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): October 30, 2024
AEROVATE
THERAPEUTICS, INC.
(Exact name of Registrant
as Specified in Its Charter)
| Delaware |
|
001-40544 |
|
83-1377888 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
| 930 Winter Street | | |
| Suite M-500 | | |
| Waltham,
Massachusetts | | 02451 |
| (Address of Principal Executive Offices) | | (Zip
Code) |
Registrant's Telephone Number, Including Area
Code: (617) 443-2400
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:
| x |
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 |
| Common
Stock, $0.0001 par value per share |
|
AVTE |
|
The
Nasdaq Global 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 x
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. x
| Item 1.01. |
Entry into a Material Definitive
Agreement. |
Merger Agreement
On October 30, 2024, Aerovate Therapeutics, Inc., a Delaware corporation
(“Aerovate”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Aerovate, Caribbean
Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Aerovate (“Merger Sub I”), Caribbean Merger Sub
II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Aerovate (“Merger Sub II” and together with
Merger Sub I, “Merger Subs”), and Jade Biosciences, Inc., a Delaware corporation (“Jade”), pursuant to which,
and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, among other things, Merger Sub I will
merge with and into Jade, with Jade surviving the merger as the surviving corporation (the “First Merger”), and as part of
the same overall transaction, Jade will merge with and into Merger Sub II, with Merger Sub II continuing as a wholly owned subsidiary
of Aerovate and the surviving corporation of the merger (the “Second Merger” and together with the First Merger, the “Merger”).
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.
In addition, in connection with the closing of the Merger (the “Closing”),
Aerovate expects to declare a cash dividend to the pre-Merger Aerovate stockholders of approximately $65.0 million in the aggregate (the
“Cash Dividend”), provided such amount is subject to adjustment as set forth in the Merger Agreement.
Subject to the terms and conditions of the Merger Agreement, at the
effective time of the Merger (the “Effective Time”), (a) each then-outstanding share of Jade’s common stock, par
value $0.0001 per share (“Jade Common Stock”), will be converted into the right to receive a number of shares of Aerovate’s
common stock, par value $0.0001 per share (“Aerovate Common Stock”), based on a ratio calculated in accordance with the Merger
Agreement (the “Exchange Ratio”), provided that any unvested restricted shares of Jade Common Stock will be subject to the
same terms and conditions (including, without limitation, vesting and repurchase provisions) that are otherwise applicable to such unvested
shares as of immediately prior to the Effective Time, (b) each then-outstanding share of Jade’s preferred stock, par value $0.0001
per share (“Jade Preferred Stock”) will be converted into the right to receive a number of shares of Aerovate’s newly
authorized convertible preferred stock, par value $0.0001 per share, equal to (x) the Exchange Ratio divided by (y) 1,000, (c) each then-outstanding
option to purchase Jade Common Stock will be assumed by Aerovate, subject to adjustment as set forth in the Merger Agreement and (d)
each then-outstanding warrant to purchase shares of Jade Common Stock or Jade Preferred Stock will be assumed by Aerovate, subject to
adjust as set forth in the Merger Agreement.
Under the Exchange Ratio formula in the Merger Agreement, upon the
Closing, on a pro forma basis and based upon the number of shares of Aerovate Common Stock expected to be issued in the Merger, pre-Merger
Jade stockholders will own approximately 98.4% of the combined company and pre-Merger Aerovate stockholders will own approximately 1.6%
of the combined company on a fully-diluted basis (after giving effect to the Concurrent Investment described below and excluding any
shares reserved for future grants under the 2024 Equity Incentive Plan and the 2024 ESPP, each as defined in the Merger Agreement). Under
certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted upward or downward based on
the level of Aerovate’s net cash at the Closing.
The Exchange Ratio assumes (i) a valuation for Aerovate of $8.0 million
and (ii) a valuation for Jade of $175.0 million. The Exchange Ratio is also based on the relative capitalization of each of Aerovate
and Jade, for which, for the purposes of calculating the Exchange Ratio, the shares of Aerovate Common Stock underlying Aerovate’s
stock options outstanding immediately prior to the Effective Time with an exercise price per share equal to or less than the Parent Closing
Price (as defined in the Merger Agreement), as adjusted to take into account the Cash Dividend, will be deemed outstanding, and all shares
of Jade Common Stock underlying outstanding Jade stock options, warrants, and other derivative securities will be deemed outstanding,
subject to certain exceptions as set forth in the Merger Agreement.
The unexercised and outstanding Aerovate stock options with an exercise
price per share greater than the Parent Closing Price (prior to giving effect to the Cash Dividend and Nasdaq Reverse Stock Split (as
defined in the Merger Agreement)) shall be cancelled at the Effective Time for no consideration. All Aerovate stock options with an exercise
price per share equal to or less than the Parent Closing Price will accelerate in full as of immediately prior to the Effective Time
and each such stock option not exercised as of immediately prior to the Effective Time will be canceled and the holder will be entitled
to receive (i) an amount in cash without interest, less any applicable tax withholding, equal to the product obtained by multiplying
(A) the excess of the Parent Closing Price over the exercise price per share of Aerovate Common Stock underlying such option to purchase
Aerovate Common Stock (“Aerovate Option”) by (B) the number of shares of Aerovate Common Stock underlying such Aerovate Option.
Further, the vesting of each outstanding and unvested Aerovate restricted
stock unit will accelerate in full as of immediately prior to the Effective Time and each outstanding and unsettled Aerovate restricted
stock unit will be settled in shares of Aerovate Common Stock.
In connection with the Merger, Aerovate will seek the approval of
its stockholders to, among other things, (a) issue the shares of Aerovate Common Stock issuable in connection with the Merger pursuant
to the rules of The Nasdaq Stock Market LLC (“Nasdaq”) (b) adopt the 2024 Equity Incentive Plan and the 2024 ESPP, (c) amend
its amended and restated certificate of incorporation to change Aerovate’s name to “Jade Biosciences, Inc.”, (d) effect
a reverse stock split of Aerovate Common Stock, at a reverse stock split ratio to be mutually agreed to by Aerovate and Jade, (e) amend
its amended and restated certificate of incorporation to increase the authorized number of Aerovate’s capital stock, and (f) amend
its amended and restated certificate of incorporation to redomicile Aerovate from Delaware to such jurisdiction as may be determined
by Jade (the “Aerovate Voting Proposals”).
Each of Aerovate and Jade has agreed to customary representations,
warranties and covenants in the Merger Agreement, including, among others, covenants relating to (1) obtaining the requisite approval
of their respective stockholders, (2) non-solicitation of alternative acquisition proposals, (3) the conduct of their
respective businesses during the period between the date of signing the Merger Agreement and the Closing, (4) Aerovate using commercially
reasonable efforts to maintain the existing listing of the Aerovate Common Stock on Nasdaq and cause the shares of Aerovate Common Stock
to be issued in connection with the Merger to be approved for listing on Nasdaq prior to the Closing and (5) Aerovate filing with
the U.S. Securities and Exchange Commission (the “SEC”) and causing to become effective a registration statement on Form
S-4 to register the shares of Aerovate Common Stock to be issued in connection with the Merger (the “Registration Statement”).
Consummation of the Merger is subject to certain closing conditions,
including, among other things, (1) approval by Aerovate stockholders of the Aerovate Voting Proposals, (2) approval by the
requisite Jade stockholders of the adoption and approval of the Merger Agreement and the transactions contemplated thereby, (3) the
waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired or been terminated, (4)
Nasdaq’s approval of the listing of the shares of Aerovate Common Stock to be issued in connection with the Merger, (5) the
effectiveness of the Registration Statement and (6) an executed Purchase Agreement for the Concurrent Investment (as defined below) in
full force and effect evidencing cash proceeds of not less than $80.0 million to be received by the combined company immediately prior
to or following the Closing. Each party’s obligation to consummate the Merger is also subject to other specified customary conditions,
including regarding the accuracy of the representations and warranties of the other party, subject to the applicable materiality standard,
and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed
on or prior to the date of the Closing.
The Merger Agreement contains certain termination rights of each of
Aerovate and Jade. Upon termination of the Merger Agreement under specified circumstances, Aerovate may be required to pay Jade a termination
fee of $2,340,000, and in certain other circumstances, Jade may be required to pay Aerovate a termination fee of $5,250,000.
At the Effective Time, the board of directors of Aerovate is expected
to consist of six members, all of whom will be designated by Jade.
Support Agreements and Lock-Up Agreements
Concurrently
and in connection with the execution of the Merger Agreement, (i) certain stockholders of Jade (solely in their respective capacities
as Jade stockholders) holding approximately 99% of the outstanding shares of Jade capital stock have entered into support agreements
with Aerovate and Jade to vote all of their shares of Jade capital stock in favor of the adoption and approval of the Merger Agreement
and the transactions contemplated thereby (the “Jade Support Agreements”) and (ii) certain stockholders of Aerovate
holding approximately 38.1% of the outstanding shares of Aerovate Common Stock have entered into support agreements with Aerovate
and Jade to vote all of their shares of Aerovate Common Stock in favor of the Aerovate Voting Proposals (the “Aerovate Support
Agreements,” and, together with the Jade Support Agreements, the “Support Agreements”).
Concurrently and in connection with the execution of the Merger Agreement,
certain executive officers, directors and stockholders of Jade have entered into lock-up agreements (the “Lock-Up Agreements”)
pursuant to which, and subject to specified exceptions, they have agreed not to transfer their shares of Aerovate Common Stock for the
180-day period following the Closing.
The preceding summaries of the Merger Agreement, the Support Agreements
and the Lock-Up Agreements do not purport to be complete and are qualified in their entirety by reference to the Merger Agreement, the
form of Aerovate Support Agreement, the form of Jade Support Agreement, and the form of Lock-Up Agreement, which are filed as Exhibits
2.1, 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K and which are incorporated herein by reference.
The Merger Agreement has been attached as an exhibit to this Current Report on Form 8-K to provide investors and securityholders
with information regarding its terms. It is not intended to provide any other factual information about Aerovate or Jade or to modify
or supplement any factual disclosures about Aerovate in its public reports filed with the SEC. The Merger Agreement includes representations,
warranties and covenants of Aerovate, Jade, and Merger Subs made solely for the purpose of the Merger Agreement and solely for the benefit
of the parties thereto in connection with the negotiated terms of the Merger Agreement. Investors should not rely on the representations,
warranties and covenants in the Merger Agreement or any descriptions thereof as characterizations of the actual state of facts or conditions
of Aerovate, Jade or any of their respective affiliates. Moreover, certain of those representations and warranties may not be accurate
or complete as of any specified date, may be modified in important part by the underlying disclosure schedules which are not filed publicly,
may be subject to a contractual standard of materiality different from those generally applicable to SEC filings or may have been used
for purposes of allocating risk among the parties to the Merger Agreement, rather than establishing matters of fact.
Private Placement and Purchase Agreement
On October 30, 2024, Jade entered into a Securities Purchase Agreement
(the “Purchase Agreement”) with certain existing Jade stockholders and new investors (the “Investors”).
Pursuant to the Purchase Agreement, and subject to the terms and conditions
thereof, Jade agreed to sell, and the Investors agreed to purchase, immediately prior to the consummation of the Merger, shares of Jade
Common Stock and pre-funded warrants (together, the “Securities”) for an aggregate purchase price of approximately $300.0
million (collectively, the “Concurrent Investment”), which reflects the conversion of the previously issued $95 million of
convertible notes. The consummation of the transactions contemplated by such agreements is conditioned on the satisfaction or waiver
of the conditions set forth in the Merger Agreement and in the Purchase Agreement. Shares of Jade Common Stock and pre-funded warrants
issued pursuant to this financing transaction will be converted into shares of Aerovate Common Stock and pre-funded warrants to acquire
shares of Aerovate Common Stock, in accordance with the Exchange Ratio and the Merger Agreement.
The Concurrent Investment is exempt from registration pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder,
as a transaction by an issuer not involving a public offering. The Investors have acquired the Securities for investment only and not
with a view to or for sale in connection with any distribution thereof, and appropriate legends have been affixed to the Securities issued
in this transaction.
The foregoing summary of the Purchase Agreement does not purport to
be complete and is qualified in its entirety by reference to the form of Purchase Agreement, which is filed as Exhibit 10.4 to this Current
Report on Form 8-K and incorporated herein by reference.
Registration Rights Agreement
At the closing of the Concurrent Investment, in connection with the
Purchase Agreement, Jade has agreed to enter into a Registration Rights Agreement (the “Registration Rights Agreement”) with
the Investors and certain other stockholders of Jade. Pursuant to the Registration Rights Agreement, the combined company will prepare
and file a resale registration statement with the SEC within 45 calendar days following the closing of the Concurrent Investment. The
combined company will use its reasonable best efforts to cause the Registration Statement to become effective as promptly as practicable.
The combined company will also agree to, among other things, indemnify
the Investors, their officers, directors, members, employees and agents, successors and assigns under the registration statement from
certain liabilities and pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts
and selling commissions) incident to the combined company’s obligations under the Registration Rights Agreement.
The foregoing summary of the Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the form of Registration Rights Agreement, which is filed as
Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 3.02. |
Unregistered Sales of Equity
Securities. |
To the extent required by this Item, the information included in Item
1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The
shares to be issued by Jade in the Concurrent Investment will be issued in private placements exempt from registration under Section
4(a)(2) of the Securities Act, and/or Regulation D promulgated thereunder, because the offer and sale of such securities does not involve
a “public offering” as defined in Section 4(a)(2) of the Securities Act, and other applicable requirements were met.
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 the Securities or any other securities of Jade or Aerovate.
| Item 5.01. |
Changes in Control of Registrant. |
To the extent required by this Item, the information included in Item
1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 5.02. |
Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
To the extent required by this Item, the information included in Item
1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 7.01. |
Regulation FD Disclosure. |
On October 31, 2024, Aerovate and Jade issued a joint press release
announcing the execution of the Merger Agreement and the Purchase Agreement. The press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K and incorporated herein by reference, except that the information contained on the websites referenced in
the press release is not incorporated herein by reference.
Furnished as Exhibit 99.2 hereto and incorporated herein by reference
is the investor presentation that will be used by Aerovate and Jade in connection with the Merger, including during the webcast described
below.
The information in this Item 7.01, including Exhibits 99.1 and 99.2
attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference
in any filing under the Securities Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Forward-Looking Statements
Certain statements in this communication, other
than purely historical information, may constitute “forward-looking statements” within the meaning of the federal securities
laws, including for purposes of the “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995,
concerning Aerovate, Jade, the proposed Concurrent Investment and the proposed Merger (collectively, the “Proposed Transactions”)
and other matters. These forward-looking statements include, but are not limited to, express or implied statements relating to Aerovate’s
and Jade’s management teams’ expectations, hopes, beliefs, intentions or strategies regarding the future including, without
limitation, statements regarding: the Proposed Transactions and the expected effects, perceived benefits or opportunities of the Proposed
Transactions, including investment amounts from investors and expected proceeds, and related timing with respect thereto; expectations
related to Aerovate’s contribution and payment of the Cash Dividends in connection with the proposed Merger, including the anticipated
timing of the Closing; the expectations regarding the ownership structure of the combined company; and the expected trading of the combined
company’s stock on Nasdaq under the ticker symbol “JBIO” after the Closing. In addition, any statements that refer
to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. The words “opportunity,” “potential,” “milestones,” “pipeline,” “can,”
“goal,” “strategy,” “target,” “anticipate,” “achieve,” “believe,”
“contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “plan,” “possible,” “project,” “should,” “will,” “would”
and similar expressions (including the negatives of these terms or variations of them) may identify forward-looking statements, but the
absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on current expectations
and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting
Aerovate, Jade or the Proposed Transactions will be those that have been anticipated. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond Aerovate’s control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, the risk that the conditions to the Closing or consummation of the Proposed Transactions are not satisfied, including
Aerovate’s failure to obtain stockholder approval for the proposed Merger; the risk that the proposed Concurrent Investment is
not completed in a timely manner or at all; uncertainties as to the timing of the consummation of the Proposed Transactions and the ability
of each of Aerovate and Jade to consummate the transactions contemplated by the Proposed Transactions; risks related to Aerovate’s
continued listing on Nasdaq until closing of the Proposed Transactions and the combined company’s ability to remain listed following
the Proposed Transactions; risks related to Aerovate’s and Jade’s ability to correctly estimate their respective operating
expenses and expenses associated with the Proposed Transactions, as applicable, as well as uncertainties regarding the impact any delay
in the closing of any of the Proposed Transactions would have on the anticipated cash resources of the resulting combined company upon
closing and other events and unanticipated spending and costs that could reduce the combined company’s cash resources; the failure
or delay in obtaining required approvals from any governmental or quasi-governmental entity necessary to consummate the Proposed Transactions;
the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the business combination
between Aerovate and Jade; the effect of the announcement or pendency of the Merger on Aerovate’s or Jade’s business relationships,
operating results and business generally; costs related to the Merger; the risk that as a result of adjustments to the Exchange Ratio,
Jade stockholders and Aerovate stockholders could own more or less of the combined company than is currently anticipated; the outcome
of any legal proceedings that may be instituted against Aerovate, Jade or any of their respective directors or officers related to the
Merger Agreement or the transactions contemplated thereby; the ability of Aerovate and Jade to protect their respective intellectual
property rights; competitive responses to the Proposed Transactions; unexpected costs, charges or expenses resulting from the Proposed
Transactions; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Proposed
Transactions; failure to realize certain anticipated benefits of the Proposed Transactions, including with respect to future financial
and operating results; the risk that Aerovate stockholders receive more or less of the Cash Dividend than is currently anticipated; legislative,
regulatory, political and economic developments; and those uncertainties and factors more fully described in periodic filings with the
SEC, including under the heading “Risk Factors” and “Business” in Aerovate’s most recent Annual Report
on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 25, 2024, subsequent Quarterly Reports on Form 10-Q filed
with the SEC, as well as discussions of potential risks, uncertainties, and other important factors included in other filings by Aerovate
from time to time, any risk factors related to Aerovate or Jade made available to you in connection with the Proposed Transactions, as
well as risk factors associated with companies, such as Jade, that operate in the biopharma industry. Should one or more of these risks
or uncertainties materialize, or should any of Aerovate’s or Jade’s assumptions prove incorrect, actual results may vary
in material respects from those projected in these forward-looking statements. Nothing in this communication should be regarded as a
representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results
of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication,
which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Neither
Aerovate nor Jade undertakes or accepts any duty to release publicly any updates or revisions to any forward-looking statements. This
communication does not purport to summarize all of the conditions, risks and other attributes of an investment in Aerovate or Jade.
No Offer or Solicitation
This communication and the information contained
herein is not intended to and does not constitute (i) a solicitation of a proxy, consent or approval with respect to any securities or
in respect of the Proposed Transactions or (ii) an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities pursuant to the Proposed Transactions or otherwise, nor shall there be any sale, issuance
or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means
of a prospectus meeting the requirements of the Securities Act of 1933, as amended, or an exemption therefrom. Subject to certain exceptions
to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly,
in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by
any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign
commerce, or any facility of a national securities exchange, of any such jurisdiction.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS COMMUNICATION IS TRUTHFUL OR COMPLETE.
Important Additional Information about the Proposed
Transaction Will be Filed with the SEC
This communication is not a substitute for the registration
statement or for any other document that Aerovate may file with the SEC in connection with the Proposed Transactions. In connection with
the Proposed Transactions, Aerovate intends to file relevant materials with the SEC, including a registration statement on Form S-4 that
will contain a proxy statement/prospectus of Aerovate. AEROVATE URGES INVESTORS AND STOCKHOLDERS TO READ THE REGISTRATION STATEMENT,
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS
TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT AEROVATE, JADE, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and stockholders will be able to obtain free copies of
the proxy statement/prospectus and other documents filed by Aerovate with the SEC (when they become available) through the website maintained
by the SEC at www.sec.gov. Stockholders are urged to read the proxy statement/prospectus and the other relevant materials when they become
available before making any voting or investment decision with respect to the Proposed Transactions. In addition, investors and stockholders
should note that Aerovate communicates with investors and the public using its website (https://ir.aerovatetx.com/).
Participants in the Solicitation
Aerovate, Jade and their respective directors and
executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the Proposed
Transactions. Information about Aerovate’s directors and executive officers, including a description of their interests in Aerovate,
is included in Aerovate’s most recent Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March
25, 2024, subsequent Quarterly Reports on Form 10-Q filed with the SEC, including any information incorporated therein by reference,
as filed with the SEC, and other documents that may be filed from time to time with the SEC. Additional information regarding these persons
and their interests in the transaction will be included in the proxy statement/prospectus relating to the Proposed Transactions when
it is filed with the SEC. These documents can be obtained free of charge from the sources indicated above.
| Item 9.01. | Financial Statements and Exhibits. |
| Exhibit Number |
|
Description |
| 2.1* |
|
Agreement
and Plan of Merger, dated as of October 30, 2024, by and among Aerovate Therapeutics, Inc., Caribbean Merger Sub I, Inc., Caribbean
Merger Sub II, LLC and Jade Biosciences, Inc. |
| 10.1 |
|
Form
of Aerovate Support Agreement |
| 10.2 |
|
Form
of Jade Support Agreement |
| 10.3 |
|
Form
of Lock-Up Agreement |
| 10.4* |
|
Form of Securities Purchase Agreement |
| 10.5 |
|
Form
of Registration Rights Agreement |
| 99.1 |
|
Joint
Press Release, issued on October 31, 2024 |
| 99.2 |
|
Investor
Presentation, dated October 2024 |
| 104 |
|
Cover Page Interactive Data
File (embedded within the Inline XBRL document) |
| * | Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted
exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential
treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished. |
SIGNATURES
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.
| |
Aerovate
Therapeutics, Inc. |
| |
|
| Date:
October 31, 2024 |
By:
|
/s/
George A. Eldridge |
| |
|
George
A. Eldridge |
| |
|
Chief
Financial Officer |
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
AEROVATE THERAPEUTICS, INC.,
CARIBBEAN MERGER SUB I, INC.
CARIBBEAN MERGER SUB II, LLC
and
JADE BIOSCIENCES, INC.
Dated as of October 30, 2024
| TABLE OF CONTENTS |
| |
|
|
Page |
| |
|
|
| Article I DEFINITIONS & INTERPRETATIONS |
4 |
| |
|
| Section 1.1 |
Certain Definitions |
4 |
| Section 1.2 |
Interpretation |
11 |
| Section 1.3 |
Currency |
11 |
| |
|
|
| Article II THE MERGER |
11 |
| |
|
| Section 2.1 |
Formation of Merger Subs |
11 |
| Section 2.2 |
The Mergers |
11 |
| Section 2.3 |
Closing |
12 |
| Section 2.4 |
Certificate of Designation; First Effective Time; Second Effective Time |
12 |
| Section 2.5 |
Effects of the Merger |
12 |
| Section 2.6 |
Parent Governance |
12 |
| Section 2.7 |
First Step Surviving Company and Surviving Entity Governance |
13 |
| |
|
|
| Article III EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT
COMPANIES; EXCHANGE OF CERTIFICATES |
14 |
| |
|
| Section 3.1 |
Conversion of Capital Stock |
14 |
| Section 3.2 |
Company Options; Company Warrants |
17 |
| Section 3.3 |
Exchange and Payment |
18 |
| Section 3.4 |
Withholding Rights |
21 |
| Section 3.5 |
Dissenters Rights |
21 |
| Section 3.6 |
Calculation of Net Cash |
22 |
| |
|
|
| Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
24 |
| |
|
| Section 4.1 |
Organization, Standing and Power |
24 |
| Section 4.2 |
Capital Stock |
25 |
| Section 4.3 |
Subsidiaries |
26 |
| Section 4.4 |
Authority |
26 |
| Section 4.5 |
No Conflict; Consents and Approvals |
27 |
| Section 4.6 |
Financial Statements |
28 |
| Section 4.7 |
No Undisclosed Liabilities |
29 |
| Section 4.8 |
Absence of Certain Changes or Events |
29 |
| Section 4.9 |
Litigation |
30 |
| Section 4.10 |
Compliance with Laws |
30 |
| Section 4.11 |
Health Care Regulatory Matters |
31 |
| Section 4.12 |
Benefit Plans |
33 |
| Section 4.13 |
Labor and Employment Matters |
35 |
| Section 4.14 |
Environmental Matters |
37 |
| Section 4.15 |
Taxes |
38 |
| Section 4.16 |
Contracts |
40 |
| Section 4.17 |
Insurance |
42 |
| Section 4.18 |
Properties |
42 |
| Section 4.19 |
Intellectual Property |
43 |
| Section 4.20 |
State Takeover Statutes |
45 |
| Section 4.21 |
No Rights Plan |
45 |
| Section 4.22 |
Related Party Transactions |
45 |
| Section 4.23 |
Certain Payments |
46 |
| Section 4.24 |
Trade Control Laws |
46 |
| Section 4.25 |
Brokers |
46 |
| Section 4.26 |
Securities Purchase Agreement |
46 |
| Section 4.27 |
No Other Representations and Warranties |
47 |
| |
|
|
| Article V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBS |
47 |
| |
|
| Section 5.1 |
Organization, Standing and Power |
47 |
| Section 5.2 |
Capital Stock |
48 |
| Section 5.3 |
Subsidiaries |
49 |
| Section 5.4 |
Authority |
49 |
| Section 5.5 |
No Conflict; Consents and Approvals |
50 |
| Section 5.6 |
SEC Reports; Financial Statements |
51 |
| Section 5.7 |
No Undisclosed Liabilities |
53 |
| Section 5.8 |
Absence of Certain Changes or Events |
53 |
| Section 5.9 |
Litigation |
54 |
| Section 5.10 |
Compliance with Law |
54 |
| Section 5.11 |
Health Care Regulatory Matters |
54 |
| Section 5.12 |
Benefit Plans |
56 |
| Section 5.13 |
Labor and Employment Matters |
59 |
| Section 5.14 |
Environmental Matters |
60 |
| Section 5.15 |
Taxes |
61 |
| Section 5.16 |
Contracts |
63 |
| Section 5.17 |
Insurance |
65 |
| Section 5.18 |
Properties |
66 |
| Section 5.19 |
Intellectual Property |
66 |
| Section 5.20 |
Related Party Transactions |
68 |
| Section 5.21 |
Certain Payments |
68 |
| Section 5.22 |
Trade Control Laws |
68 |
| Section 5.23 |
Brokers |
68 |
| Section 5.24 |
Opinion of Financial Advisor |
69 |
| Section 5.25 |
State Takeover Statutes |
69 |
| Section 5.26 |
No Other Representations or Warranties |
69 |
| Article VI COVENANTS |
69 |
| |
|
| Section 6.1 |
Operation of Parent’s Business |
69 |
| Section 6.2 |
Operation of Company’s Business |
72 |
| Section 6.3 |
Access and Investigation |
74 |
| Section 6.4 |
No Solicitation |
75 |
| Section 6.5 |
Notification of Certain Matters |
76 |
| Section 6.6 |
Parent Options |
76 |
| Section 6.7 |
Parent Restricted Stock Unit Awards |
77 |
| Section 6.8 |
Parent ESPP |
77 |
| Section 6.9 |
Parent 401(K) Plan |
77 |
| |
|
|
| Article VII ADDITIONAL AGREEMENTS |
77 |
| |
|
| Section 7.1 |
Registration Statement; Proxy Statement |
77 |
| Section 7.2 |
Company Stockholder Approval |
80 |
| Section 7.3 |
Parent Stockholders’ Meeting |
82 |
| Section 7.4 |
Efforts; Regulatory Approvals; Transaction Litigation |
84 |
| Section 7.5 |
Indemnification, Exculpation and Insurance |
85 |
| Section 7.6 |
Section 16 Matters |
87 |
| Section 7.7 |
Disclosure |
87 |
| Section 7.8 |
Listing |
87 |
| Section 7.9 |
Tax Matters |
88 |
| Section 7.10 |
Directors and Officers |
89 |
| Section 7.11 |
Termination of Certain Agreements and Rights |
89 |
| Section 7.12 |
Obligations of Merger Subs |
89 |
| Section 7.13 |
Allocation Certificate |
89 |
| Section 7.14 |
Pre-Closing Cash Dividend |
89 |
| Section 7.15 |
Concurrent Investment |
90 |
| Section 7.16 |
Parent Equity Plans |
91 |
| Section 7.17 |
Wind-Down Activities |
91 |
| Section 7.18 |
Parent SEC Documents |
91 |
| |
|
|
| Article VIII CLOSING CONDITIONS |
|
91 |
| |
|
|
| Section 8.1 |
Conditions Precedent of each Party |
91 |
| Section 8.2 |
Conditions Precedent to Obligation of the Company |
92 |
| Section 8.3 |
Conditions Precedent of Parent and Merger Subs |
94 |
| |
|
|
| Article IX TERMINATION |
94 |
| |
|
| Section 9.1 |
Termination |
94 |
| Section 9.2 |
Effect of Termination |
97 |
| Section 9.3 |
Expenses; Termination Fees |
97 |
| Article X GENERAL PROVISIONS |
99 |
| |
|
|
| Section 10.1 |
Non-survival of Representations and Warranties |
99 |
| Section 10.2 |
Amendment or Supplement |
99 |
| Section 10.3 |
Waiver |
99 |
| Section 10.4 |
Fees and Expenses |
100 |
| Section 10.5 |
Notices |
100 |
| Section 10.6 |
Entire Agreement |
101 |
| Section 10.7 |
No Third Party Beneficiaries |
101 |
| Section 10.8 |
Governing Law |
101 |
| Section 10.9 |
Submission to Jurisdiction |
101 |
| Section 10.10 |
Assignment; Successors |
102 |
| Section 10.11 |
Specific Performance |
102 |
| Section 10.12 |
Severability |
102 |
| Section 10.13 |
Waiver of Jury Trial |
103 |
| Section 10.14 |
Counterparts |
103 |
| Section 10.15 |
Facsimile or .pdf Signature |
103 |
| Section 10.16 |
No Presumption Against Drafting Party |
103 |
| Exhibit A |
Form of Parent Support Agreement |
| Exhibit B |
Form of Company Support Agreement |
| Exhibit C |
Form of Lock-Up Agreement |
| Exhibit D |
Form of Securities Purchase Agreement |
| Exhibit E-1 |
First Certificate of Merger, including certificate of incorporation of the First Step Surviving
Corporation attached as Exhibit A thereto, incorporated by reference into this Agreement |
| Exhibit E-2 |
Second Certificate of Merger, incorporated by reference into this Agreement |
| Exhibit F |
Certificate of Designation |
| INDEX OF DEFINED TERMS |
| |
|
| Definition |
Location |
| |
|
| 2024 Equity Incentive Plan |
Section 1.1 |
| 2024 ESPP |
Section 1.1 |
| 2024 Plans |
Section 1.1 |
| AAA |
Section 3.6(e) |
| Acceptable Confidentiality Agreement |
Section 1.1 |
| Accounting Firm |
Section 3.6(e) |
| Acquisition Inquiry |
Section 1.1 |
| Acquisition Proposal |
Section 1.1 |
| Acquisition Transaction |
Section 1.1 |
| Action |
Section 4.9 |
| Affiliate |
Section 1.1 |
| Agreement |
Preamble |
| Allocation Certificate |
Section 7.13 |
| Anticipated Meeting Date |
Section 3.6(a) |
| Assumed Option |
Section 3.2(a) |
| Assumed Warrant |
Section 3.2(b) |
| Book-Entry Shares |
Section 3.3(b) |
| Business Day |
Section 1.1 |
| Cash Determination Time |
Section 3.6(a) |
| Certificate of Designation |
Section 1.1 |
| Certificate of Merger |
Section 2.4 |
| Certificates |
Section 3.3(b) |
| Closing Section 2.3 |
|
| Code |
Recitals |
| Company |
Preamble |
| Company Audited Financial Statements |
Section 7.1(g) |
| Company Balance Sheet |
Section 4.6(b) |
| Company Board |
Recitals |
| Company Board Adverse Recommendation Change |
Section 7.2(c) |
| Company Board Recommendation |
Section 7.2(c) |
| Company Bylaws |
Section 4.1(b) |
| Company Capital Stock |
Section 1.1 |
| Company Charter |
Section 4.1(b) |
| Company Common Stock |
Recitals |
| Company Disclosure Letter |
Article IV |
| Company Equity Plan |
Section 1.1 |
| Company Equity Value |
Section 3.1(i)(A)) |
| Company Financial Statements |
Section 4.6(a) |
| Company Fundamental Representations |
Section 1.1 |
| Company Interim Financial Statements |
Section 7.1(g) |
| Company Intervening Event |
Section 7.2(d) |
| Company Notes |
Section 1.1 |
| Company Notice Period |
Section 7.2(d) |
| Company Options |
Section 1.1 |
| Company Outstanding Shares |
Section 3.1(i)(B)) |
| Company Owned IP |
Section 1.1 |
| Company Plan |
Section 1.1 |
| Company Preferred Stock |
Section 1.1 |
| Company Products |
Section 4.11(c) |
| Company Registered IP |
Section 4.19(a) |
| Company Restricted Shares |
Section 3.1(b) |
| Company Stock Awards |
Section 4.2(b) |
| Company Stockholder Approval |
Recitals |
| Company Support Agreements |
Recitals |
| Company Termination Fee |
9.3(b) |
| Company Triggering Event |
Section 1.1 |
| Company Valuation |
Section 3.1(i)(C)) |
| Company Value Per Share |
Section 3.1(i)(D)) |
| Company Warrant |
Section 1.1 |
| Concurrent Investment |
Recitals |
| Concurrent Investment Amount |
Recitals |
| Concurrent Investment Investor |
Recitals |
| Concurrent Investment Investors |
Recitals |
| Confidentiality Agreement |
Section 1.1 |
| Constructive Issuance |
Recitals |
| Contemplated Transactions |
Section 1.1 |
| control |
Section 1.1 |
| Controlled Group |
Section 4.12(c) |
| Current Offering Period |
Section 6.8 |
| D&O Indemnified Parties |
Section 7.5(a) |
| Data Processors |
Section 4.19(h) |
| Delaware Secretary of State |
Section 2.4 |
| Delivery Date |
Section 3.6(a) |
| DGCL |
Recitals |
| Dispute Notice |
Section 3.6(b) |
| Dissenting Shares |
Section 3.5 |
| Dividend Record Date |
Section 7.14 |
| DLLCA |
Recitals |
| Employee Plan |
Section 1.1 |
| End Date |
Section 9.1(b) |
| Environmental Law |
Section 4.14(b) |
| ERISA |
Section 1.1 |
| Exchange Act |
Section 4.5(b) |
| Exchange Agent |
Section 3.3(a)) |
| Exchange Fund |
Section 3.3(a)) |
| Exchange Ratio |
Section 3.1(a)(i) |
| Excluded Shares |
Section 3.1(a)(iii)) |
| FDA |
Section 4.11(c) |
| FDA Ethics Policy |
Section 4.11(i) |
| FDCA |
Section 4.11(a) |
| Final Parent Net Cash |
Section 3.6(c) |
| First Certificate of Merger |
Section 2.4 |
| First Effective Time |
Section 2.4 |
| First Merger |
Recitals |
| First Merger Sub |
Preamble |
| First Step Surviving Company |
Section 2.2 |
| Form S-4 |
Section 7.1(a) |
| GAAP |
Section 4.6(a) |
| Hazardous Substance |
Section 4.11(c) |
| Health Care Laws |
Section 4.11(a) |
| HSR Act |
Section 1.1 |
| Intellectual Property |
Section 1.1 |
| Intended Tax Treatment |
Recitals |
| Investor Agreements |
Section 7.11(a) |
| IRS |
Section 4.12(b) |
| IT Systems |
Section 4.19(g) |
| knowledge |
Section 1.1 |
| Lock-Up Agreement |
Recitals |
| Material Adverse Effect |
Section 4.1(a) |
| Material Contracts |
Section 4.16(a) |
| Measurement Date |
Section 5.2(a) |
| Merger |
Recitals |
| Merger Consideration |
Section 3.1(a)(i) |
| Merger Subs |
Preamble |
| Multiemployer Plan |
Section 1.1 |
| Nasdaq |
Section 1.1 |
| Nasdaq Fees |
Section 1.1 |
| Nasdaq Issuance Proposal |
Recitals |
| Nasdaq Listing Application |
Section 7.8 |
| Nasdaq Reverse Stock Split |
Section 1.1 |
| Net Cash |
Section 1.1 |
| Ordinary Course |
Section 1.1 |
| Ordinary Course Agreement |
Section 4.15(g) |
| Parent |
Preamble |
| Parent 401(k) Plan |
Section 6.9 |
| Parent Board |
Recitals |
| Parent Board Adverse Recommendation Change |
Section 7.3(b) |
| Parent Board Recommendation |
Section 7.3(b) |
| Parent Capital Stock |
Section 1.1 |
| Parent Charter Amendment |
Section 2.6(a) |
| Parent Closing Price |
Section 1.1 |
| Parent Common Stock |
Recitals |
| Parent Common Stock Issuance |
Section 5.4(a) |
| Parent Convertible Preferred Stock |
Section 1.1 |
| Parent Disclosure Letter |
Article V |
| Parent Equity Plans |
Section 1.1 |
| Parent ESPP |
Section 1.1 |
| Parent Fundamental Representations |
Section 1.1 |
| Parent Intervening Event |
Section 7.3(c) |
| Parent IT Systems |
Section 5.19(d) |
| Parent ITM Option |
Section 1.1 |
| Parent Legacy Assets |
Section 1.1 |
| Parent Legacy Business |
Section 1.1 (hh) |
| Parent Legacy Transaction |
Section 6.1(c) |
| Parent Material Adverse Effect |
Section 5.1(a) |
| Parent Material Contracts |
Section 5.16(a) |
| Parent Net Cash Calculation |
Section 3.6(a) |
| Parent Net Cash Schedule |
Section 3.6(a) |
| Parent Notice Period |
Section 7.3(c) |
| Parent Options |
Section 1.1 |
| Parent OTM Options |
Section 1.1 |
| Parent Outstanding Shares |
Section 3.1(i)(E)) |
| Parent Owned IP |
Section 1.1 |
| Parent Plan |
Section 1.1 |
| Parent Preferred Stock |
Section 1.1 |
| Parent Products |
Section 5.11(c) |
| Parent Registered IP |
Section 5.19(a) |
| Parent Restricted Stock Unit Awards |
Section 1.1 |
| Parent SEC Documents |
Section 5.6(a) |
| Parent Stock Option Cash Consideration |
Section 6.6 |
| Parent Stockholder Approval |
Section 5.4(a) |
| Parent Stockholder Meeting |
Section 7.3(a) |
| Parent Stockholder Proposals |
Section 7.3(a) |
| Parent Support Agreements |
Recitals |
| Parent Termination Fee |
9.3(d) |
| Parent Triggering Event |
Section 1.1 |
| Parent Valuation |
Section 3.1(i)(F)) |
| Parent Value Per Share |
Section 3.1(i)(G)) |
| PBGC |
Section 4.12(d)(iv) |
| Permits |
Section 4.10 |
| Permitted Alternative Agreement |
Section 9.1(j) |
| Permitted Liens |
Section 4.18(a) |
| Person |
Section 1.1 |
| Personal Information |
Section 4.19(h) |
| Pre-Closing Cash Dividend |
Recitals |
| Pre-Closing Cash Dividend Amount |
Section 7.14 |
| Pre-Closing Period |
Section 6.1(a) |
| Privacy Laws |
Section 4.19(h) |
| Proxy Statement |
Section 7.1(a) |
| Registration Statement |
Section 7.1(a) |
| Representative |
Section 1.1 |
| Response Date |
Section 3.6(b) |
| Reverse Stock Split Proposal |
Section 2.6(a) |
| Safety Notices |
Section 4.11(g) |
| Sarbanes-Oxley Act |
Section 5.6(a) |
| SEC |
Section 1.1 |
| Second Certificate of Merger |
Section 2.4 |
| Second Effective Time |
Section 2.4 |
| Second Merger |
Recitals |
| Second Merger Sub |
Preamble |
| Securities Act |
Section 4.5(b) |
| Service Provider Grants |
Section 3.1(a)(i)(A) |
| Stockholder Notice |
Section 7.2(b) |
| Securities Purchase Agreement |
Recitals |
| Subsequent Transaction |
Section 1.1 |
| Subsidiary |
Section 1.1 |
| Superior Offer |
Section 1.1 |
| Surviving Entity |
Section 2.2 |
| Takeover laws |
Section 4.20 |
| Tax Action |
Section 4.15(d) |
| Tax Certificates |
Section 7.9(c) |
| Tax Return |
Section 1.1 |
| Taxes |
Section 1.1 |
| Trade Approvals |
Section 4.24 |
| Trade Laws |
Section 4.24 |
| Transaction Expenses |
Section 1.1 |
| Transaction Litigation |
Section 7.4(c) |
| WARN Act |
Section 4.13(d) |
| Withholding Agent |
Section 3.4 |
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF
MERGER (this “Agreement”), dated as of October 30, 2024, by and among Aerovate Therapeutics, Inc., a Delaware
corporation (“Parent”), Caribbean Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”)
and wholly owned subsidiary of Parent, Caribbean Merger Sub II, LLC, a Delaware limited liability company (“Second Merger Sub”
and, together with First Merger Sub, “Merger Subs”) and wholly owned subsidiary of Parent, and Jade Biosciences, Inc.,
a Delaware corporation (the “Company”).
RECITALS
WHEREAS, Parent and the Company
intend to effect a merger of First Merger Sub with and into the Company (the “First Merger”) in accordance with this
Agreement and the General Corporation Law of the State of Delaware (the “DGCL”). Upon consummation of the First Merger,
First Merger Sub will cease to exist and the Company will become a wholly-owned subsidiary of Parent;
WHEREAS, immediately following
the First Merger and as part of the same overall transaction as the First Merger, the Company will merge with and into Second Merger
Sub (the “Second Merger” and, together with the First Merger, the “Merger”) in accordance with this Agreement,
the DGCL and the Delaware Limited Liability Company Act (the “DLLCA”), with Second Merger Sub being the surviving
entity of the Second Merger;
WHEREAS, the parties hereto
intend that the First Merger and the Second Merger, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder, and
that this Agreement be, and hereby is, adopted as a “plan of reorganization” for the purposes of Section 368 of the
Code and Treasury Regulations Section 1.368-2(g) and 1.368-3 (the “Intended Tax Treatment”);
WHEREAS, the Board of Directors
of the Company (the “Company Board”) has (i) determined that the Contemplated Transactions are fair to, advisable
and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Contemplated
Transactions and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the
stockholders of the Company vote to adopt this Agreement and thereby approve the Contemplated Transactions;
WHEREAS, the Company Board
has unanimously approved this Agreement and the Merger, with the Company continuing as the First Step Surviving Company (as defined below),
after the First Effective Time (as defined below), pursuant to which, among other things, (i) each share of common stock, par value
$0.0001 per share, of the Company (the “Company Common Stock”) (other than any Excluded Shares, Dissenting Shares)
shall be converted into the right to receive a number of shares of common stock, par value $0.0001 per share, of Parent (the “Parent
Common Stock”) equal to the Exchange Ratio and (ii) each share of Company Preferred Stock outstanding immediately prior
to the First Effective Time (other than any Excluded Shares, Dissenting Shares) shall be converted solely into the right to receive a
number of shares of Parent Convertible Preferred Stock equal to (x) the Exchange Ratio divided by (y) 1,000, in each case,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, First Merger Sub
is a newly incorporated Delaware corporation that is wholly-owned by Parent, and has been formed for the sole purpose of effecting the
First Merger;
WHEREAS, Second Merger Sub
is a newly incorporated Delaware limited liability company that is wholly-owned by Parent, and has been formed for the sole purpose of
effecting the Second Merger;
WHEREAS, the Board of Directors
of Parent (the “Parent Board”) has (i) determined that the Contemplated Transactions are fair to, advisable and
in the best interests of Parent and its stockholders, (ii) approved and declared advisable this Agreement and the Contemplated Transactions,
including the issuance of shares of Parent Capital Stock to the stockholders of the Company pursuant to this Agreement and the Parent
Support Agreements and the constructive issuance by the Company of shares of Company Common Stock to stockholders of Parent (as reflected
in Rule 145(a) of the Securities Act) (the “Constructive Issuance”), (iii) determined that the Reverse
Stock Split Proposal (as defined below), among other things, is advisable and in the best interests of Parent and its stockholders, (iv) determined
to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the stockholders of Parent vote to authorize
the issuance of the Parent Common Stock in accordance with Nasdaq Listing Rule 5635 (the “Nasdaq Issuance Proposal”),
the Reverse Stock Split Proposal and the other Parent Stockholder Proposals;
WHEREAS,
the board of directors of First Merger Sub has (i) determined that the Contemplated Transactions are fair to, advisable and
in the best interests of First Merger Sub and its sole stockholder, (ii) approved and declared advisable this Agreement and the
Contemplated Transactions and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement,
that the stockholder of First Merger Sub votes to adopt this Agreement and thereby approve the Contemplated Transactions;
WHEREAS,
the sole member of the Second Merger Sub has (i) determined that the Contemplated Transactions are fair to, advisable, and
in the best interests of Second Merger Sub and its sole member, and (ii) approved and declared advisable this Agreement and the
Contemplated Transactions;
WHEREAS, Parent, Merger Subs
and the Company each desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger as specified herein;
WHEREAS, concurrently with
the execution and delivery of this Agreement and as a condition and inducement to the Company’s willingness to enter into this
Agreement, the officers, directors and stockholders of Parent listed on Section A of the Parent Disclosure Letter have entered
into Parent Support Agreements, dated as of the date of this Agreement, in the form attached hereto as Exhibit A (the “Parent
Support Agreements”), pursuant to which such officers, directors and stockholders have, subject to the terms and conditions
set forth therein, agreed to vote all of their shares of Parent Common Stock in favor of the approval of this Agreement and thereby approve
the Contemplated Transactions, including, but not limited to the Parent Stockholder Proposals;
WHEREAS, concurrently with
the execution and delivery of this Agreement and as a condition and inducement of Parent’s willingness to enter into this Agreement,
the officers, directors and stockholders of the Company listed on Section A of the Company Disclosure Letter have entered
into Company Support Agreements, dated as of the date of this Agreement, in the form attached hereto as Exhibit B (the “Company
Support Agreements”), pursuant to which such officers, directors and stockholders have, subject to the terms and conditions
set forth therein, agreed to vote all of their shares of Company Common Stock in favor of the adoption of this Agreement and thereby
approve the Contemplated Transactions;
WHEREAS, concurrently with
the execution and delivery of this Agreement and as a condition and inducement to Parent’s willingness to enter into this Agreement,
certain stockholders of the Company listed on Section B of the Company Disclosure Letter are executing lock-up agreements
in the form attached hereto as Exhibit C (the “Lock-Up Agreement”);
WHEREAS, it is expected that
within two (2) Business Days after the Registration Statement is declared effective under the Securities Act, the stockholders of
the Company will execute an action by written consent by the holders of (i) at least a majority of the outstanding shares of Company
Common Stock and Company Preferred Stock, voting together as a single class, and (ii) at least a majority of the outstanding shares
of and Company Preferred Stock, voting as a single class, in form and substance reasonably acceptable to Parent, approving and adopting
this Agreement (the “Company Stockholder Approval”);
WHEREAS, the stockholders
of Parent as of the Dividend Record Date (which for clarity shall exclude holders of Parent Capital Stock issued as part of the Merger
Consideration) shall be entitled to receive from Parent a cash dividend in an expected aggregate amount of $70,000,000, subject to certain
adjustments as set forth herein (the “Pre-Closing Cash Dividend”); and
WHEREAS, concurrently with
the execution of this Agreement, certain investors (each a “Concurrent Investment Investor” and collectively the “Concurrent
Investment Investors”) have entered into a securities purchase agreement representing an aggregate commitment of not less than
$80,000,000 (which, for the avoidance of doubt, excludes any Company Notes issued on or prior to the date hereof and expected to be contributed
in connection with the Concurrent Investment) (the “Concurrent Investment Amount”) in the form attached hereto as
Exhibit D (collectively, the “Securities Purchase Agreement”), pursuant to which such Persons will have
agreed, subject to the terms and conditions set forth therein, to subscribe and purchase a number of shares of the Company Common Stock
immediately prior to the Closing (the “Concurrent Investment”).
AGREEMENT
NOW, THEREFORE, in consideration
of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound
hereby, Parent, Merger Subs and the Company hereby agree as follows:
Article I
DEFINITIONS & INTERPRETATIONS
Section 1.1 Certain
Definitions. For purposes of this Agreement:
(a) “2024
Equity Incentive Plan” shall mean an equity incentive plan of Parent in form and substance as designated by the Company, reserving
for issuance a number of shares of Parent Common Stock to be designated by the Company.
(b) “2024
ESPP” shall mean an “employee stock purchase plan” of Parent in form and substance as designated by Company, reserving
for issuance a number of shares of Parent Common Stock to be designated by the Company.
(c) “2024
Plans” shall mean both the 2024 Equity Incentive Plan and 2024 ESPP.
(d) “Acceptable
Confidentiality Agreement” means a confidentiality agreement containing terms not materially less restrictive in the aggregate
to the counterparty thereto than the terms of the Confidentiality Agreement, except such confidentiality agreement need not contain any
standstill, non-solicitation or no hire provisions. Notwithstanding the foregoing, a Person who has previously entered into a confidentiality
agreement with Parent relating to a potential Acquisition Proposal on terms that are not materially less restrictive than the Confidentiality
Agreement with respect to the scope of coverage and restrictions on disclosure and use shall not be required to enter into a new or revised
confidentiality agreement, and such existing confidentiality agreement shall be deemed to be an Acceptable Confidentiality Agreement.
(e) “Acquisition
Inquiry” means, with respect to a party, an inquiry, indication of interest or request for information (other than an inquiry,
indication of interest or request for information made or submitted by the Company, on the one hand, or Parent, on the other hand, to
the other party) that could reasonably be expected to lead to an Acquisition Proposal, other than the Concurrent Investment or the issuance
of any Company Notes.
(f) “Acquisition
Proposal” means, with respect to either party hereto, any proposal or offer (whether written or oral) from any Person (other
than the other party or any of its Representatives) contemplating or otherwise relating to an Acquisition Transaction (other than in
connection with the Concurrent Investment, Parent’s leases, a Parent Legacy Transaction or the exercise or repurchase of existing
equity interests).
(g) “Acquisition
Transaction” means any transaction or series of related transactions (other than the Concurrent Investment or the issuance
of any Company Notes) involving:
(i) any
merger, consolidation, amalgamation, share exchange, business combination, issuance of securities, acquisition of securities, reorganization,
recapitalization, tender offer, exchange offer or other similar transaction: (i) in which a party is a constituent entity, (ii) in
which a Person or “group” (as defined in the Exchange Act and the rules promulgated thereunder) of Persons directly
or indirectly acquires beneficial or record ownership of securities representing more than 20% of the outstanding securities of any class
of voting securities of a party or any of its Subsidiaries or (iii) in which a party or any of its Subsidiaries issues securities
representing more than 20% of the outstanding securities of any class of voting securities of such party or any of its Subsidiaries;
or
(ii) any
sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets that constitute or account
for 20% or more of the consolidated book value of the fair market value of the assets of a party and its Subsidiaries taken as a whole.
(h) “Affiliate”
of any Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
(i) “Business
Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or required
by applicable Law to be closed.
(j) “Certificate
of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Parent Convertible Preferred
Stock in the form attached hereto as Exhibit F.
(k) “Company
Capital Stock” means, collectively, the Company Common Stock and Company Preferred Stock.
(l) “Company
Equity Plan” means the Company’s 2024 Equity Incentive Plan, as amended from time to time.
(m) “Company
Fundamental Representations” means each of the representations and warranties of the Company set forth in Section 4.1,
Section 4.2, Section 4.2(a). Section 4.4 and Section 4.25.
(n) “Company
Notes” means the convertible notes issued pursuant to (i) that certain Convertible Note Purchase Agreement, dated as of
July 24, 2024, between the Company and the purchasers party thereto, and (ii) that certain Convertible Note Purchase Agreement,
dated as of September 30, 2024, between the Company and the purchasers party thereto, or any additional convertible promissory notes
that may be issued from time to time prior to the Closing.
(o) “Company
Options” means options to purchase shares of Company Common Stock granted by the Company under the Company Equity Plan.
(p) “Company
Owned IP” means all Intellectual Property owned by the Company or any of its Subsidiaries in whole or in part.
(q) “Company
Plan” means each Employee Plan that is sponsored, maintained, or contributed (or required to be contributed) to by the Company
or any of its Subsidiaries for the benefit of one or more current or former employees, officers, directors or other service providers
of the Company or any of its Subsidiaries and with respect to which the Company or any of its Subsidiaries has any liability, contingent
or otherwise, other than any plan, program, arrangement, agreement or policy mandated by applicable Laws.
(r) “Company
Preferred Stock” means the shares of the Company’s capital stock designated as Series Seed Preferred Stock par value
$0.0001 per share.
(s) “Company
Triggering Event” shall be deemed to have occurred if, at any time prior to the adoption of this Agreement and the approval
of the Contemplated Transactions by the Company Stockholder Approval: (a) the Company Board shall have publicly approved, endorsed
or recommended any Acquisition Proposal or (b) the Company shall have entered into any letter of intent or similar document or any
Contract relating to any Acquisition Proposal (other than an Acceptable Confidentiality Agreement) permitted pursuant to Section 6.4.
(t) “Company
Warrant” means warrants to purchase shares of Company Capital Stock issued by the Company.
(u) “Confidentiality
Agreement” means that certain non-disclosure agreement, dated as of July 24, 2024, between the Company and Parent.
(v) “Contemplated
Transactions” means the Merger, the Constructive Issuance and the other transactions contemplated by this Agreement (other
than the Parent Legacy Transaction and Parent Charter Amendment), the Concurrent Investment and the Nasdaq Reverse Stock Split (to the
extent applicable and deemed necessary by Parent and the Company).
(w) “control”
(including the terms “controlled,” “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
(x) “Employee
Plan” means each “employee benefit plan” (within the meaning of section 3(3) of ERISA, whether or not
subject to ERISA), Multiemployer Plans, and all stock purchase, stock option, phantom stock or other equity-based plan, severance, employment,
change-in-control, fringe benefit, bonus, incentive, deferred compensation, compensation, supplemental retirement, health, life, or disability
insurance, dependent care, vacation and all other employee benefit and compensation plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the
Contemplated Transactions or otherwise), whether formal or informal, written or oral.
(y) “ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
(z) “HSR
Act” means the U.S. Har Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(aa) “Intellectual
Property” means all intellectual property rights of any kind, including all of the following: (i) trademarks or service
marks (whether registered or unregistered), trade names, domain names, social media user names, social media addresses, logos, slogans,
and trade dress, including applications to register any of the foregoing, together with the goodwill symbolized by any of the foregoing;
(ii) patents, utility models and any similar or equivalent statutory rights with respect to the protection of inventions, and all
applications for any of the foregoing, together with all re-issuances, continuations, continuations-in-part, divisionals, revisions,
extensions and reexaminations thereof; (iii) copyrights (registered and unregistered) and applications for registration; (iv) trade
secrets and customer lists, in each case to the extent any of the foregoing derives economic value (actual or potential) from not being
generally known to other Persons who can obtain economic value from its disclosure or use, and other confidential information (“Trade
Secrets”); and (v) any other proprietary or intellectual property rights of any kind or nature.
(bb) “knowledge”
of any party means (i) the actual knowledge of any executive officer of such party or other officer having primary responsibility
for the relevant matter or any employee consultant or interim officer serving similar roles (ii) any fact or matter which any such
Person would be expected to discover or otherwise become aware of in the course of conducting due inquiry, consistent with such Person’s
title and responsibilities, concerning the existence of the relevant matter.
(cc) “Multiemployer
Plan” shall have the meaning set forth in Section 3(37) of ERISA.
(dd) “Nasdaq”
means the Nasdaq Stock Market, LLC.
(ee) “Nasdaq
Fees” means all Nasdaq fees associated with any action contemplated by Section 7.8.
(ff) “Nasdaq
Reverse Stock Split” means a reverse stock split of all outstanding shares of Parent Common Stock at a reverse stock split
ratio as mutually agreed to by Parent and the Company that is effectuated by Parent for the purpose of maintaining compliance with Nasdaq
listing standards.
(gg) “Net
Cash” means (i) Parent’s unrestricted cash, cash equivalents and short-term investments, plus (ii) all
prepaid expenses, deposits, restricted cash and short-term receivables set forth on Schedule 1.1(a), in each case, to the extent capable
of use by the combined company after the Closing, minus (iii) the sum of Parent’s short-term and long-term liabilities,
including all accounts payable, indebtedness, lease termination costs, all actual and reasonably projected costs and expenses relating
to the winding down of the Parent Legacy Business and any related prepayment penalties and premiums, and any unpaid Transaction Expenses
(including any costs, fees or other liabilities, including Taxes, related to the premiums, commissions and other fees paid or payable
in connection with obtaining Parent’s D&O tail policy as set forth in Section 7.5(d)), minus (iv) any and
all change in control payments, severance payments and any payroll or similar Taxes owed in connection with the foregoing or any of Parent’s
equity plans, including, for the avoidance of doubt, any employer-side portion of any payroll or similar Taxes owed in connection with
the vesting and settlement of the Parent Restricted Stock Unit Awards pursuant to Section 6.7 hereof), in each case to the
extent payable to Parent’s employees solely as a result of the consummation of the Contemplated Transactions, minus (v) the
Pre-Closing Cash Dividend Amount. Set forth on Section 1.1(a) of the Parent Disclosure Letter is an illustrative example
of the calculation of Net Cash.
(hh) “Ordinary
Course” means, in the case of each of the Company and Parent, such actions taken in the ordinary course of its business and
consistent with its past practice or, with respect to the Company, the customary practices of a recently formed company at a similar
stage of development.
(ii) “Parent
Capital Stock” means the Parent Common Stock and the Parent Preferred Stock.
(jj) “Parent
Closing Price” means the volume weighted average closing trading price of a share of Parent Common Stock on Nasdaq for the
five (5) consecutive trading days ending three (3) trading days immediately prior to the Anticipated Meeting Date as reported
by Bloomberg L.P.
(kk) “Parent
Convertible Preferred Stock” means Parent’s non-voting convertible preferred stock, par value $0.001 per share, with
the rights, preferences, powers and privileges specified in the Certificate of Designation.
(ll) “Parent
Equity Plans” means each of Parent’s 2018 Equity Incentive Plan and 2021 Stock Option and Incentive Plan, in each case,
as amended from time to time.
(mm) “Parent
ESPP” means Parent’s 2021 Employee Stock Purchase Plan.
(nn) “Parent
Fundamental Representations” means each of the representations and warranties of Parent and Merger Subs set forth in Section 5.1,
Section 5.2, Section 5.3, Section 5.4 and Section 5.25.
(oo) “Parent
ITM Option” means each Parent Option that is not a Parent OTM Option.
(pp) “Parent
Legacy Assets” means all assets, technology and Intellectual Property of Parent as they existed at any time prior to the date
of this Agreement, including for purposes of clarity, and the tangible and intangible assets, in each case to the extent primarily used
in or primarily related to AV-101 (the “Parent Legacy Business”).
(qq) “Parent
Options” means options to purchase shares of Parent Common Stock issued pursuant to a Parent Equity Plan or otherwise including,
for the avoidance of doubt, the Parent ESPP.
(rr) “Parent
OTM Option” means Parent Options with an exercise price greater than the Parent Closing Price, in each case, as adjusted to
take into account the Pre-Closing Cash Dividend in accordance with the Parent Equity Plans, as applicable.
(ss) “Parent
Owned IP” means all Intellectual Property owned by Parent in whole or in part.
(tt) “Parent
Plan” means each Employee Plan that is sponsored, maintained, or contributed (or required to be contributed) to by Parent or
any of its Subsidiaries for the benefit of current or former employees, officers, directors or other service providers of Parent or any
of its Subsidiaries or with respect to which Parent or any of its Subsidiaries has any liability, contingent or otherwise, other than
any plan, program, arrangement, agreement or policy mandated by applicable Laws.
(uu) “Parent
Preferred Stock” means the shares of Parent’s capital stock designated as preferred stock, par value $0.0001 per share
of Parent, including the Parent Convertible Preferred Stock.
(vv) “Parent
Restricted Stock Unit Awards” means each award of restricted stock unit awards with respect to shares of Parent Common Stock
issued pursuant to a Parent Equity Plan or otherwise.
(ww) “Parent
Triggering Event” shall be deemed to have occurred if: (a) Parent shall have failed to include in the Proxy Statement
the Parent Board Recommendation (as defined below), (b) the Parent Board or any committee thereof shall have made a Parent Board
Adverse Recommendation Change or approved, endorsed or recommended any Acquisition Proposal, (c) Parent shall have entered into
any letter of intent or similar document or any Contract relating to any Acquisition Proposal (other than an Acceptable Confidentiality
Agreement permitted pursuant to Section 6.4), (d) a tender offer or exchange offer for outstanding shares of Parent
Common Stock is commenced, and the Parent Board (or any committee thereof) recommends that the stockholders of Parent tender their shares
in such tender or exchange offer or, within ten (10) Business Days after the commencement of such tender offer or exchange offer,
the Parent Board fails to recommend against acceptance of such offer, or (e) Parent shall have failed to issue a press release confirming
the Parent Board Recommendation within ten (10) Business Days following the Company’s written request to Parent to issue such
press release in response to any other publicly announced Acquisition Proposal with respect to Parent.
(xx) “Person”
means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including
any Governmental Entity.
(yy) “Representative”
means a party’s directors, officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors,
agents or representatives.
(zz) “SEC”
means the Securities and Exchange Commission.
(aaa) “Subsequent
Transaction” means any Acquisition Transaction (with all references to 20% in the definition of Acquisition Transaction being
treated as references to 50% for these purposes).
(bbb) “Subsidiary”
means, with respect to any Person, any other Person of which stock or other equity interests having ordinary voting power to elect more
than 50% of the board of directors or other governing body are owned, directly or indirectly, by such first Person.
(ccc) “Superior
Offer” means an unsolicited bona fide written Acquisition Proposal (with all references to 20% in the definition of Acquisition
Transaction being treated as references to 50% for these purposes) that: (a) was not obtained or made as a direct or indirect result
of a breach of (or in violation of) the Agreement and (b) is on terms and conditions that the Parent Board or the Company Board,
as applicable, determines in good faith, based on such matters that it deems relevant (including the likelihood of consummation thereof
and the financing terms thereof), as well as any written offer by the other party to the Agreement to amend the terms of the Agreement,
and following consultation with its outside legal counsel and financial advisors, if any, are more favorable, from a financial point
of view, to the Parent’s stockholders or the Company’s stockholders, as applicable, than the terms of the Contemplated Transactions.
(ddd) “Tax
Return” means any return, declaration, report, certificate, bill, election, claim for refund, information return, statement
or other written information and any other document filed or supplied or required to be filed or supplied to any Governmental Entity
with respect to Taxes, including any schedule, attachment or supplement thereto, and including any amendment thereof.
(eee) “Taxes”
means all U.S. federal, state and local and non-U.S. net income, gross income, gross receipts, sales, use, stock, ad valorem, transfer,
transaction, franchise, profits, gains, registration, license, wages, lease, service, service use, employee and other withholding, imputed
underpayment, social security, unemployment, welfare, disability, payroll, employment, excise, severance, stamp, occupation, workers’
compensation, premium, real property, personal property, windfall profits, net worth, capital, value-added, alternative or add-on minimum,
customs duties, estimated and other taxes, fees, assessments, charges or levies in the nature of a tax (whether imposed, assessed, determined,
administered, enforced or collected directly or through withholding and including any amounts resulting from the failure to file any
Tax Return), whether disputed or not, together with any interest and any penalties, additions to tax or additional amounts with respect
thereto (or attributable to the nonpayment thereof).
(fff) “Transaction
Expenses” means the aggregate amount (without duplication) of all costs, fees, Taxes and expenses incurred by Parent and Merger
Subs, or for which Parent or Merger Subs are or may become liable in connection with the Contemplated Transactions and the negotiation,
preparation and execution of this Agreement or any other agreement, document, instrument, filing, certificate, schedule, exhibit, letter
or other document prepared or executed in connection with the Contemplated Transactions, including (i) the maximum amount of fees
and expenses payable to financial advisors, investment bankers, legal counsel, accountants, brokers, consultants, Tax advisors, transfer
agents, proxy solicitor and other advisors of Parent, including the employer portion of any payroll or similar Taxes incurred or to be
incurred by Parent or Merger Subs with respect to the payment of any item listed in this definition of Transaction Expenses; (ii) 50%
of the fees paid to the SEC in connection with filing the Registration Statement, the Proxy Statement, and any amendments and supplements
thereto, with the SEC; (iii) 50% of the fees and expenses incurred in connection with the printing, mailing and distribution of
the Registration Statement and any amendments and supplements thereto; (iv) 50% of the filing fees of Parent in connection with
the HSR Act; (v) 50% of the fees and expenses incurred in connection with the Exchange Agent; and (vi) any bonus, retention
payments, severance, change-in-control payments or similar payment obligations (including payments with “single-trigger”
provisions triggered at and as of the consummation of the transactions contemplated hereby) that become due or payable to any director,
officer, employee or consultant in connection with the consummation of the Contemplated Transactions, together with any payroll Taxes
associated therewith; provided, however, that Transaction Expenses shall specifically exclude (A) any fees and expenses
incurred by the Company in connection with the Concurrent Investment, (B) the value or anticipated value of any settlement or judgment
that is entered into or awarded post-Closing relating to stockholder litigation or threatened litigation arising out of or in connection
with the Contemplated Transactions, (C) 50% of any Nasdaq Fees, and (D) 50% of the filing fees of Parent in connection with
the HSR Act.
Section 1.2 Interpretation.
When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article,
Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement
or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any
capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set
forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without
limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement.
The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the
word “shall.” References to days mean calendar days unless otherwise specified.
Section 1.3 Currency.
All references to “dollars” or “$” or “US$” in this Agreement refer to United States dollars, which
is the currency used for all purposes in this Agreement.
Article II
THE MERGER
Section 2.1 Formation
of Merger Subs. Parent has caused each of First Merger Sub and Second Merger Sub to be organized under the laws of the State of Delaware.
Section 2.2 The
Mergers. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, at the First Effective
Time, First Merger Sub shall be merged with and into the Company. Following the First Merger, the separate corporate existence of First
Merger Sub shall cease, and the Company shall continue as the surviving company of the Merger (the “First Step Surviving Company”)
and a wholly-owned subsidiary of Parent. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with
the DGCL and the DLLCA, at the Second Effective Time, the First Step Surviving Corporation will merge with and into Second Merger Sub,
and the separate existence of the First Step Surviving Corporation shall cease. As a result of the Second Merger, Second Merger Sub will
continue as the surviving entity in the Second Merger (the “Surviving Entity”).
Section 2.3 Closing.
Unless this Agreement is earlier terminated pursuant to the provisions of Article IX, and subject to the satisfaction or
waiver of the conditions set forth in Article VIII, the consummation of the Merger (the “Closing”) shall
take place remotely by the electronic exchange of documents, as promptly as practicable (but in no event later than the second Business
Day following the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in Article VIII,
other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of each
of such conditions), unless another time, date and place is mutually agreed upon by Parent and the Company in writing. The date on which
the Closing actually takes place is referred to as the “Closing Date.”
Section 2.4 Certificate
of Designation; First Effective Time; Second Effective Time. Prior to the Closing, Parent shall file the Certificate of Designation
with the office of the Secretary of State of the State of Delaware. Upon the terms and subject to the provisions of this Agreement, at
the Closing, the parties (i) shall cause the First Merger to be consummated by executing and filing a certificate of merger with
respect to the First Merger in the form attached hereto as Exhibit E-1 hereto (the “First Certificate of Merger”
) and (ii) shall cause the Second Merger to be consummated by executing and filing a certificate of merger with respect to the Second
Merger in the form attached hereto as Exhibit E-2 hereto (the “Second Certificate of Merger” and together with
the First Certificate of Merger, the “Certificate of Merger” ), in each case, with the Secretary of State of the State
of Delaware (the “Delaware Secretary of State” ), in such form as is required by, and executed in accordance with
the relevant provisions of the DGCL and the DLLCA, as the case may be. The First Merger shall become effective at such time as the First
Certificate of Merger is duly filed with the Delaware Secretary of State or at such other time as Parent and the Company shall agree
in writing and shall specify in the Certificate of Merger (the time the First Merger becomes effective being the “First Effective
Time” ). The Second Merger shall become effective at the time of the filing of such Second Certificate of Merger with the Secretary
of State of the State of Delaware or at such later time as may be specified in such Second Certificate of Merger with the consent of
Parent and the Company (the time as of which the Second Merger becomes effective being the “Second Effective Time”
).
Section 2.5 Effects
of the Merger. At and after the First Effective Time, the First Merger shall have the effects set forth in this Agreement and in
the relevant provisions of the DGCL. At and after the Second Effective Time, the Second Merger shall have the effects set forth in this
Agreement and in the relevant provisions of the DGCL and the DLLCA. Without limiting the generality of the foregoing, and subject thereto,
(i) at the First Effective Time, all the property, rights, privileges, powers and franchises of the Company and First Merger Sub
shall vest in the First Step Surviving Company, and all debts, liabilities and duties of the Company and First Merger Sub shall become
the debts, liabilities and duties of the First Step Surviving Company, and (ii) at the Second Effective Time, all the property,
rights, privileges, powers and franchises of the First Step Surviving Company shall vest in the Surviving Entity, and all debts, liabilities
and duties of the First Step Surviving Company shall become the debts, liabilities and duties of the Surviving Entity.
Section 2.6 Parent
Governance.
(a) Parent
Certificate of Incorporation. As of the Second Effective Time, the certificate of incorporation of Parent shall be identical to the
certificate of incorporation of Parent immediately prior to the First Effective Time, until thereafter amended in accordance with its
terms and as provided by applicable Law; provided, however, that, at the Second Effective Time or at such other
time as Parent and the Company shall agree in writing, Parent shall file an amendment to the certificate of incorporation to (i) effect
the Nasdaq Reverse Stock Split (the “Reverse Stock Split Proposal”), (ii) change the name of Parent to “Jade
Biosciences, Inc.” (iii) increase the number of shares of Parent Capital Stock that Parent is authorized to issue to
a number mutually agreed between Parent and the Company, such amount to be sufficient to allow for consummation of the Contemplated Transactions,
(iv) redomicile Parent from Delaware to such jurisdiction as may be determined by the Company (being either the Cayman Islands or
Bermuda) and (v) make such other changes as mutually agreeable to Parent and the Company (such amendment, the “Parent Charter
Amendment”).
(b) Parent
Bylaws. As of the Second Effective Time, the bylaws of Parent shall be identical to the bylaws of Parent immediately prior to the
First Effective Time, until thereafter amended in accordance with their terms and as provided by applicable Law; provided, however, that,
at the Second Effective Time or at such other time as Parent and the Company shall agree in writing, Parent shall file an amendment to
the bylaws as necessary to redomicile Parent from Delaware to such jurisdiction as may be determined by the Company (being either the
Cayman Islands or Bermuda).
(c) Board
of Directors. The parties shall take all action necessary (including, to the extent necessary, procuring the resignation of any directors
on the Parent Board immediately prior to the First Effective Time) so that, as of the First Effective Time, the Board of Directors shall
upon the First Effective Time initially consist of the Persons set forth in Section 2.6(c) of the Company Disclosure
Letter.
(d) Parent
Officers. The parties shall take all action necessary (including, to the extent necessary, procuring the resignation or removal of
any officers of Parent immediately prior to the Second Effective Time) so that, as of the First Effective Time and the First Effective
Time, the Parent officers shall initially consist of the Persons set forth in Section 2.6(d) of the Company Disclosure
Letter.
Section 2.7 First
Step Surviving Company and Surviving Entity Governance.
(a) At
the First Effective Time:
(i) The
Certificate of Incorporation of the First Step Surviving Company shall, by virtue of the Merger and without any further action, be amended
and restated to read in its entirety as set forth on Exhibit A to the Certificate of Merger, and, as so amended and restated, shall
be the Certificate of Incorporation of the First Step Surviving Company until thereafter amended in accordance with applicable Law;
(ii) The
bylaws of the First Step Surviving Company shall be amended and restated to read in their entirety as the bylaws of First Merger Sub
as in effect immediately prior to the First Effective Time (except that references to the name of First Merger Sub shall be replaced
with references to the name of the First Step Surviving Company), and, as so amended and restated, shall be the bylaws of the First Step
Surviving Company until thereafter amended in accordance with applicable Law;
(iii) The
directors of the First Step Surviving Company shall be such persons as are designated by the Company prior to the First Effective Time,
each to hold office in accordance with the certificate of incorporation and bylaws of the First Step Surviving Company until the earlier
of their resignation or removal or until their respective successors are duly elected and qualified; and
(iv) The
officers of the First Step Surviving Company shall be such persons as are designated by the Company prior to the First Effective Time,
each to hold office in accordance with the certificate of incorporation and bylaws of the First Step Surviving Company until the earlier
of their resignation or removal or until their respective successors are duly elected and qualified.
(b) At
the Second Effective Time:
(i) The
certificate of formation of the Surviving Entity shall be the certificate of formation of Second Merger Sub as in effect immediately
prior to the Second Effective Time, until thereafter amended as provided by the DLLCA and such certificate of formation; provided, however,
that at the Second Effective Time (as part of the Second Certificate of Merger), the certificate of formation shall be amended to (A) change
the name of the Surviving Entity to “Jade Biosciences Operating Company, LLC,” and (B) make such other changes as are
mutually agreed to by Parent and the Company; and
(ii) The
limited liability company agreement of the Surviving Entity shall be amended and restated in its entirety to read identically to the
limited liability company agreement of Second Merger Sub as in effect immediately prior to the Second Effective Time, until thereafter
amended as provided by the DLLCA and such limited liability company agreement; provided, however, that following the Second Effective
Time (as soon thereafter as practicable), the limited liability company agreement shall be amended to change the name of the Surviving
Entity to “Jade Biosciences Operating Company, LLC”.
Article III
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT COMPANIES; EXCHANGE OF CERTIFICATES
Section 3.1 Conversion
of Capital Stock.
(a) At
the First Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Subs, the Company or the holders
of any shares of capital stock of the Parent, Merger Subs or the Company:
(i) Subject
to Section 3.3(g), (i) each share of Company Common Stock issued and outstanding immediately prior to the First Effective
Time (other than any Excluded Shares, Dissenting Shares, but including any Company Restricted Shares which shall be subject to Section 3.1(b) below)
shall be converted into and become exchangeable for the right to receive, a number of shares of Parent Common Stock equal to the Exchange
Ratio and (ii) each share of Company Preferred Stock outstanding immediately prior to the First Effective Time (other than any Excluded
Shares, Dissenting Shares) shall be converted solely into the right to receive a number of shares of Parent Convertible Preferred Stock
equal to (x) the Exchange Ratio divided by (y) 1,000 (collectively, the “Merger Consideration” ). As of
the First Effective Time, all such shares of Company Capital Stock shall no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and shall thereafter only represent the right to receive the Merger Consideration. For purposes of this Agreement,
the “Exchange Ratio” shall mean the ratio (rounded to four decimal places) equal to (a) the Company Value Per
Share divided by (b) the Parent Value Per Share, in which:
(A) Company
Equity Value” means $175,000,000.
(B) “Company
Outstanding Shares” means the total number of shares of Company Capital Stock outstanding immediately prior to the First Effective
Time (including any shares of Company Common Stock that are issued in, or issuable upon the exercise or conversion of securities issued
in, the Concurrent Investment), expressed on a fully diluted and as-converted-to-Company Common Stock basis assuming, without limitation
or duplication the exercise of all Company Options, Company Warrants or other rights or commitments to receive shares of Company Common
Stock or Company Preferred Stock (or securities convertible or exercisable into shares of Company Common Stock or Company Preferred Stock,
including the Company Notes), whether conditional or unconditional, that are outstanding as of immediately prior to the First Effective
Time; provided, that for the avoidance of doubt, Company Outstanding Shares shall (1) exclude, to avoid the double-counting of,
any shares of Company Capital Stock underlying Company Notes that are to be contributed as consideration in the Concurrent Investment,
and (2) exclude any shares of Company Capital Stock underlying any Company Options, Company Warrants and any other equity awards
issued under the Company Equity Plan (including any shares of Company Common Stock issuable upon the exercise of such Company Options,
Company Warrants or other equity awards) issued to directors, employees, consultants or other service providers following the date hereof
but prior to the Closing (collectively, the “Service Provider Grants”).
(C) “Company
Valuation” means the Company Equity Value, plus an amount equal to the total proceeds contemplated by the Concurrent Investment
received (including in the total proceeds any Company Notes contributed in the Concurrent Investment, and any interest, premium and other
amounts thereon) by the Company prior to the First Effective Time.
(D) “Company
Value Per Share” equals the Company Valuation divided by the number of Company Outstanding Shares (rounded to four decimal
places).
(E) “Parent
Outstanding Shares” means the total number of shares of Parent Capital Stock outstanding immediately prior to the First Effective
Time (after giving effect, to the extent completed prior to the First Effective Time, to the Nasdaq Reverse Stock Split), assuming (i) the
exercise, conversion or exchange of all options, warrants, conversion rights, exchange rights or any other rights to receive shares of
Parent Capital Stock which exist immediately prior to the First Effective Time (excluding any Parent Convertible Preferred Stock issuable
following the Closing in accordance herewith), (ii) the settlement in shares of Parent Common Stock of Parent Options outstanding
as of immediately prior to the First Effective Time on a net settlement basis as provided in Section 6.6 and (iii) the
settlement in shares of Parent Common Stock of Parent Restricted Stock Units outstanding as of immediately prior to the First Effective
Time on a net settlement basis as provided in Section 6.7. Notwithstanding the foregoing, Parent OTM Options, shall not be
included in the total number of shares of Parent Capital Stock for purposes of determining the Parent Outstanding Shares to the extent
cancelled at or prior to Closing under Section 6.6.
(F) “Parent
Valuation” means (i) $8,000,000, minus (ii) the amount by which Net Cash is less than $0 (if any).
(G) “Parent
Value Per Share” equals the Parent Valuation divided by the number of Parent Outstanding Shares (rounded to four decimal places).
For the avoidance of doubt and for illustrative purposes only, sample “Exchange Ratio” and “Parent Valuation”
calculations are set forth on Section 3.1(a)(i)(F) of the Parent Disclosure Letter.
(ii) At
the First Effective Time, each share of Parent Capital Stock issued and outstanding immediately prior to the First Effective Time shall
remain outstanding.
(iii) Each
share of Company Capital Stock held in the treasury of the Company or owned, directly or indirectly, by Parent or Merger Subs immediately
prior to the First Effective Time (collectively, “Excluded Shares”) shall automatically be cancelled and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(iv) Each
share of common stock, par value $0.001 per share, of First Merger Sub issued and outstanding immediately prior to the First Effective
Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.001 per
share, of the First Step Surviving Company. Each book entry share of First Merger Sub evidencing ownership of any such shares shall,
as of the First Effective Time, evidence ownership of such shares of common stock of the First Step Surviving Company.
(b) If
any shares of Company Capital Stock outstanding immediately prior to the First Effective Time are unvested or are subject to a repurchase
option or a risk of forfeiture under any applicable restricted stock purchase agreement or other similar agreement with the Company (such
shares, collectively, the “Company Restricted Shares”, shall automatically and without any action on the part of the
holder thereof, become converted into a number of Parent Common Stock (rounded down to the nearest whole share) equal to the product
of (x) the number of Company Restricted Shares and (y) the Exchange Ratio in accordance with Section 3.1(a)(i);
provided that such converted shares of Parent Common Stock issued in exchange for such shares of Company Restricted Shares will, to the
same extent be unvested and subject to the same repurchase option or risk of forfeiture, and such shares of Parent Common Stock shall
accordingly be marked with appropriate legends. The Company shall take all actions that may be necessary to ensure that, from and after
the First Effective Time, Parent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement. For clarity, the provisions of this Section 3.1(b) shall not result in a duplication
of the issuance of the Merger Consideration in Section 3.1(a)(i), and each share of Company Restricted Shares shall only
be entitled to receive a number of shares of Parent Common Stock equal to the Exchange Ratio. For the avoidance of doubt, stockholders
and equityholders of the Company, in their capacity as such, shall not receive any Cash Dividend pursuant to Section 7.14.
(c) If,
between the date of this Agreement and the First Effective Time, the outstanding Company Capital Stock or Parent Capital Stock shall
have been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split (including the Nasdaq Reverse Stock Split to the extent such split has not previously been
taken into account in calculating the Exchange Ratio), combination or exchange of shares or other like change, the Exchange Ratio shall,
to the extent necessary, be equitably adjusted to reflect such change to the extent necessary to provide the holders of Company Capital
Stock, Company Options, Company Warrants and Parent Capital Stock with the same economic effect as contemplated by this Agreement prior
to such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares or other like change;
provided, however, that nothing herein will be construed to permit the Company or Parent to take any action with respect to Company Capital
Stock or Parent Capital Stock, respectively, that is prohibited or not expressly permitted by the terms of this Agreement.
(d) At
the Second Effective Time, by virtue of the Second Merger and without any action on the part of Parent, the First Step Surviving Corporation,
Second Merger Sub or their respective stockholders, each share of the First Step Surviving Corporation issued and outstanding immediately
prior to the Second Effective Time shall be canceled and extinguished without any conversion thereof and no payment or distribution shall
be made with respect thereto.
Section 3.2 Company
Options; Company Warrants.
(a) At
the First Effective Time, Parent shall assume each Company Equity Plan and each Company Option outstanding immediately prior to the First
Effective Time (including any Service Provider Grants) shall automatically without any further action on the part of Parent, Merger
Subs, Company or any holder of a Company Option, be converted, at the First Effective Time, into an option (an “Assumed Option”)
to acquire, on the same terms and conditions (including the same vesting and exercisability terms and conditions) as were applicable
under the Company Equity Plan and option agreement applicable to such Company Option immediately prior to the First Effective Time, except
for administrative or ministerial changes as determined by the Company Board (or, following the First Effective Time, the Parent Board
or compensation committee). The number of shares of Parent Common Stock subject to each such Assumed Option shall be determined by multiplying
the number of shares of Company Common Stock subject to such Company Option immediately prior to the First Effective Time by the Exchange
Ratio, rounding down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise
price of such Company Option immediately prior to the First Effective Time by the Exchange Ratio, rounding up to the nearest whole cent;
provided, that in the case of any Company Option to which Section 421 of the Code applies as of immediately prior to the First Effective
Time (taking into account the effect of any accelerated vesting thereof, if applicable) by reason of its qualification under Section 422
of the Code, the exercise price, the number of shares of Parent Common Stock subject to such option and the terms and conditions of exercise
of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code; provided further,
that for any other Assumed Option, the exercise price, the number of shares of Parent Common Stock subject to such option and the terms
and conditions of exercise of such option shall, in all events, be determined in a manner consistent with the requirements of Section 409A
of the Code in order to avoid the imposition of any additional taxes thereunder. As of the First Effective Time, Parent will assume each
Company Equity Plan, with the number of shares available for issuance thereunder being determined by multiplying the number of shares
of Company Common Stock available for issuance thereunder prior to the First Effective Time by the Exchange Ratio. For the avoidance
of doubt, stockholders and equityholders of the Company, in their capacities as such, shall not receive any Pre-Closing Cash Dividend
pursuant to Section 7.14.
(b) At
the First Effective Time, each Company Warrant (including any pre-funded Company Warrant issued pursuant to the Concurrent Investment),
whether vested or unvested, that is outstanding immediately prior to the First Effective Time shall, at the First Effective Time, cease
to represent a right to acquire shares of Company Capital Stock and shall be converted, at the First Effective Time, into a warrant to
purchase shares of Parent Common Stock (an “Assumed Warrant”), on the same terms and conditions (including any vesting provisions
and any provisions providing for accelerated vesting upon certain events) as were applicable under such Assumed Warrant as of immediately
prior to the First Effective Time. The number of shares of Parent Common Stock subject to each such Assumed Warrant shall be equal to
(i) the number of shares of the Company Common Stock subject to each Assumed Warrant immediately prior to the First Effective Time
multiplied by (ii) the Exchange Ratio, rounded down, if necessary, to the nearest whole share of Parent Common Stock, and such Assumed
Warrant shall have an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share
of the Company Common Stock otherwise purchasable pursuant to such Assumed Warrant immediately prior to the First Effective Time divided
by (B) the Exchange Ratio.
Section 3.3 Exchange
and Payment.
(a) Parent
shall issue and deposit (or cause to be deposited) with a bank or trust company designated by Parent (the “Exchange Agent”),
in trust for the benefit of holders of shares of Company Capital Stock immediately prior to the First Effective Time (other than holders
to the extent they hold Excluded Shares or Dissenting Shares), book-entry shares (or certificates if requested) representing the shares
of Parent Capital Stock issuable pursuant to Section 3.1(a)(i). In addition, Parent shall make available by depositing with
the Exchange Agent, as necessary from time to time after the First Effective Time any dividends or other distributions payable pursuant
to Section 3.3(e) (which for clarity shall not include the Pre-Closing Cash Dividend). All certificates representing
shares of Parent Capital Stock, and any dividends, distributions and cash deposited with the Exchange Agent are hereinafter referred
to as the “Exchange Fund.”
(b) As
soon as reasonably practicable after the First Effective Time and in any event not later than the tenth (10th) Business Day
prior to the anticipated Closing Date, the parties shall cause the Exchange Agent to mail to each holder of record of a certificate that
immediately prior to the First Effective Time represented outstanding shares of Company Capital Stock (collectively, the “Certificates”)
and to each holder of record of uncertificated shares of Company Capital Stock represented by book entry (“Book-Entry Shares”)
that were converted into the right to receive the Merger Consideration (together with any dividends or other distributions payable pursuant
to Section 3.3(e), but not the Pre-Closing Cash Dividend), (i) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to any Certificates held by such Person shall pass, only upon proper delivery
of such Certificates, if any, and identification of the Book-Entry Shares, if any, to the Exchange Agent, and which letter shall be in
customary form and contain such other provisions as Parent or the Exchange Agent may reasonably specify) and (ii) instructions for
use in effecting the surrender of any such Certificates and identifying such Book-Entry Shares in exchange for the Merger Consideration
(together with any dividends or other distributions payable pursuant to Section 3.3(e), but not the Pre-Closing Cash Dividend).
Upon surrender of a Certificate and identification of the Book-Entry Shares, as applicable, to the Exchange Agent, together with such
letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as the
Exchange Agent may reasonably require, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange for
the shares of Company Capital Stock formerly represented by such Certificate or Book-Entry Share (other than Excluded Shares or Dissenting
Shares) (A) that number of whole shares of Parent Capital Stock (after taking into account all shares of Company Capital Stock then
held by such holder under all Certificates so surrendered and Book-Entry Shares so identified) to which such holder of Company Capital
Stock shall have become entitled pursuant to Section 3.1(a)(i) (which shall be in uncertificated book-entry form unless
a physical certificate is requested), and (B) any dividends or other distributions payable pursuant to Section 3.3(e) (but
not the Pre-Closing Cash Dividend), and any Certificate so surrendered, together with any Book-Entry Shares, shall forthwith be cancelled.
No interest will be paid or accrued on any unpaid dividends and distributions, if any, payable to holders of Certificates or Book-Entry
Shares. Until surrendered as contemplated by this Section 3.3, each Certificate or Book-Entry Share shall be deemed after
the First Effective Time to represent only the right to receive the Merger Consideration payable in respect thereof (together with any
dividends or other distributions payable pursuant to Section 3.3(e), but not the Pre-Closing Cash Dividend).
(c) If
payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Book-Entry
Share is registered, it shall be a condition of payment that such Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer or such Book-Entry Share shall be properly transferred and that the Person requesting such payment shall
have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered
holder of such Certificate or Book-Entry Share or shall have established to the satisfaction of Parent that such Tax is not applicable.
(d) Holders
of Company Capital Stock, in their capacities as such, shall not be entitled to any portion of the Pre-Closing Cash Dividend, and
the Certificates and Book-Entry Shares shall not represent any right to any portion of the Pre-Closing Cash Dividend.
(e) (i) No
dividends or other distributions with respect to Parent Capital Stock with a record date after the First Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of Parent Capital Stock that the holder thereof has the right
to receive upon the surrender thereof until the holder thereof shall surrender such Certificate in accordance with this Article III.
Following the surrender of a Certificate in accordance with this Article III, there shall be paid to the record holder thereof,
without interest, (A) promptly after such surrender, the amount of any dividends or other distributions with a record date after
the First Effective Time theretofore paid with respect to such whole shares of Parent Capital Stock, and (B) at the appropriate
payment date, the amount of dividends or other distributions with a record date after the First Effective Time but prior to such surrender
and a payment date subsequent to such surrender payable with respect to such whole shares of Parent Capital Stock.
(ii) Holders
of Book-Entry Shares who are entitled to receive shares of Parent Capital Stock under this Article III shall be paid (A) at
the time of payment of such Parent Capital Stock by the Exchange Agent under Section 3.3(b), the amount of dividends or other
distributions (other than the Pre-Closing Cash Dividend) with a record date after the First Effective Time theretofore paid with respect
to such whole shares of Parent Capital Stock, and (B) at the appropriate payment date, the amount of dividends or other distributions
with a record date after the First Effective Time but prior to the time of such payment by the Exchange Agent under Section 3.3(b) and
a payment date subsequent to the time of such payment by the Exchange Agent under Section 3.3(b) payable with respect
to such whole shares of Parent Capital Stock.
(f) The
Merger Consideration (together with any dividends or other distributions payable pursuant to Section 3.3(e), but not the
Pre-Closing Cash Dividend) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the shares of
Company Capital Stock formerly represented by such Certificates or Book-Entry Shares. At the First Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration of transfers of the shares of Company Capital Stock that
were outstanding immediately prior to the First Effective Time. If, after the First Effective Time, Certificates are presented to the
Surviving Entity or the Exchange Agent for transfer or transfer is sought for Book-Entry Shares, such Certificates or Book-Entry Shares
shall be cancelled and exchanged as provided in this Article III.
(g) No
fractional shares of Parent Capital Stock shall be issued in connection with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Notwithstanding any other provision of this Agreement, each holder of shares of Company Capital Stock converted
pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Capital Stock (after taking
into account all Certificates delivered by such holder and the aggregate number of shares of Parent Capital Stock represented thereby)
shall receive, in lieu thereof, cash (without interest and subject to applicable Tax withholding) in an amount equal to such fractional
part of a share of Parent Common Stock multiplied by the last reported sale price of Parent Common Stock at 4:00 p.m. (New York
City time), end of regular trading hours on Nasdaq on the last trading day prior to the Effective Time.
(h) Any
portion of the Exchange Fund that remains undistributed to the holders of Certificates or Book-Entry Shares six months after the First
Effective Time shall be delivered to the Surviving Entity, upon demand, and any remaining holders of Certificates or Book-Entry Shares
(except to the extent representing Excluded Shares or Dissenting Shares) shall thereafter look only to the Surviving Entity, as general
creditors thereof, for payment of the Merger Consideration (together with any dividends or other distributions payable pursuant to Section 3.3(e) but
not the Pre-Closing Cash Dividend) (subject to abandoned property, escheat or other similar laws), without interest.
(i) None
of Parent, the Surviving Entity, the Exchange Agent or any other Person shall be liable to any Person in respect of shares of Parent
Capital Stock, dividends or other distributions with respect thereto properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificates or Book-Entry Shares shall not have been exchanged prior to two years
after the First Effective Time (or immediately prior to such earlier date on which the related Merger Consideration (and all dividends
or other distributions with respect to shares of Parent Capital Stock) would otherwise escheat to or become the property of any Governmental
Entity), any such Merger Consideration (and such dividends, distributions and cash) in respect thereof shall, to the extent permitted
by applicable Law, become the property of the Surviving Entity, free and clear of all claims or interest of any Person previously entitled
thereto.
(j) If
any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit, in form and substance reasonably acceptable
to Parent, of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Exchange
Agent, the posting by such Person of a bond in such amount as Parent or the Exchange Agent may determine is reasonably necessary as indemnity
against any claim that may be made against it or the Surviving Entity with respect to such Certificate, then the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable in respect thereof (together with
any dividends or other distributions payable pursuant to Section 3.3(e) but not the Pre-Closing Cash Dividend).
Section 3.4 Withholding
Rights. Parent, the Surviving Entity and the Exchange Agent (each, a “Withholding Agent”) shall each 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 any Withholding Agent is required to deduct and withhold under applicable Law. To the extent that amounts are so deducted
and withheld by a Withholding Agent and remitted to the appropriate Governmental Entity, such amounts shall be treated for all purposes
of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made. Except in connection
with a failure of the Company to comply with payments under this Agreement in respect of Company Restricted Shares for which an election
under Section 83(b) of the Code has not been filed, the Withholding Agent shall use commercially reasonable efforts to (i) notify
each holder of Company Capital Stock at least five (5) Business Days prior to deducting or withholding any amounts of its intent
to deduct and withhold and (ii) cooperate with such holder to minimize any such deductions and withholding.
Section 3.5 Dissenters
Rights. Notwithstanding anything in this Agreement to the contrary, each share of the Company Capital Stock (other than Excluded
Shares) outstanding immediately prior to the First Effective Time and held by a holder who is entitled to demand and has properly demanded
appraisal for such shares of the Company Capital Stock in accordance with Section 262 of the DGCL and, as of the First Effective
Time, have neither effectively withdrawn nor lost their rights to such appraisal and payment under the DGCL (“Dissenting Shares”),
shall not be converted into or be exchangeable for the right to receive a portion of the Merger Consideration but shall be entitled only
to such rights as are granted by Section 262 of the DGCL, unless and until such holder fails to perfect or withdraws or otherwise
loses such holder’s right to appraisal and payment under the DGCL. If, after the First Effective Time, any such holder fails to
perfect or withdraws or loses such holder’s right to appraisal, such Dissenting Shares shall thereupon be treated as if they had
been converted as of the First Effective Time into the right to receive the portion of the Merger Consideration, if any, to which such
holder is entitled pursuant to Section 3.1(a)(i), without interest. The Company shall give Parent (a) prompt notice
of any demands received by the Company for appraisal of any shares of the Company Capital Stock issued and outstanding immediately prior
to the First Effective Time, attempted written withdrawals of such demands, and any other instruments served pursuant to the DGCL and
received by the Company relating to stockholders’ rights to appraisal with respect to the Merger and (b) the opportunity to
participate in all negotiations and proceedings with respect to any exercise of such appraisal rights under the DGCL. The Company shall
not, except with the prior written consent of Parent, which shall not be unreasonably withheld, conditioned or delayed, voluntarily make
any payment with respect to any demands for payment of fair value for capital stock of the Company, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
Section 3.6 Calculation
of Net Cash.
(a) Not
less than ten (10) Business Days prior to the anticipated date for the Parent Stockholder Meeting as mutually agreed in good faith
by Parent and the Company (the “Anticipated Meeting Date”), Parent will deliver to the Company a certificate signed
by an officer of Parent in the form reasonably acceptable to the Company setting forth a schedule (the “Parent Net Cash Schedule”
, and the date of delivery of the Parent Net Cash Schedule, the “Delivery Date”) setting forth, in reasonable detail,
Parent’s good faith, estimated calculation of Net Cash (the “Parent Net Cash Calculation”) as of the close of
business on the Closing Date (the “Cash Determination Time”) prepared and certified by Parent’s chief financial
officer (or if there is no chief financial officer at such time, the principal financial and accounting officer for Parent). Parent shall
make available to the Company (electronically to the greatest extent possible), as reasonably requested by the Company, the work papers
and back-up materials (including all relevant invoices and similar evidence of outstanding obligations) used or useful in preparing the
Parent Net Cash Schedule and, if reasonably requested by the Company, Parent’s internal finance personnel, accountants and counsel
at reasonable times and upon reasonable notice.
(b) Within
five (5) Business Days after the Delivery Date (the last day of such period, the “Response Date”), the Company
shall have the right to dispute any part of the Parent Net Cash Calculation by delivering a written notice to that effect to Parent (a
“Dispute Notice”). Any Dispute Notice shall identify in reasonable detail and, to the extent known, the nature and
amounts of any proposed revisions to the Parent Net Cash Calculation.
(c) If,
on or prior to the Response Date, the Company notifies Parent in writing that it has no objections to the Parent Net Cash Calculation
or, if prior to 11:59 p.m. (Pacific time) on the Response Date, the Company fails to deliver a Dispute Notice as provided in Section 3.6(b),
then the Parent Net Cash Calculation as set forth in the Parent Net Cash Schedule shall be deemed to have been finally determined for
purposes of this Agreement and to represent the Net Cash at the Cash Determination Time (the “Final Parent Net Cash”)
for purposes of this Agreement.
(d) If
the Company delivers a Dispute Notice on or prior to 11:59 p.m. (Pacific time) on the Response Date, then Representatives of Parent
and the Company shall promptly, and in no event later than one calendar day after the Response Date, communicate and attempt in good
faith to resolve the disputed item(s) and negotiate an agreed-upon determination of Net Cash, which agreed upon Net Cash amount
(if so resolved) shall be deemed to have been finally determined for purposes of this Agreement and to represent the Final Parent Net
Cash for purposes of this Agreement.
(e) If
Representatives of Parent and the Company are unable to resolve the disputed items pursuant to Section 3.6(d) within
three calendar days after delivery of the Dispute Notice (or such other period as Parent and the Company may mutually agree upon), then
any remaining disagreements as to the calculation of Net Cash shall be referred to an independent auditor of recognized national standing
jointly selected by Parent and the Company (provided that if the parties are unable to select an independent auditor within five (5) days,
then either Parent or the Company may thereafter request that the Boston, Massachusetts Office of the American Arbitration Association
(“AAA”) make such selection (either the independent auditor jointly selected by both parties or such independent auditor
selected by the AAA, the “Accounting Firm”). Parent shall promptly deliver to the Accounting Firm all work papers
and back-up materials used in preparing the Parent Net Cash Schedule, and Parent and the Company shall use commercially reasonable efforts
to cause the Accounting Firm to make its determination within five calendar days of accepting its selection. Parent and the Company shall
be afforded the opportunity to present to the Accounting Firm any material related to the unresolved disputes and to discuss the issues
with the Accounting Firm; provided, however, that no such presentation or discussion shall occur without the presence of a Representative
of each of Parent and the Company. The determination of the Accounting Firm shall be limited to the disagreements submitted to the Accounting
Firm. The determination of the amount of Net Cash made by the Accounting Firm shall be made in writing delivered to each of Parent and
the Company, shall be final and binding on Parent and the Company and shall (absent manifest error) be deemed to have been finally determined
for purposes of this Agreement and to represent the Final Parent Net Cash for purposes of this Agreement. The parties shall delay the
Closing until the resolution of the matters described in this Section 3.6(e). The fees and expenses of the Accounting Firm
shall be allocated between Parent and the Company in the same proportion that the disputed amount of the Net Cash that was unsuccessfully
disputed amount by such party (as finally determined by the Accounting Firm) bears to the total disputed amount of the Net Cash amount
and such portion of the costs and expenses of the Accounting Firm borne by the Company and any other fees, costs or expenses incurred
by the Company following the Anticipated Meeting Date in connection with the procedures set forth in this Section 3.6(e) shall
be deducted from the final determination of the amount of Net Cash, to the extent of available amounts. If this Section 3.6(e) applies
as to the determination of the Final Parent Net Cash described in Section 3.6(a), upon resolution of the matter in accordance
with this Section 3.6(e), the parties shall not be required to determine the Net Cash again even though the Closing Date
may occur later than the Anticipated Meeting Date. Notwithstanding anything else in this Agreement, Parent shall redetermine the Final
Parent Net Cash if the Closing Date is more than ten calendar days after the Anticipated Meeting Date.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the
corresponding section or subsection of the disclosure letter delivered by the Company to Parent (the “Company Disclosure Letter”)
(it being agreed that the disclosure of any information in a particular section or subsection of the Company Disclosure Letter shall
be deemed disclosure of such information with respect to any other section or subsection of this Agreement to which the relevance of
such information is readily apparent on its face), the Company represents and warrants to Parent and Merger Subs as follows:
Section 4.1 Organization,
Standing and Power.
(a) The
Company (i) is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation,
(ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business
as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary,
except in the case of clause (iii), where the failure to be so qualified or licensed or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, “Material
Adverse Effect” means any event, change, circumstance, occurrence, effect or state of facts that (A) is or would reasonably
be expected to be materially adverse to the business, assets, liabilities, financial condition, or results of operations of the Company
and its Subsidiaries, taken as a whole, or (B) materially impairs the ability of the Company to consummate the Merger or any of
the other Contemplated Transactions; provided, however, that in the case of clause (A) only, Material Adverse
Effect shall not include any event, change, circumstance, occurrence, effect or state of facts to the extent resulting from (1) changes
or conditions generally affecting the industries in which the Company and its Subsidiaries operate, or the economy or the financial,
debt, banking, capital, credit or securities markets, in the United States, including effects on such industries, economy or markets
resulting from any regulatory and political conditions or developments in general, (2) the outbreak or escalation of war or acts
of terrorism or any natural disasters, acts of God or comparable events, epidemic, pandemic or disease outbreak (including the COVID-19
virus) or any worsening of the foregoing, or any declaration of martial law, quarantine or similar directive, policy or guidance or Law
or other action by any Governmental Entity in response thereto, (3) changes in Law or GAAP, or the interpretation or enforcement
thereof, (4) the public announcement or pendency of this Agreement, or (5) any specific action taken (or omitted to be taken)
by the Company at or with the express written consent of Parent; provided, that, with respect to clauses (1), (2) and
(3), the impact of such event, change, circumstance, occurrence, effect or state of facts is not disproportionately adverse to the Company
and its Subsidiaries as compared to other participants in the industries in which the Company and its Subsidiaries operate.
(b) The
Company has previously made available to Parent true and complete copies of the Company’s Certificate of Incorporation (the “Company
Charter”) and bylaws (the “Company Bylaws”) and the Certificate of Incorporation and bylaws of each other
Subsidiary of the Company, in each case as amended to the date of this Agreement, and each as so delivered is in full force and effect.
None of the Company or any of its Subsidiaries is in violation of any provision of its Certificate of Incorporation or bylaws.
Section 4.2 Capital
Stock.
(a) The
authorized capital stock of the Company consists of 60,000,000 shares of Company Capital Stock. As of the date hereof, (i) 5,819,672
shares of Company Common Stock (excluding treasury shares) were issued and outstanding (of which 819,672 shares are the Company Restricted
Shares), (ii) zero shares of Company Common Stock were held by the Company in its treasury, (iii) 20,000,000 shares of Company
Preferred Stock were issued and outstanding, (iv) 3,637,978 Company Options were issued and outstanding and (v) zero shares
of Company Common Stock subject to the exercise of Company Warrants. All outstanding shares of capital stock of the Company and any of
its Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and not subject to any preemptive rights. Neither
the Company nor any of its Subsidiaries has any outstanding bonds, debentures, notes or other obligations having the right to vote (or
convertible into, or exchangeable or exercisable for, securities having the right to vote) with the stockholders of the Company or any
of its Subsidiaries on any matter. Except as set forth above in this Section 4.2(a), neither the Company nor any of its Subsidiaries
has any outstanding (A) shares of capital stock or other voting securities or equity interests of the Company or any of its Subsidiaries,
(B) securities of the Company or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock
of the Company or any of its Subsidiaries or other voting securities or equity interests of the Company or any of its Subsidiaries, (C) stock
appreciation rights, “phantom” stock rights, performance units, interests in or rights to the ownership or earnings of the
Company or any of its Subsidiaries or other equity equivalent or equity-based awards or rights, (D) subscriptions, options, warrants,
calls, commitments, Contracts or other rights to acquire from the Company or any of its Subsidiaries, or obligations of the Company or
any of its Subsidiaries to issue, any shares of capital stock of the Company or any of its Subsidiaries, voting securities, equity interests
or securities convertible into or exchangeable or exercisable for capital stock or other voting securities or equity interests of the
Company or any of its Subsidiaries or rights or interests described in the preceding clause (C), or (E) obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any such securities or to issue, grant, deliver or sell,
or cause to be issued, granted, delivered or sold, any such securities. There are no stockholder agreements, voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party or of which the Company has knowledge with respect to the
holding, voting, registration, redemption, repurchase or disposition of, or that restricts the transfer of, any capital stock or other
voting securities or equity interests of the Company or any of its Subsidiaries.
(b) Section 4.2(b) of
the Company Disclosure Letter sets forth a true and complete list of all holders, as of the date hereof, of outstanding Company Restricted
Shares, Company Options and other similar rights to purchase or receive shares of Company Common Stock or similar rights granted under
the Company Equity Plan or otherwise (collectively, “Company Stock Awards”), indicating as applicable, with respect
to each Company Stock Award then outstanding, the type of award granted, the number of shares of Company Common Stock subject to such
Company Stock Award, the name of the agreement under which such Company Stock Award was granted, the date of grant, exercise or purchase
price, vesting schedule, payment schedule (if different from the vesting schedule) and expiration thereof, whether the Company Stock
Award is a non-statutory stock option or qualifies as an “incentive stock option” as defined in Section 422 of the Code,
whether an 83(b) election was timely filed, and whether (and to what extent) the vesting of such Company Stock Award will be accelerated
or otherwise adjusted in any way or any other terms will be triggered or otherwise adjusted in a way by the consummation of the Merger
and the other Contemplated Transactions or by the termination of employment or engagement or change in position of any holder thereof
following or in connection with the Merger. The Company has made available to Parent true and complete copies of all forms of award agreements
evidencing outstanding Company Stock Awards. Neither the Company nor any of its Subsidiaries is under any obligation to issue shares
of Company Common Stock or any capital stock of any of its Subsidiaries pursuant to any employee or director stock option, stock purchase
or equity compensation plan or arrangement other than the ones issued under the Company Equity Plan.
Section 4.3 Subsidiaries.
Section 4.3 of the Company Disclosure Letter sets forth a true and complete list of each Subsidiary of the Company, including
its jurisdiction of incorporation or formation. Each of the Company’s Subsidiaries (i) is an entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar
power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly
qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership,
leasing or operations of its properties makes such qualification or licensing necessary, except in the case of clause (iii), where the
failure to be so qualified or licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect. All outstanding shares of capital stock and other voting securities or equity interests of
each such Subsidiary are owned directly by the Company, free and clear of all Liens. Except for the capital stock of, or other equity
or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any equity, membership interest, partnership
interest, joint venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable
for any of the foregoing, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any
loan, capital contribution, guarantee, credit enhancement or other investment in, or assume any liability or obligation of, any Person.
Section 4.4 Authority.
(a) The
Company has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate
the Contemplated Transactions. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company
of the Contemplated Transactions have been duly authorized by all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to approve this Agreement or to consummate the Merger and the other Contemplated
Transactions, subject, in the case of the consummation of the Merger, to receipt of the Company Stockholder Approval. This Agreement
has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger
Subs, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except
to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting
the enforcement of creditors’ rights generally or by general principles of equity).
(b) The
Company Board, at a meeting duly called and held at which all directors of the Company were present, duly and unanimously adopted resolutions
(i) determining that the terms of this Agreement, the Company Support Agreements, the Merger, the Concurrent Investment and the
other Contemplated Transactions are fair to, advisable and in the best interests of the Company’s stockholders, (ii) approving
and declaring advisable this Agreement and the Contemplated Transactions, including the Merger, (iii) directing that this Agreement
be submitted to the stockholders of the Company for adoption, and (iv) resolving to recommend that the Company’s stockholders
vote in favor of the adoption of this Agreement and the Contemplated Transactions, including the Merger, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way.
(c) The
Company Stockholder Approval is the only vote of the holders of any class or series of the Company Capital Stock or other securities
required in connection with the consummation of the Merger. Other than the Company Stockholder Approval (and except with respect to the
Concurrent Investment), no vote of the holders of any class or series of the Company’s capital stock or other securities is required
in connection with the consummation of any of the Contemplated Transactions to be consummated by the Company.
Section 4.5 No
Conflict; Consents and Approvals.
(a) Except
as set forth in Section 4.5(a) of the Company Disclosure Letter, the execution, delivery and performance of this Agreement
by the Company does not, and the consummation of the Merger and the other Contemplated Transactions and compliance by the Company with
the provisions hereof will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in, termination, cancellation, modification or acceleration of any obligation
or to the loss of a benefit under, or result in the creation of any pledge, claim, lien, charge, option, right of first refusal, encumbrance
or security interest of any kind or nature whatsoever (including any limitation on voting, sale, transfer or other disposition or exercise
of any other attribute of ownership) (collectively, “Liens”) in or upon any of the properties, assets or rights of
the Company under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, or require any
consent, waiver or approval of any Person pursuant to, any provision of (i) the Company Charter or Company Bylaws, (ii) any
material bond, debenture, note, mortgage, indenture, guarantee, license, lease, purchase or sale order or other contract, commitment,
agreement, instrument, obligation, arrangement, understanding, undertaking, permit, concession or franchise, whether oral or written
(each, including all amendments thereto, a “Contract”) to which the Company is a party or by which the Company or
any of its properties or assets may be bound or (iii) subject to the governmental filings and other matters referred to in Section 4.5(b),
any federal, state, local or foreign law (including common law), statute, ordinance, rule, code, regulation, order, judgment, injunction,
decree or other legally enforceable requirement (“Law”) applicable to the Company or by which the Company or any of
its properties or assets may be bound, except as, in the case of clauses (ii) and (iii), as individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse Effect.
(b) No
consent, approval, order or authorization of, or registration, declaration, filing with or notice to, any federal, state, local or foreign
government or subdivision thereof or any other governmental, administrative, judicial, arbitral, legislative, executive, regulatory or
self-regulatory authority, instrumentality, agency, commission or body (each, a “Governmental Entity”) is required
by or with respect to the Company in connection with the execution, delivery and performance of this Agreement by the Company or the
consummation by the Company of the Merger and the other Contemplated Transactions or compliance with the provisions hereof, except for
(i) the filing of the pre-merger notification report under the HSR Act, (ii) the filing with the SEC of such reports under
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as
may be required in connection with this Agreement and the Contemplated Transactions, (iii) such other filings and reports as may
be required pursuant to the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”),
the Exchange Act and any other applicable state or federal securities, takeover and “blue sky” laws, (iv) the filing
of the Certificate of Merger with the Delaware Secretary of State as required by the DGCL, and (v) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or notices the failure of which to be obtained or made, individually or
in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.
Section 4.6 Financial
Statements.
(a) True
and complete copies of the audited balance sheet of the Company as at September 30, 2024 and June 18, 2024, and the related
audited statements of operations and comprehensive loss, convertible preferred stock and stockholders’ deficit and cash flows,
together with all related notes and schedules thereto (collectively referred to as the “Company Financial Statements”).
The Company Financial Statements (i) are correct and complete in all material respects and have been prepared in accordance with
the books and records of the Company; (ii) have been prepared in accordance with generally accepted accounting principles in the
United States (“GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto); and (iii) fairly present, in all material respects, the financial position, results of operations and cash
flows of the Company as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein
and subject, in the case of any unaudited financial statements, to normal and recurring year-end adjustments that will not, individually
or in the aggregate, be material.
(b) Except
as and to the extent adequately accrued or reserved against in the audited consolidated balance sheet of the Company as at December 31,
2023 (such balance sheet, together with all related notes and schedules thereto, the “Company Balance Sheet”), the
Company does not have any liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, whether known or
unknown and whether or not required by GAAP to be reflected in a balance sheet of the Company or disclosed in the notes thereto, except
for liabilities and obligations, incurred in the ordinary course of business consistent with past practice since the date of the Company
Balance Sheet, that are not, individually or in the aggregate, material to the Company.
(c) The
books of account and financial records of the Company and its Subsidiaries are true and correct and have been prepared and are maintained
in accordance with sound accounting practice.
(d) The
Company maintains a system of internal accounting controls designed to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of the financial statements of the Company in conformity with GAAP and to maintain accountability of the Company’s
assets, (iii) access to the Company’s assets is permitted only in accordance with management’s general or specific authorization,
and (iv) the recorded accountability for the Company’s assets is compared with the existing assets at regular intervals and
appropriate action is taken with respect to any differences. The Company maintains internal control over financial reporting that provides
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with GAAP.
(e) Since
January 1, 2023, neither the Company nor its independent auditors have identified (i) any significant deficiency or material
weakness in the design or operation of the system of internal accounting controls utilized by the Company, (ii) any fraud, whether
or not material, that involves the Company, the Company’s management or other employees who have a role in the preparation of financial
statements or the internal accounting controls utilized by the Company or (iii) any claim or allegation regarding any of the foregoing.
Section 4.7 No
Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, known or unknown, whether due or to become due and whether or not required to be recorded
or reflected on a balance sheet under GAAP, except (a) to the extent specifically and adequately accrued or reserved against in
the Company Balance Sheet and (b) for liabilities and obligations incurred in the ordinary course of business consistent with past
practice (none of which is a liability for a breach or default under any contract, breach of warranty, tort, infringement, misappropriation
or violation of law) since the date of the Company Balance Sheet that are not individually or in the aggregate material to the Company.
Section 4.8 Absence
of Certain Changes or Events. Except as set forth in Section 4.8 of the Company Disclosure Letter, since the date of
the Company Balance Sheet: (i) except in connection with the execution of this Agreement and the consummation of the Contemplated
Transactions, the Company and its Subsidiaries have conducted their business only in the ordinary course consistent with past practice;
(ii) there has not been any change, event or development or prospective change, event or development that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse Effect; and (iii) neither the Company nor any of its
Subsidiaries has:
(a) (i) declared,
set aside or paid any dividends on, or made any other distributions (whether in cash, stock or property) in respect of, any of its capital
stock or other equity interests, (ii) purchased, redeemed or otherwise acquired shares of capital stock or other equity interests
of the Company or any of its Subsidiaries or any options, warrants, or rights to acquire any such shares or other equity interests, or
(iii) split, combined, reclassified or otherwise amended the terms of any of its capital stock or other equity interests or issued
or authorized the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other
equity interests;
(b) amended
or otherwise changed, or authorized or proposed to amend or otherwise change, its certificate of incorporation or by-laws (or similar
organizational documents);
(c) adopted
or entered into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or reorganization; or
(d) changed
its financial or Tax accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or applicable
Law, or revalued any of its material assets.
Section 4.9 Litigation.
There is no action, suit, claim, arbitration, investigation, inquiry, grievance or other proceeding (each, an “Action”)
(or basis therefor) pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries,
its properties or assets, or any present or former officer, director or employee of the Company or any of its Subsidiaries in such individual’s
capacity as such, other than any Action that (a) does not involve an amount in controversy in excess of $100,000 and (b) does
not seek injunctive or other non-monetary relief. Neither the Company nor any of its Subsidiaries nor any of their respective properties
or assets is subject to any outstanding judgment, order, injunction, rule or decree of any Governmental Entity. There is no Action
pending or, to the knowledge of the Company, threatened seeking to prevent, hinder, modify, delay or challenge the Merger or any of the
other Contemplated Transactions.
Section 4.10 Compliance
with Laws. The Company and each of its Subsidiaries are and have been in compliance in all material respects with all Laws applicable
to their businesses, operations, properties or assets. Neither the Company nor any of its Subsidiaries has received, since January 1,
2021, a notice or other written communication alleging or relating to a possible material violation of any Law applicable to their businesses,
operations, properties, assets or Company Products (as defined below). The Company and each of its Subsidiaries have in effect all material
permits, licenses, variances, exemptions, applications, approvals, clearances, authorizations, registrations, formulary listings, consents,
operating certificates, franchises, orders and approvals (collectively, “Permits”) of all Governmental Entities necessary
or advisable for them to own, lease or operate its properties and assets and to carry on its businesses and operations as now conducted,
and there has occurred no violation of, default (with or without notice or lapse of time or both) under or event giving to others any
right of revocation, non-renewal, adverse modification or cancellation of, with or without notice or lapse of time or both, any such
Permit, nor would any such revocation, non-renewal, adverse modification or cancellation result from the consummation of the Contemplated
Transactions.
Section 4.11 Health
Care Regulatory Matters. Except as set forth in Section 4.11 of the Company Disclosure Letter:
(a) The
Company, and to the knowledge of the Company, each of its directors, officers, management employees, agents (while acting in such capacity),
contract manufacturers, suppliers, and distributors are, and for the past six (6) years have been, in material compliance with all
health care laws to the extent applicable to the Company or any of its products or activities, including, but not limited to the following:
the Federal Food, Drug & Cosmetic Act (“FDCA”); the Public Health Service Act (42 U.S.C. § 201 et seq.),
including the Clinical Laboratory Improvement Amendments of 1988 (42 U.S.C. § 263a); the Federal Trade Commission Act (15 U.S.C.
§ 41 et seq.); the Controlled Substances Act (21 U.S.C. § 801 et seq.); the federal Anti-Kickback Statute (42 U.S.C. §
1320a-7b(b)); the civil monetary penalties law (42 U.S.C. § 1320a-7a); the civil False Claims Act (31 U.S.C. § 3729 et seq.);
the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)); the Stark law (42 U.S.C. § 1395nn); the Criminal Health
Care Fraud Statute (18 U.S.C. § 1347); the exclusion laws (42 U.S.C. § 1320a-7); Medicare (Title XVIII of the Social Security
Act); Medicaid (Title XIX of the Social Security Act); any regulations promulgated pursuant to such laws; and any other state, federal
or ex-U.S. laws or regulations governing the manufacturing, development, testing, labeling, advertising, marketing or distribution of
drug, biologic and medical device products, kickbacks, patient or program charges, recordkeeping, claims process, documentation requirements,
medical necessity, referrals, the hiring of employees or acquisition of services or supplies from those who have been excluded from government
health care programs, quality, safety, privacy, security, licensure, accreditation or any other aspect of providing health care, clinical
laboratory or diagnostic products or services, to the extent applicable to the Company (“Health Care Laws”). To the
knowledge of the Company, there are no facts or circumstances that reasonably would be expected to give rise to any material liability
under any Health Care Laws.
(b) Neither
the Company nor any of its Subsidiaries is a party to any material corporate integrity agreements, monitoring agreements, consent decrees,
settlement orders, or similar agreements with or imposed by any Governmental Entity.
(c) All
applications, notifications, submissions, information, claims, reports and statistical analyses, and other data and conclusions derived
therefrom, utilized as the basis for or submitted in connection with any and all requests for a Permit from the U.S. Food and Drug Administration
(“FDA”) or other Governmental Entity relating to products that are regulated as drugs, medical devices, or other healthcare
products under Health Care Laws, including drugs or medical devices, compounds or products being researched, tested, stored, developed,
labeled, manufactured, packed, imported, exported and/or distributed by the Company or any of its Subsidiaries (“Company Products”),
including, without limitation, investigational new drug applications and investigational device exemptions, when submitted to the FDA
or other Governmental Entity were true, complete and correct in all material respects as of the date of submission and any necessary
or required updates, changes, corrections or modification to such applications, submissions, information and data have been submitted
to the FDA or other Governmental Entity. The Company does not have knowledge of any facts or circumstances that would be reasonably likely
to lead the revocation, suspension, limitation, or cancellation of a Permit required under Health Care Laws or of any application for
marketing approval currently pending before the FA or such other Governmental Entity.
(d) All
preclinical studies and clinical trials conducted by or, to the knowledge of the Company, on behalf of the Company have been, and if
still pending are being, conducted in compliance with research protocols and all applicable Health Care Laws, including, but not limited
to, the FDCA and its applicable implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58, 312, 314, 320 and 812. No clinical trial
conducted by or on behalf of the Company has been conducted using any clinical investigators who have been disqualified. No clinical
trial conducted by or on behalf of the Company has been terminated or suspended prior to completion, and no clinical investigator that
has participated or is participating in, or institutional review board that has or has had jurisdiction over, a clinical trial conducted
by or on behalf of the Company has placed a clinical hold order on, or otherwise terminated, delayed or suspended, such a Company clinical
trial at a clinical research site based on an actual or alleged lack of safety or efficacy of any Company Product or a failure to conduct
such clinical trial in compliance with applicable Health Care Laws.
(e) All
manufacturing operations conducted by or, to the knowledge of the Company, for the benefit of the Company have been and are being conducted
in material compliance with all Permits under applicable Health Care Laws, all applicable provisions of the FDA’s current good
manufacturing practice (cGMP) regulations for drug products at 21 C.F.R. Parts 210 and 211, the Quality System (QS) regulations at 21
C.F.R. Part 820 and all comparable foreign regulatory requirements of any Governmental Entity.
(f) The
Company has not received any written communication that relates to an alleged violation or non-compliance with any Health Care Laws,
including any notification of any pending or threatened claim, suit, proceeding, hearing, enforcement, investigation, arbitration, import
detention or refusal, FDA Warning Letter or Untitled Letter, or any action by a Governmental Entity relating to any Health Care Laws.
All Warning Letters, Form-483 observations, or comparable findings from other Governmental Entities listed in Section 4.11(f) of
the Company Disclosure Letter have been resolved to the satisfaction of the applicable Governmental Entity.
(g) There
have been no seizures, withdrawals, recalls, detentions, or suspensions of manufacturing, testing, or distribution relating to the Company
Products required or requested by a Governmental Entity, or other notice of action relating to an alleged lack of safety, efficacy, or
regulatory compliance of the Company Products, or any adverse experiences relating to the Company Products that have been reported to
FDA or other Governmental Entity (“Safety Notices”). All Safety Notices listed in Section 4.11(g) of
the Company Disclosure Letter have been resolved to the satisfaction of the applicable Governmental Entity.
(h) Except
as set forth in Section 4.11(h) of the Company Disclosure Letter, there are no unresolved Safety Notices, and to the
knowledge the Company, there are no facts or circumstances that would be reasonably likely to result in a Safety Notice with respect
to the Company Products or a termination or suspension of developing and testing of any of the Company Products.
(i) Neither
the Company, nor, to the knowledge of the Company, any officer, employee, agent, or distributor of the Company has made an untrue statement
of a material fact or fraudulent or misleading statement to a Governmental Entity, failed to disclose a material fact required to be
disclosed to a Governmental Entity, or committed an act, made a statement, or failed to make a statement that would reasonably be expected
to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities” Final Policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto (the “FDA
Ethics Policy”). None of the aforementioned is or has been under investigation resulting from any allegedly untrue, fraudulent,
misleading, or false statement or omission, including data fraud, or had any action pending or threatened relating to the FDA Ethics
Policy.
(j) All
reports, documents, claims, Permits and notices required to be filed, maintained or furnished to the FDA or any Governmental Entity by
the Company have been so filed, maintained or furnished, except where failure to file, maintain or furnish such reports, documents, claims,
Permits or notices have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
All such reports, documents, claims, Permits and notices were true and complete in all material respects on the date filed (or were corrected
in or supplemented by a subsequent filing).
(k) Neither
the Company nor, to the knowledge of the Company, any officer, employee, agent, or distributor of the Company has been convicted of any
crime or engaged in any conduct that has resulted, or would reasonably be expected to result, in debarment under applicable Law, including,
without limitation, 21 U.S.C. § 335a, or exclusion under 42 U.S.C. § 1320a-7, or any other statutory provision or similar law
applicable in other jurisdictions in which the Company Products are sold or intended to be sold. Neither the Company nor, to the knowledge
of the Company, any officer, employee, agent or distributor of the Company, has been excluded from participation in any federal health
care program or convicted of any crime or engaged in any conduct for which such Person could be excluded from participating in any federal
health care program under Section 1128 of the Social Security Act of 1935, as amended, or any similar Health Care Law or program.
Section 4.12 Benefit
Plans.
(a) Section 4.12(a) of
the Company Disclosure Letter contains a true, correct and complete list of each material Company Plan.
(b) The
Company has provided or made available to Parent a current, accurate and complete copy of each material Company Plan, or if such Company
Plan is not in written form, a written summary of all of the material terms of such Company Plan. With respect to each Company Plan,
the Company has furnished or made available to Parent a current, accurate and complete copy of, to the extent applicable: (i) all
documents embodying or governing such Company Plan and any related trust agreement or other funding instrument, (ii) the most recent
determination letter of the Internal Revenue Service (the “IRS”), (iii) any summary plan description, summary
of material modifications, and other similar material written communications (or a written description of any material oral communications)
to the employees of the Company or its Subsidiaries concerning the extent of the benefits provided under a Company Plan, (iv) all
non-routine correspondence to and from any governmental agency, and (v) for the three most recent years and as applicable (A) the
Form 5500 and attached schedules, (B) audited financial statements, (C) nondiscrimination testing results and (D) actuarial
valuation reports.
(c) Neither
the Company, its Subsidiaries or any member of their “Controlled Group” (defined as any organization which is a member
of a controlled, affiliated or otherwise related group of entities within the meaning of Sections 414(b), (c), (m) or (o) of
the Code) has ever sponsored, maintained, contributed to or been required to contribute to or incurred any liability (contingent or otherwise)
with respect to: (i) a Multiemployer Plan, (ii) an “employee pension benefit plan” (within the meaning of Section 3(2) of
ERISA) that is subject to Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, (iii) any “multiple
employer plan” as defined in Section 413 of the Code or Section 210 of ERISA, (iv) a “funded welfare benefit
plan” within the meaning of Section 419 of the Code or (v) any “multiple employer welfare arrangement” (as
such term is defined in Section 3(40) of ERISA).
(d) With
respect to the Company Plans:
(i) each
Company Plan is and has been established, operated, and administered in all material respects with its terms and materially complies
in form and in operation with the applicable provisions of ERISA and the Code and all other applicable legal requirements;
(ii) no
Company Plan is, or within the past six years has been, the subject of an application or filing under a government sponsored amnesty,
voluntary compliance, or similar program, or been the subject of any self-correction under any such program;
(iii) each
Company Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination, advisory and/or
opinion letter, as applicable, from the IRS that it is so qualified and nothing has occurred to the knowledge of the Company since the
date of such letter that would reasonably be expected to cause the loss of the sponsor’s ability to rely upon such letter, and
nothing has occurred to the knowledge of the Company that would reasonably be expected to result in the loss of the qualified status
of such Company Plan;
(iv) there
is no material Action (including any investigation, audit or other administrative proceeding) by the Department of Labor, the Pension
Benefit Guaranty Corporation (the “PBGC”), the IRS or any other Governmental Entity or by any plan participant or
beneficiary pending, or to the knowledge of the Company, threatened, relating to the Company Plans, any fiduciaries thereof with respect
to their duties to the Company Plans or the assets of any of the trusts under any of the Company Plans (other than routine claims for
benefits);
(v) none
of the Company Plans currently provides, or reflects or represents any liability to provide post-termination or retiree welfare benefits
to any person for any reason, except as may be required by Section 601, et seq. of ERISA and Section 4980B(b) of
the Code or other applicable similar law regarding health care coverage continuation (collectively “COBRA”), and none
of the Company, its Subsidiaries or any members of their Controlled Group has any liability to provide post-termination or retiree welfare
benefits to any person or ever represented, promised or contracted to any employee or former employee of the Company (either individually
or to Company employees as a group) or any other person that such employee(s) or other person would be provided with post-termination
or retiree welfare benefits, except to the extent required by statute or except with respect to a contractual obligation to reimburse
any premiums such person may pay in order to obtain health coverage under COBRA;
(vi) all
payments and/or contributions required to have been timely made with respect to all Company Plans either have been made or have been
accrued in accordance with the terms of the applicable Company Plan and applicable law;
(vii) each
Company Plan is subject exclusively to United States Law; and
(viii) the
execution and delivery of this Agreement, the Company Stockholder Approval, and the consummation of the Merger will not, either alone
or in combination with any other event, (A) entitle any current or former employee, officer, director or consultant of the Company
or any Subsidiary to severance pay, unemployment compensation or any other similar termination payment, or (B) accelerate the time
of payment or vesting, or increase the amount of or otherwise enhance any benefit due any such employee, officer, director or consultant.
(e) Neither
the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan (including any Company Plan) that
may reasonably be expected to result, separately or in the aggregate, in connection with the Contemplated Transactions (either alone
or in combination with any other events), in the payment of any “parachute payments” within the meaning of Section 280G
of the Code. There is no agreement, plan or other arrangement to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary is otherwise bound to compensate any person in respect of Taxes or other liabilities incurred with respect to Section 409A
or 4999 of the Code.
(f) Each
Company Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code (or
any comparable or similar provision of state, local, or foreign Law) complies in both form and operation in all material respects with
the requirements of Section 409A of the Code (or any comparable or similar provision of state, local, or foreign Law) and all applicable
IRS guidance issued with respect thereto (and has so complied for the entire period during which Section 409A of the Code has applied
to such Company Plan) so that no amount paid or payable pursuant to any such Company Plan is subject to any additional Tax or interest
under Section 409A of the Code (or any comparable or similar provision of state, local, or foreign Law).
(g) No
Company Plan provides major medical health or long-term disability benefits that are not fully insured through an insurance contract.
Section 4.13 Labor
and Employment Matters.
(a) The
Company and its Subsidiaries are and since January 1, 2021, have been in compliance in all material respects with all applicable
Laws relating to labor or employment matters, including those relating to employment practices, terms and conditions of employment, collective
bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation,
the collection and payment of withholding and/or payroll Taxes and similar Taxes, unemployment compensation, equal employment opportunity,
discrimination, harassment, employee and contractor classification, restrictive covenants, pay equity, information privacy and security,
and continuation coverage with respect to group health plans. Since January 1, 2021, there has not been, and as of the date of this
Agreement there is not pending or, to the knowledge of the Company, threatened, any labor dispute, work stoppage, labor strike or lockout
against the Company or any of its Subsidiaries by employees.
(b) No
employee of the Company or any of its Subsidiaries, or since January 1, 2021 has been, is covered by an effective or pending collective
bargaining agreement or similar labor agreement. To the knowledge of the Company, there has not been any activity on behalf of any labor
union, labor organization or similar employee group to organize any employees of the Company or any of its Subsidiaries. There are no,
and since January 1, 2021 there has not been any: (i) unfair labor practice charges or complaints against the Company or any
of its Subsidiaries pending before the National Labor Relations Board or any other labor relations tribunal or authority and to the knowledge
of the Company no such representations, claims or petitions are threatened, (ii) representations, claims or petitions pending before
the National Labor Relations Board or any other labor relations tribunal or authority or (iii) grievances or pending arbitration
proceedings against the Company or any of its Subsidiaries that arose out of or under any collective bargaining agreement.
(c) To
the knowledge of the Company, no current officer of the Company or any of its Subsidiaries intends, or is expected, to terminate such
individual’s employment relationship with such entity in connection with or as a result of the Contemplated Transactions.
(d) Since
January 1, 2021, (i) neither the Company nor any of its Subsidiaries has effectuated a “plant closing” (as
defined in the Worker Adjustment Retraining and Notification Act of 1988, as amended (the “WARN Act”)) affecting any
site of employment or one or more facilities or operating units within any site of employment or facility, (ii) there has not occurred
a “mass layoff” (as defined in the WARN Act) in connection with the Company or any of its Subsidiaries affecting any site
of employment or one or more facilities or operating units within any site of employment or facility and (iii) neither the Company
nor any of its Subsidiaries has engaged in layoffs or employment terminations sufficient in number to trigger application of any similar
state, local or foreign law. The Company and its Subsidiaries properly classify and for the three (3) years immediately preceding
the date hereof have properly classified its and their (i) employees as exempt or non-exempt in accordance with applicable overtime
laws, (ii) contingent workers in accordance with applicable law and (iii) workers as employees or non-employees (e.g., consultants,
independent contractors), in accordance with applicable law.
(e) Except
as set forth on Section 4.13(e) of the Company Disclosure Letter, with respect to any current or former employee, officer,
consultant or other service provider of the Company, there have not been Actions against or involving the Company or any of its Subsidiaries
pending, or to the knowledge of the Company, threatened to be brought or filed, in connection with the employment or engagement of any
current or former employee, officer, consultant or other service provider of the Company, including, without limitation, any claim relating
to employment discrimination, harassment, retaliation, equal pay, employment classification, contractor classification, wages, hours,
and benefits, or any other employment related matter arising under applicable Laws, except where such action would not, individually
or in the aggregate, result in the Company incurring a material liability.
(f) Except
as set forth on Section 4.13(f) of the Company Disclosure Letter or with respect to any Company Plan (which subject
is addressed in Section 4.12 above), the execution of this Agreement and the consummation of the transactions set forth in
or contemplated by this Agreement will not result in any breach or violation of, or cause any payment to be made under, any applicable
Laws respecting labor and employment or any collective bargaining agreement to which the Company or any of its Subsidiaries is a party.
(g) Since
January 1, 2021, (i) no allegations of harassment or discrimination (with respect to any category protected by applicable
law, including, without limitation, sexual harassment), retaliation on the basis of protected activity (including as a whistleblower)
or protected class status in accordance with applicable law, or other misconduct relating to the workplace have been made, initiated,
filed or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective current
or former directors, officers or senior level management employees, (ii) to the knowledge of the Company, no incidents of any such
workplace-related harassment, discrimination, retaliation or other misconduct have occurred, and (iii) the Company has not entered
into any settlement agreement related to allegations of such harassment, discrimination, retaliation or other workplace-related misconduct
by any of their directors, officers or employees described in clause (i) hereof or any independent contractor.
(h) No
employee or other worker of the Company is subject to any service relationship that is not “at-will” or that is terminable
on more than 30 days’ notice.
Section 4.14 Environmental
Matters.
(a) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, (i) the
Company and its Subsidiaries have conducted their respective businesses in compliance with all, and have not violated any, applicable
Environmental Laws; (ii) the Company and its Subsidiaries have obtained all Permits of all Governmental Entities and any other Person
that are required under any Environmental Law; (iii) there has been no release of any Hazardous Substance by the Company or any
of its Subsidiaries or any other Person in any manner that has given or would reasonably be expected to give rise to any remedial or
investigative obligation, corrective action requirement or liability of the Company or any its Subsidiaries under applicable Environmental
Laws; (iv) the Company and its Subsidiaries have not received any claims, notices, demand letters or requests for information (except
for such claims, notices, demand letters or requests for information the subject matter of which has been resolved prior to the date
of this Agreement) from any federal, state, local, foreign or provincial Governmental Entity or any other Person asserting that the Company
or any of its Subsidiaries is in violation of, or liable under, any Environmental Law; (v) no Hazardous Substance has been disposed
of, arranged to be disposed of, released or transported in violation of any applicable Environmental Law, or in a manner that has given
rise to, or that would reasonably be expected to give rise to, any liability under any Environmental Law, in each case, on, at, under
or from any current or former properties or facilities owned or operated by the Company or any of its Subsidiaries or as a result of
any operations or activities of the Company or any of its Subsidiaries at any location and, to the knowledge of the Company, Hazardous
Substances are not otherwise present at or about any such properties or facilities in amount or condition that has resulted in or would
reasonably be expected to result in liability to the Company or any of its Subsidiaries under any Environmental Law; and (vi) neither
the Company nor any of its Subsidiaries nor any of their respective properties or facilities are subject to, or are threatened to become
subject to, any liabilities relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or
claim asserted or arising under any Environmental Law or any agreement relating to environmental liabilities.
(b) As
used herein, “Environmental Law” means any Law relating to (i) the protection, preservation or restoration of
the environment (including air, surface water, groundwater, drinking water supply, surface and subsurface soils and strata, wetlands,
plant and animal life or any other natural resource) or (ii) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances.
(c) As
used herein, “Hazardous Substance” means any substance listed, defined, designated, classified or regulated as a waste,
pollutant or contaminant or as hazardous, toxic, radioactive or dangerous or any other term of similar import under any Environmental
Law, including but not limited to petroleum.
Section 4.15 Taxes.
(a) The
Company and its Subsidiaries have (i) filed all income and other material Tax Returns required to be filed by or on behalf of it
(taking into account any applicable extensions thereof) and all such Tax Returns are true, accurate and complete in all material respects;
and (ii) paid in full (or caused to be timely paid in full) all material Taxes that are required to be paid by or with respect to
it, whether or not such Taxes were shown as due on such Tax Returns.
(b) All
material Taxes not yet due and payable by the Company as of the date of the Company Balance Sheet have been, in all respects, properly
accrued in accordance with GAAP on the Company Financial Statements, and such Company Financial Statements reflect an adequate reserve
(in accordance with GAAP) for all material Taxes accrued but unpaid by the Company through the date of such financial statements. Since
the date of the Company Financial Statements, neither the Company nor any of its Subsidiaries has incurred, individually or in the aggregate,
any liability for Taxes outside the ordinary course of business consistent with past practice.
(c) Neither
the Company nor any of its Subsidiaries has executed any waiver of any statute of limitations on, or extended the period for the assessment
or collection of, any amount of Tax, in each case that has not since expired.
(d) No
material audits or other investigations, proceedings, claims, assessments or examinations by any Governmental Entity (each, a “Tax
Action”) with respect to Taxes or any Tax Return of the Company or any of its Subsidiaries are presently in progress or have
been asserted, threatened or proposed in writing and to the knowledge of the Company, no such Tax Action is being contemplated. No deficiencies
or claims for a material amount of Taxes have been claimed, proposed, assessed or asserted in writing against the Company or any of its
Subsidiaries by a Governmental Entity, other than any such claim, proposal, assessment or assertion that has been satisfied by payment
in full, settled or withdrawn.
(e) Subject
to exceptions as would not be material, the Company and its Subsidiaries have timely withheld all Taxes required to have been withheld
from payments made (or deemed made) to its employees, independent contractors, creditors, shareholders and other third parties and, to
the extent required, such Taxes have been timely paid to the relevant Governmental Entity.
(f) Neither
the Company nor any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulations § 1.6011-4(b)(2).
(g) Neither
the Company nor any of its Subsidiaries (i) is a party to or bound by, or has any liability pursuant to, any Tax sharing, allocation,
indemnification or similar agreement or obligation, other than any such agreement or obligation which is a customary commercial agreement
obligation entered into in the ordinary course of business with vendors, lessors, lenders or the like the primary purpose of which is
unrelated to Taxes (each, an “Ordinary Course Agreement”); (ii) is or has been a member of a group (other than
a group the common parent of which is the Company) filing a consolidated, combined, affiliated, unitary or similar income Tax Return;
(iii) has any liability for the Taxes of any Person (other than the Company or its Subsidiaries) pursuant to Treasury Regulations
§ 1.1502-6 (or any similar provision of state, local or non-United States Law) as a transferee or successor, by Contract or
otherwise by operation of Law; or (iv) is or has been treated as a resident for any income Tax purpose, or as subject to Tax by
virtue of having a permanent establishment, an office or fixed place of business, in any country other than the country in which it was
or is organized.
(h) No
private letter rulings, technical advice memoranda, or similar material agreements or rulings have been requested, entered into or issued
by any Governmental Entity with respect to the Company or any of its Subsidiaries which rulings remain in effect.
(i) Neither
the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) a change in, or use of improper,
method of accounting requested or initiated on or prior to the Closing Date, (ii) a “closing agreement” as described
in Section 7121 of the Code (or any similar provision of Law) executed on or prior to the Closing Date, (iii) an installment
sale or open transaction disposition made on or prior to the Closing Date, (iv) any prepaid amount received or deferred revenue
accrued on or prior to the Closing Date, other than in respect of such amounts received in the ordinary course of business or (v) to
the knowledge of the Company, an intercompany transaction or excess loss amount described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).
(j) There
are no liens for Taxes upon any of the assets of the Company or any of its Subsidiaries other than Liens described in clause (i) of
the definition of Permitted Liens.
(k) Neither
the Company nor any of its Subsidiaries has distributed stock of another Person or has had its stock distributed by another Person, in
a transaction (or series of transactions) that was purported or intended to be governed in whole or in part by Sections 355 or 361 of
the Code.
(l) Neither
the Company nor any of its Subsidiaries has been a United States real property holding corporation, as defined in Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) No
material claim has been made in writing by any Governmental Entity in a jurisdiction where the Company or any of its Subsidiaries does
not currently file a Tax Return of a certain type or pay Taxes of a certain type that the Company is or may be subject to taxation by
such jurisdiction of such type.
(n) There
are no outstanding shares of Company stock issued in connection with the performance of services (within the meaning of Section 83
of the Code) that immediately prior to the First Effective Time are subject to a substantial risk of forfeiture (as such terms are defined
in Section 83 of the Code) for which a valid election under Section 83(b) of the Code has not been made.
(o) To
the knowledge of the Company, neither the Company nor any of its Subsidiaries has been, is, or immediately prior to the First Effective
Time will be, treated as an “investment company” within the meaning of Section 368(a)(2)(F) of the Code.
(p) Neither
the Company nor any of its Subsidiaries has taken, or failed to take, any action nor knows of any fact or circumstance that, in each
case, could reasonably be expected to prevent or impede the Merger from qualifying as a transaction qualifying for the Intended Tax Treatment.
For purposes of this Section 4.15,
where the context permits, each reference to the Company shall include a reference to any person for whose Taxes the Company is liable
under applicable Law.
Section 4.16 Contracts.
(a) Section 4.16(a) of
the Company Disclosure Letter sets forth each contract that, as of the date of this Agreement, that would constitute a “material
contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act), with respect to the
Company (assuming the Company were subject to the requirements of the Exchange Act) (all such contracts, in addition to those set forth
in Section 4.16(b) of the Company Disclosure Letter, but excluding any Company Plans, “Material Contracts”).
(b) Section 4.16(b) of
the Company Disclosure Letter lists the following contracts, in effect as of the date of this Agreement, which involve payment or receipt
by the Company in excess of $250,000 in the aggregate, which for the purposes of this Agreement shall be considered Material Contracts:
(i) each
Contract relating to any agreement for indemnification or guaranty not entered into in the ordinary course of business;
(ii) each
Contract containing (A) any covenant prohibiting the Company or the Surviving Entity from engaging in any line of business or competing
with any Person, or limiting the development, manufacture or distribution of the Surviving Entity’s products or services, (B) any
most-favored pricing arrangement, (C) any exclusivity provision in favor of a third party, or (D) any non-solicitation provision
applicable to the Company, in the case of the foregoing clause (D), which are material to the Company, taken as a whole;
(iii) each
Contract relating to capital expenditures and requiring payments after the date of this Agreement pursuant to its express terms and not
cancelable without penalty;
(iv) each
Contract relating to the disposition or acquisition of material assets or any ownership interest in any Person;
(v) each
Contract relating to any mortgages, indentures, loans, notes or credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit or creating any material Liens with respect to any assets of the Company or
any loans or debt obligations with officers or directors of the Company;
(vi) (A) any
Contract involving supply or distribution (identifying any that contain exclusivity provisions), (B) any Contract involving provision
of services or products with respect to any pre-clinical or clinical development activities of the Company, (C) any Contract involving
a dealer, distributor, joint marketing, alliance, joint venture, cooperation, development or other Contract currently in force under
which the Company has continuing obligations to develop or market any product, technology or service, or any Contract pursuant to which
the Company has continuing obligations to develop any Intellectual Property that will not be owned, in whole or in part, by the Company
or (D) any Contract to license any patent, trademark registration, service mark registration, trade name or copyright registration
to or from any third party to manufacture or produce any product, service or technology of the Company or any Contract to sell, distribute
or commercialize any products or service of the Company, in each case, except for Contracts entered into in the ordinary course of business;
(vii) each
Contract with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services
to the Company in connection with the Contemplated Transactions; and
(viii) each
Contract relating to leases of real properties with respect to which the Company directly or indirectly holds a valid leasehold interest
as well as any other real estate that is in the possession of or leased by the Company.
(c) (i) Each
Material Contract is valid and binding on the Company, and to the knowledge of the Company, each other party thereto, and is in full
force and effect and enforceable in accordance with its terms; and (ii) as of the date of this Agreement, the Company has not
receive any written notice of any material default under any Material Contract by the Company or of any event or condition that has occurred
that constitutes, or, after notice or lapse of time or both, would constitute, a material default on the part of the Company. The Company
has made available to Parent true and complete copies of all Material Contracts, including all amendments thereto. Except as set forth
in Section 4.16(c) of the Company Disclosure Letter, there are no Material Contracts that are not in written form.
Section 4.17 Insurance.
Each of the Company and its Subsidiaries is covered by valid and currently effective insurance policies issued in favor of the Company
or its Subsidiaries that are customary and adequate for companies of similar size in the industries and locations in which the Company
and its Subsidiaries operate. Section 4.17 of the Company Disclosure Letter sets forth, as of the date hereof, a true and
complete list of all material insurance policies issued in favor of the Company or any of its Subsidiaries, or pursuant to which the
Company or any of its Subsidiaries is a named insured or otherwise a beneficiary, as well as any historic incurrence-based policies still
in force. With respect to each such insurance policy, (a) such policy is in full force and effect and all premiums due thereon have
been paid, (b) neither the Company nor any of its Subsidiaries is in breach or default, and has not taken any action or failed to
take any action which (with or without notice or lapse of time, or both) would constitute such a breach or default, or would permit termination
or modification of, any such policy and (c) to the knowledge of the Company, no insurer issuing any such policy has been declared
insolvent or placed in receivership, conservatorship or liquidation. No notice of cancellation or termination has been received with
respect to any such policy, nor will any such cancellation or termination result from the consummation of the Contemplated Transactions.
Section 4.18 Properties.
(a) The
Company or one of its Subsidiaries has good and valid title to, or in the case of leased property and leased tangible assets, a valid
leasehold interest in, all of its real properties and tangible assets that are necessary for the Company and its Subsidiaries to conduct
their respective businesses as currently conducted, free and clear of all Liens other than (i) Liens for Taxes and assessments not
yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings, (ii) mechanics’,
workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business of the
Company and its Subsidiaries consistent with past practice and (iii) any such matters of record, Liens and other imperfections of
title that do not, individually or in the aggregate, materially impair the continued ownership, use and operation of the assets to which
they relate in the business of the Company and its Subsidiaries as currently conducted (“Permitted Liens”). Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the tangible
personal property currently used in the operation of the business of the Company and its Subsidiaries is in good working order (reasonable
wear and tear excepted).
(b) Each
of the Company and its Subsidiaries has complied with the terms of all leases to which it is a party, and all such leases are in full
force and effect, except for any such noncompliance or failure to be in full force and effect that, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except for any such failure to do so that, individually or in the aggregate, has not
had and would not reasonably be expected to have a Material Adverse Effect.
(c) Section 4.18(c) of
the Company Disclosure Letter sets forth a true and complete list of (i) all real property owned by the Company or any of its Subsidiaries
and (ii) all real property leased for the benefit of the Company or any of its Subsidiaries.
(d) This
Section 4.18 does not relate to intellectual property, which is the subject of Section 4.19.
Section 4.19 Intellectual
Property.
(a) Section 4.19(a) of
the Company Disclosure Letter sets forth a true and complete list of all (i) patents and patent applications; (ii) trademark
registrations and applications; and (iii) material copyright registrations and applications, in each case owned or licensed by the
Company and its Subsidiaries (collectively, “Company Registered IP”) and a true and complete list of all domain names
owned or exclusively licensed by the Company and its Subsidiaries. Except as, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect (A) all of the Company Registered IP is subsisting and, solely in the
case of any Company Registered IP that is registered or issued and to the knowledge of the Company, valid and enforceable, (B) no
Company Registered IP is involved in any interference, reissue, derivation, reexamination, opposition, cancellation or similar proceeding
and, to the knowledge of the Company, no such action is threatened with respect to any of the Company Registered IP and (C) the
Company and its Subsidiaries own exclusively, free and clear of any and all Liens (other than Permitted Liens), all Company Owned IP,
including all Intellectual Property created on behalf of the Company or its Subsidiaries by employees or independent contractors.
(b) Section 4.19(b) of
the Company Disclosure Letter accurately identifies (i) all contracts pursuant to which any Intellectual Property is licensed to
the Company or any of its Subsidiaries (other than (A) any non-customized software that (1) is so licensed solely in executable
or object code form pursuant to a nonexclusive, internal use software license and other Intellectual Property associated with such software
and (2) is not incorporated into, or material to the development, manufacturing, or distribution of, any of the products and services
of the Company or any of its Subsidiaries, (B) any Intellectual Property licensed on a nonexclusive basis ancillary to the purchase
or use of equipment, reagents or other materials, (C) any confidential information provided under confidentiality agreements and
(D) agreements between the Company or any of its Subsidiaries and its employees in the Company’s standard form thereof), (ii) whether
such contract involves the Company Registered IP licensed to the Company or any of its Subsidiaries and (iii) whether the license
or licenses granted to the Company or any of its Subsidiaries are exclusive or nonexclusive.
(c) Section 4.19(c) if
the Company Disclosure Letter accurately identifies each of the Company’s contracts pursuant to which any Person has been granted
any license or covenant not sue under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest
in, any Company Registered IP (other than (i) any confidential information provided under confidentiality agreements and (ii) any
Company Registered IP nonexclusively licensed to academic collaborators, suppliers, manufacturers or service providers for the sole purpose
of enabling such academic collaborator, supplier, manufacturer or service provider to provide services for the Company’s benefit).
(d) To
the knowledge of the Company, the Company Registered IP constitutes all Intellectual Property necessary for the Company to conduct its
business as currently conducted; provided, however, that the foregoing representation is not a representation with respect to non-infringement
of Intellectual Property.
(e) The
Company and its Subsidiaries have taken commercially reasonable measures to maintain the confidentiality of all information that constitutes
or constituted a material Trade Secret of the Company and its Subsidiaries, including requiring all Persons having access thereto to
execute written non-disclosure agreements or other binding obligations to maintain confidentiality of such information.
(f) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, (i) to
the knowledge of the Company, the conduct of the businesses of the Company and its Subsidiaries, including the manufacture, marketing,
offering for sale, sale, importation, use or intended use or other disposal of any product as currently sold or under development by
Company or any of its Subsidiaries, has not infringed, misappropriated or diluted, and does not infringe, misappropriate or dilute, any
Intellectual Property of any Person, (ii) neither the Company nor any of its Subsidiaries have received any written notice or claim
asserting or suggesting that any such infringement, misappropriation, or dilution is or may be occurring or has or may have occurred
and (iii) to the knowledge of the Company, no Person is infringing, misappropriating, or diluting in any material respect any Company
Registered IP.
(g) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, (i) the
Company and its Subsidiaries have taken commercially reasonable steps to protect the confidentiality and security of the computer and
information technology systems used by the Company or any of its Subsidiaries (the “IT Systems”) and the information
and transactions stored or contained therein or transmitted thereby, (ii) to the knowledge of the Company, during the past two (2) years,
there has been no unauthorized or improper use, loss, access, transmittal, modification or corruption of any such information or data
and (iii) since January 1, 2021, there have been no material failures, crashes, viruses, security breaches (including any unauthorized
access to any personally identifiable information), affecting the IT Systems.
(h) The
Company and its Subsidiaries have at all times complied in all material respects with all: (i) applicable Laws, published privacy
policies and contractual obligations relating to privacy, data protection, and the collection, retention, protection, and use of information
that alone or in combination with other information can be used to identify an individual, household or device (“Personal Information”)
collected, used, or held for use by the Company or any of its Subsidiaries (collectively, “Privacy Laws”), (ii) since
January 1, 2021, no claims have been asserted or, to the knowledge of the Company, threatened in writing against the Company or
any of its Subsidiaries alleging a violation of any Person’s privacy or Personal Information, (iii) neither this Agreement
nor the consummation of the Contemplated Transactions will breach or otherwise violate any Privacy Laws and (iv) the Company and
its Subsidiaries have taken commercially reasonable steps to protect the Personal Information collected, used or held for use by the
Company or any of its Subsidiaries against loss and unauthorized access, use, modification or disclosure, or other misuse. The Company
and its Subsidiaries have contractually obligated all vendors, processors, service providers and other Persons collecting, using or otherwise
processing Personal Information by or for the Company or any of its Subsidiaries (“Data Processors”) to comply with
applicable Privacy Laws and to take reasonable measures to protect Personal Information from unauthorized, access, use or disclosure.
To the knowledge of the Company, no Data Processors have failed to comply with Privacy Laws with respect to the Personal Information
processed on behalf of the Company or its Subsidiaries.
(i) To
the knowledge of the Company, no government funding, facilities or resources of a university, college, other educational institution
or research center or funding from third parties was used in the development of Company Owned IP or any Intellectual Property, exclusively
licensed to the Company or any of its Subsidiaries, and no Governmental Entity, university, college, other educational institution or
research center has, to the knowledge of the Company, any claim or right in or to such Intellectual Property.
(j) Except
as set forth on Section 4.19(j) of the Company Disclosure Letter, the execution, delivery and performance by the Company
of this Agreement, and the consummation of the Contemplated Transactions, will not result in the loss of, or give rise to any right of
any third party to terminate or modify any of the rights or obligations of the Company or any of its Subsidiaries under any agreement
under which the Company or any of its Subsidiaries grants to any Person, or any Person grants to the Company or any of its Subsidiaries,
a license or right under or with respect to any Intellectual Property that is material to any of the businesses of the Company or any
of its Subsidiaries.
Section 4.20 State
Takeover Statutes. As of the date hereof and at all times on or prior to the First Effective Time, the Company Board has taken all
actions so that the restrictions applicable to business combinations contained in Section 203 of the DGCL are, and will be, inapplicable
to the execution, delivery and performance of this Agreement and the timely consummation of the Merger and the other Contemplated Transactions
and will not restrict, impair or delay the ability of Parent or Merger Subs, after the First Effective Time, to vote or otherwise exercise
all rights as a stockholder of the Company. No other “moratorium,” “fair price,” “business combination,”
“control share acquisition” or similar provision of any state anti-takeover Law (collectively, “Takeover Laws”)
or any similar anti-takeover provision in the Company Charter or Company Bylaws is, or at the First Effective Time will be, applicable
to this Agreement, the Merger or any of the other Contemplated Transactions.
Section 4.21 No
Rights Plan. There is no stockholder rights plan, “poison pill” anti-takeover plan or other similar device in effect
to which the Company or any of its Subsidiaries is a party or is otherwise bound.
Section 4.22 Related
Party Transactions. Except as set forth on Section 4.22 of the Company Disclosure Letter, since January 1, 2022
through the date of this Agreement, there have been no transactions, agreements, arrangements or understandings between the Company or
any of its Subsidiaries, on the one hand, and the Affiliates of the Company or any of its Subsidiaries, on the other hand that would
be required to be disclosed under Item 404 of Regulation S-K under the Securities Act (assuming the Company and its Subsidiaries were
subject to the requirements of the Exchange Act).
Section 4.23 Certain
Payments. For the five (5) years immediately preceding the date hereof, neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any of their respective directors, executives, representatives, agents or employees (a) has used
or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political
activity, (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental
officials or employees, (c) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, as amended,
(d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties, or (e) has
made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
Section 4.24 Trade
Control Laws. Since April 24, 2019, the Company and its Subsidiaries have been in material compliance with all applicable import,
export control, and economic and trade sanctions laws, regulations, statutes, and orders, including the Export Administration Regulations,
the International Traffic in Arms Regulations, and the regulations administered by the Office of Foreign Assets Control of the U.S. Department
of the Treasury (the “Trade Laws”) and have obtained, or are otherwise qualified to rely upon, all material import
and export licenses, consents, notices, waivers, approvals, orders, authorizations, registrations, declarations or other authorizations
from, and made any filings with, any governmental authority required for (i) the import, export, and reexport of products, services,
software and technologies and (ii) releases of technologies and software to foreign nationals (the “Trade Approvals”).
There are no pending or threatened claims against the Company or its Subsidiaries, nor any actions, conditions, facts, or circumstances
that would reasonably be expected to give rise to any material future claims with respect to the Trade Laws or Trade Approvals.
Section 4.25 Brokers.
No broker, investment banker, financial advisor or other Person, other than as set forth on Section 4.25 of the Company Disclosure
Letter, the fees and expenses of which will be paid by the Company or any of its Subsidiaries, or following the First Effective Time,
Parent is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection
with the Contemplated Transactions based upon arrangements made by or on behalf of the Company, any of its Subsidiaries or any of its
Affiliates. The Company has furnished to Parent a true and complete copy of any Contract between the Company or any of its Subsidiaries
and any Person identified on Section 4.25 of the Company Disclosure Letter.
Section 4.26 Securities
Purchase Agreement.
(a) The
Company has delivered to Parent and Merger Subs, correct and complete copies of all definitive agreements related to the Concurrent Investment,
including the Securities Purchase Agreement. The Securities Purchase Agreement has not been amended or modified prior to the date of
this Agreement and as of the date hereof, the respective obligations and commitments contained in the Securities Purchase Agreement have
not been withdrawn or rescinded in any respect.
(b) As
of the date hereof, the Securities Purchase Agreement is in full force and effect and is the legal, valid, binding and enforceable obligation
of the Company, and, to the knowledge of the Company, each of the Concurrent Investment Investors. There are no conditions precedent
or other contingencies related to the funding of the full amount of the Concurrent Investment, other than as expressly set forth in the
Securities Purchase Agreement. As of the date hereof, no event has occurred which, with or without notice, lapse of time or both, would
reasonably be expected to constitute a default or breach on the part of the Company or, to the knowledge of the Company, any Concurrent
Investment Investor under the Securities Purchase Agreement.
Section 4.27 No
Other Representations and Warranties. Except for the representations and warranties contained in Article V, the Company
acknowledges and agrees that none of Parent, Merger Subs or any other Person on behalf of Parent or Merger Subs makes any other express
or implied representation or warranty whatsoever, and specifically (but without limiting the generality of the foregoing) that none of
Parent, its Subsidiaries or any other Person on behalf of Parent or Merger Subs makes any representation or warranty with respect to
any projections or forecasts delivered or made available to the Company or any of its Representatives of future revenues, results of
operations (or any component thereof), cash flows or financial condition (or any component thereof) of Parent (including any such projections
or forecasts made available to the Company and Representatives in certain “data rooms” or management presentations in expectation
of the Contemplated Transactions), and the Company has not relied on any such information or any representation or warranty not set forth
in Article V.
Article V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS
Except (a) as disclosed
in the Parent SEC Documents at least three Business Days prior to the date of this Agreement and that is reasonably apparent on the face
of such disclosure to be applicable to the representation and warranty set forth herein (other than any disclosures contained or referenced
therein under the captions “Risk Factors,” “Forward-Looking Statements,” “Quantitative and Qualitative
Disclosures About Market Risk,” and any other disclosures contained or referenced therein of information, factors, or risks that
are predictive, cautionary, or forward-looking in nature); or (b) as set forth in the corresponding section or subsection of the
disclosure letter delivered by Parent to the Company (the “Parent Disclosure Letter”) (it being agreed that the disclosure
of any information in a particular section or subsection of the Parent Disclosure Letter shall be deemed disclosure of such information
with respect to any other section or subsection of this Agreement to which the relevance of such information is readily apparent on its
face), each of Parent and Merger Subs represent and warrant to the Company as follows:
Section 5.1 Organization,
Standing and Power.
(a) Each
of Parent and Merger Subs is a corporation duly organized or other entity duly formed, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation. Each of Parent and Merger Subs (x) has all requisite corporate or similar power and
authority to own, lease and operate its properties and to carry on its business as now being conducted and (y) is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing
or operation of its properties makes such qualification or licensing necessary, except in the case of clause (y), where the failure to
be so qualified or licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to
have a Parent Material Adverse Effect. For purposes of this Agreement, “Parent Material Adverse Effect” means any
event, change, circumstance, occurrence, effect or state of facts that (A) is or would reasonably be expected to be materially adverse
to the business, assets, liabilities, financial condition, or results of operations of Parent and its Subsidiaries, taken as a whole,
or (B) materially impairs the ability of Parent or Merger Subs to consummate the Merger or any of the other Contemplated Transactions;
provided, however, that in the case of clause (A) only, Parent Material Adverse Effect shall not include any
event, change, circumstance, occurrence, effect or state of facts to the extent resulting from (1) changes or conditions generally
affecting the industries in which Parent and its Subsidiaries operate, or the economy or the financial, debt, banking, capital, credit
or securities markets, in the United States, including effects on such industries, economy or markets resulting from any regulatory and
political conditions or developments in general, (2) the outbreak or escalation of war or acts of terrorism or any natural disasters,
acts of God or comparable events, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or any worsening of the foregoing,
or any declaration of martial law, quarantine or similar directive, policy or guidance or Law or other action by any Governmental Entity
in response thereto, (3) changes in Law or GAAP, or the interpretation or enforcement thereof, (4) the public announcement
or pendency of this Agreement, or (5) any specific action taken (or omitted to be taken) by Parent at or with the express written
consent of the Company; provided, that, with respect to clauses (1), (2) and (3), the impact of such event, change,
circumstance, occurrence, effect or state of facts is not disproportionately adverse to Parent and its Subsidiaries, as compared to other
participants in the industries in which Parent and its Subsidiaries operate.
(b) Parent
has previously made available to the Company true and complete copies of the Certificate of Incorporation and bylaws of each of Parent,
each of its Subsidiaries, and Merger Subs, in each case, as amended to the date of this Agreement, and each as so delivered is in full
force and effect. None of Parent, its Subsidiaries, or Merger Subs is in violation of any provision of their respective Certificate of
Incorporation or bylaws or equivalent governing documents.
Section 5.2 Capital
Stock.
(a) The
authorized capital stock of Parent consists of 150,000,000 shares of Parent Common Stock and 10,000,000 shares of Parent Preferred Stock.
As of the close of business on October 29, 2024 (the “Measurement Date”), (i) 28,867,711 shares of Parent
Common Stock (excluding treasury shares) were issued and outstanding, all of which were validly issued, fully paid and nonassessable
(which term means that no further sums are required to be paid by the holders thereof in connection with the issue of such shares) and
were free of preemptive rights, (ii) no shares of Parent Common Stock were held in treasury, (iii) an aggregate of 3,266,711
shares of Parent Common Stock were subject to the exercise of outstanding Parent Options, (iv) no shares of Parent Common Stock
were subject to outstanding Parent Restricted Stock Unit Awards, and (v) no shares of Parent Preferred Stock were issued and outstanding
or held in treasury. Except as set forth above in this Section 5.2(a), Parent does not have any outstanding bonds, debentures,
notes or other obligations having the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right
to vote) with the stockholders of Parent or any of its Subsidiaries on any matter. Except as set forth above in this Section 5.2(a) and
except for changes since the close of business on the Measurement Date resulting from the exercise of any options as described above,
as of the Measurement Date, there are no outstanding (A) shares of capital stock or other voting securities or equity interests
of Parent or any of its Subsidiaries, (B) securities of Parent or any of its Subsidiaries convertible into or exchangeable or exercisable
for shares of capital stock of Parent or any of its Subsidiaries or other voting securities or equity interests of Parent or any of its
Subsidiaries, (C) stock appreciation rights, “phantom” stock rights, performance units, interests in or rights to the
ownership or earnings of Parent or any of its Subsidiaries or other equity equivalent or equity-based awards or rights, (D) subscriptions,
options, warrants, calls, commitments, Contracts or other rights to acquire from Parent or any of its Subsidiaries, or obligations of
Parent or any of its Subsidiaries to issue, any shares of capital stock of Parent or any of its Subsidiaries, voting securities, equity
interests or securities convertible into or exchangeable or exercisable for capital stock or other voting securities or equity interests
of Parent or any of its Subsidiaries or rights or interests described in the preceding clause (C), or (E) obligations of Parent
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any such securities or to issue, grant, deliver or sell, or cause
to be issued, granted, delivered or sold, any such securities. There are no stockholder agreements, voting trusts or other agreements
or understandings to which Parent or any of its Subsidiaries is a party or of which Parent has knowledge with respect to the holding,
voting, registration, redemption, repurchase or disposition of, or that restricts the transfer of, any capital stock or other voting
securities or equity interests of Parent or any of its Subsidiaries.
(b) The
authorized capital stock of First Merger Sub consists of 1,000 shares of common stock, par value $0.001 per share, of which 1,000 shares
are issued and outstanding, all of which shares are beneficially owned by Parent.
(c) The
shares of Parent Common Stock to be issued pursuant to the Merger will be duly authorized, validly issued, fully paid and nonassessable
and not subject to any preemptive rights.
Section 5.3 Subsidiaries.
Section 5.3 of the Parent Disclosure Letter sets forth a true and complete list of each Subsidiary of Parent, including its
jurisdiction of incorporation or formation. Each of Parent’s Subsidiaries (i) is an entity duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and
authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing
or operations of its properties makes such qualification or licensing necessary, except in the case of clause (iii), where the failure
to be so qualified or licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be expected
to have a Parent Material Adverse Effect. All outstanding shares of capital stock and other voting securities or equity interests of
each such Subsidiary are owned directly by Parent, free and clear of all Liens. Except for the capital stock of, or other equity or voting
interests in, its Subsidiaries, Parent does not own, directly or indirectly, any equity, membership interest, partnership interest, joint
venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable for any of the
foregoing, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital
contribution, guarantee, credit enhancement or other investment in, or assume any liability or obligation of, any Person. Each Merger
Sub was formed solely for the purpose of engaging in the Merger and the other Contemplated Transactions and has engaged in no business
other than in connection with the Contemplated Transactions.
Section 5.4 Authority.
(a) Each
of Parent and Merger Subs has all necessary corporate power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger and the other Contemplated Transactions, including the issuance of the shares of Parent Common
Stock to the holders of Company capital stock as Merger Consideration (the “Parent Common Stock Issuance”). The execution,
delivery and performance of this Agreement by Parent and Merger Subs and the consummation by Parent and Merger Subs of the Merger and
the other Contemplated Transactions have been duly authorized by all necessary corporate action on the part of Parent and Merger Subs
and no other corporate proceedings on the part of Parent or Merger Subs are necessary to approve this Agreement or to consummate the
Merger and the other Contemplated Transactions, subject to (i) obtaining the approval of the Nasdaq Issuance Proposal and the Reverse
Stock Split Proposal by the holders of a majority of the votes cast for such proposals (collectively, the “Parent Stockholder
Approval”) and (ii) the approval of this Agreement by Parent as the sole stockholder of Merger Subs. This Agreement has
been duly executed and delivered by Parent and Merger Subs and, assuming the due authorization, execution and delivery by the Company,
constitutes a valid and binding obligation of each of Parent and Merger Subs, enforceable against each of Parent and Merger Subs in accordance
with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization
or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity).
(b) The
Parent Board, at a meeting duly called and held at which all directors of Parent were present, duly adopted resolutions (i) determining
that the terms of this Agreement, the Merger and the other Contemplated Transactions are fair to, advisable and in the best interests
of Parent and its stockholders, (ii) approving and declaring advisable this Agreement and the Contemplated Transactions, including
the Merger, the issuance of shares of Parent Common Stock to the stockholders of the Company pursuant to the terms of this Agreement,
the Concurrent Investment, the Pre-Closing Cash Dividend and the Parent Support Agreements, (iii) determining to submit the Parent
Board Recommendation to the stockholders of Parent, and (iv) determining to approve and recommend the Parent Stockholder Proposal
to the stockholders of Parent as promptly as practicable after the form of the Reverse Stock Split Proposal is mutually agreed to by
Parent and the Company. The board of directors of Merger Subs (by unanimous written consent) has: (x) determined that the Contemplated
Transactions are fair to, advisable, and in the best interests of Merger Subs and its sole stockholder, (y) deemed advisable and
approved this Agreement and the Contemplated Transactions and (z) determined to recommend, upon the terms and subject to the conditions
set forth in this Agreement, that the stockholder of Merger Subs vote to adopt this Agreement and thereby the Contemplated Transactions.
(c) The
Parent Stockholder Approval is the only vote of the holders of any class or series of the Parent Common Stock or other securities required
in connection with the consummation of the Merger and the other Contemplated Transactions, including the Parent Common Stock Issuance.
Other than the Parent Stockholder Approval, no vote of the holders of any class or series of the Parent Common Stock or other securities
is required in connection with the consummation of any of the Contemplated Transactions to be consummated by Parent.
Section 5.5 No
Conflict; Consents and Approvals.
(a) Except
as set forth in Section 5.5(a) of the Parent Disclosure Letter, the execution, delivery and performance of this Agreement
by each of Parent and Merger Subs does not, and the consummation of the Merger and the other Contemplated Transactions and compliance
by each of Parent and Merger Subs with the provisions hereof will not, conflict with, or result in any violation or breach of, or default
(with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation, modification
or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties,
assets or rights of Parent or Merger Subs under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements
under, or require any consent, waiver or approval of any Person pursuant to, any provision of (i) the Certificate of Incorporation
or bylaws of Parent or Merger Subs, (ii) any Parent Material Contract to which Parent or Merger Subs is a party by which Parent,
Merger Subs or any of their respective properties or assets may be bound, or (iii) subject to the governmental filings and other
matters referred to in Section 5.5(b), any material Law or any rule or regulation of Nasdaq applicable to Parent or
Merger Subs or by which Parent, Merger Subs or any of their respective properties or assets may be bound, except as, in the case of clauses (ii) and
(iii), as individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) No
consent, approval, order or authorization of, or registration, declaration, filing with or notice to, any Governmental Entity is required
by or with respect to Parent or Merger Subs in connection with the execution, delivery and performance of this Agreement by Parent or
Merger Subs or the consummation by Parent or Merger Subs of the Merger and the other Contemplated Transactions or compliance with the
provisions hereof, except for (i) the filing of the pre-merger notification report under the HSR Act, (ii) the filing with
the SEC of such reports under Section 13(a) or 15(d) of the Exchange Act, as may be required in connection with this Agreement
and the Contemplated Transactions, (iii) such other filings and reports as may be required pursuant to the applicable requirements
of the Securities Act, the Exchange Act and any other applicable state or federal securities, takeover and “blue sky” laws,
(iv) the filing of the Certificate of Merger with the Delaware Secretary of State as required by the DGCL, (v) any filings
required under the rules and regulations of Nasdaq and (vi) such consents, approvals, orders, authorizations, registrations,
declarations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.6 SEC
Reports; Financial Statements.
(a) Parent
has filed with or furnished to the SEC on a timely basis true and complete copies of all forms, reports, schedules, statements and other
documents required to be filed with or furnished to the SEC by Parent since January 1, 2024 (all such documents, together with all
exhibits and schedules to the foregoing materials and all information incorporated therein by reference, the “Parent SEC Documents”).
As of their respective filing dates (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of
such filing), the Parent SEC Documents complied in all material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, including, in each
case, the rules and regulations promulgated thereunder, and none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a 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.
(b) The
financial statements (including the related notes and schedules thereto) included (or incorporated by reference) in the Parent SEC Documents
(i) have been prepared in a manner consistent with the books and records of Parent, (ii) have been prepared in accordance with
GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto), (iii) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto and (iv) fairly present in
all material respects the consolidated financial position of Parent as of the dates thereof and their respective consolidated results
of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments that were not, or are not expected to be, material in amount), all in accordance with GAAP and the applicable rules and
regulations promulgated by the SEC. Since January 1, 2024, Parent has not made any change in the accounting practices or policies
applied in the preparation of its financial statements, except as required by GAAP, SEC rule or policy or applicable Law. The books
and records of Parent have been, and are being, maintained in all material respects in accordance with GAAP (to the extent applicable)
and any other applicable legal and accounting requirements and reflect only actual transactions.
(c) Parent
has established and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Such disclosure controls and procedures are designed to ensure that information relating to Parent required to be disclosed
in Parent’s periodic and current reports under the Exchange Act, is made known to Parent’s principal executive officer and
principal financial officer by others within those entities to allow timely decisions regarding required disclosures as required under
the Exchange Act. The chief executive officer and chief financial officer of Parent have evaluated the effectiveness of Parent’s
disclosure controls and procedures and, to the extent required by applicable Law, presented in any applicable Parent SEC Document that
is a report on Form 10-K or Form 10-Q, or any amendment thereto, its conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by such report or amendment based on such evaluation.
(d) Parent
has established and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) which is effective in providing reasonable assurance regarding the reliability of Parent’s financial reporting
and the preparation of Parent’s financial statements for external purposes in accordance with GAAP. Parent has disclosed, based
on its most recent evaluation of Parent’s internal control over financial reporting prior to the date hereof, to Parent’s
auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of Parent’s
internal control over financial reporting which are reasonably likely to adversely affect Parent’s ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees
who have a significant role in Parent’s internal control over financial reporting. A true, correct and complete summary of any
such disclosures made by management to Parent’s auditors and audit committee is set forth as Section 5.6(d) of
Parent Disclosure Letter.
(e) Since
January 1, 2024, (i) neither Parent nor, to the knowledge of Parent, any of its directors, officers, employees, auditors, accountants
or representatives has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Parent or its internal accounting
controls, including any material complaint, allegation, assertion or claim that Parent has engaged in questionable accounting or auditing
practices and (ii) no attorney representing Parent, whether or not employed by Parent, has reported evidence of a material violation
of securities Laws, breach of fiduciary duty or similar violation by Parent or any of its officers, directors, employees or agents to
the Parent Board or any committee thereof or to any director or officer of Parent.
(f) As
of the date of this Agreement, there are no outstanding or unresolved comments in the comment letters received from the SEC staff with
respect to the Parent SEC Documents. To the knowledge of Parent, none of the Parent SEC Documents is subject to ongoing review or outstanding
SEC comment or investigation.
(g) Parent
is not a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract
(including any Contract or arrangement relating to any transaction or relationship between or among Parent, on the one hand, and any
unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or
any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S K under the Exchange Act)), where the
result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities
of, Parent in Parent’s published financial statements or other Parent SEC Documents.
(h) Parent
is in compliance in all material respects with (i) the provisions of the Sarbanes-Oxley Act and (ii) the rules and regulations
of Nasdaq, in each case, that are applicable to Parent.
Section 5.7 No
Undisclosed Liabilities. Neither Parent nor any of its Subsidiaries has any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, known or unknown, whether due or to become due and whether or not required to be recorded or reflected
on a balance sheet under GAAP, except (a) to the extent specifically and adequately accrued or reserved against in the audited balance
sheet of Parent as at December 31, 2023 included in the Annual Report on Form 10-K filed by Parent with the SEC on March 25,
2024 (without giving effect to any amendment thereto filed on or after the date hereof) and (b) for liabilities and obligations
incurred in the ordinary course of business consistent with past practice (none of which is a liability for a breach or default under
any contract, breach of warranty, tort, infringement, misappropriation or violation of law) since December 31, 2023 that are not
individually or in the aggregate material to Parent.
Section 5.8 Absence
of Certain Changes or Events. Except as set forth in Section 5.8 of the Parent Disclosure Letter, since December 31,
2023, (i) except in connection with the execution of this Agreement and the consummation of the Contemplated Transactions, Parent
and its Subsidiaries have conducted their business only in the ordinary course consistent with past practice; (ii) there has not
been any change, event or development or prospective change, event or development that, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect; and (iii) neither Parent nor any of its Subsidiaries has:
(a) (i) declared,
set aside or paid any dividends on, or made any other distributions (whether in cash, stock or property) in respect of, any of its capital
stock or other equity interests, other than the Pre-Closing Cash Dividend, (ii) purchased, redeemed or otherwise acquired shares
of capital stock or other equity interests of Parent or any of its Subsidiaries or any options, warrants, or rights to acquire any such
shares or other equity interests, or (iii) split, combined, reclassified or otherwise amended the terms of any of its capital stock
or other equity interests or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or other equity interests;
(b) amended
or otherwise changed, or authorized or proposed to amend or otherwise change, its certificate of incorporation or by-laws (or similar
organizational documents);
(c) adopted
or entered into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or reorganization; or
(d) changed
its financial or Tax accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or applicable
Law, or revalued any of its material assets.
Section 5.9 Litigation.
There is no Action (or basis therefor) pending or, to the knowledge of Parent, threatened against or affecting Parent or any of its Subsidiaries,
any of its properties or assets, or any present or former officer, director or employee of Parent or any of its Subsidiaries in such
individual’s capacity as such, other than any Action that (a) does not involve an amount in controversy in excess of $100,000
and (b) does not seek injunctive or other non-monetary relief. Neither Parent nor any of its Subsidiaries nor any of their respective
properties or assets is subject to any outstanding judgment, order, injunction, rule or decree of any Governmental Entity. There
is no Action pending or, to the knowledge of Parent, threatened seeking to prevent, hinder, modify, delay or challenge the Merger or
any of the other Contemplated Transactions.
Section 5.10 Compliance
with Law. Parent and each of its Subsidiaries are and have been in compliance in all material respects with all Laws applicable to
its businesses, operations, properties or assets. Neither Parent nor any of its Subsidiaries has received, since January 1, 2021,
a notice or other written communication alleging or relating to a possible material violation of any Law applicable to its business,
operations, properties, assets or Parent Products (as defined below). Parent and each of its Subsidiaries have in effect all material
Permits of all Governmental Entities necessary or advisable for it to own, lease or operate its properties and assets and to carry on
its business and operations as now conducted, and there has occurred no violation of, default (with or without notice or lapse of time
or both) under or event giving to others any right of revocation, non-renewal, adverse modification or cancellation of, with or without
notice or lapse of time or both, any such Permit, nor would any such revocation, non-renewal, adverse modification or cancellation result
from the consummation of the Contemplated Transactions.
Section 5.11 Health
Care Regulatory Matters. Except as set forth in Section 5.11 of the Parent Disclosure Letter:
(a) Parent,
and to the knowledge of Parent, each of its directors, officers, management employees, agents (while acting in such capacity), contract
manufacturers, suppliers, and distributors are, and at all times prior hereto were, in material compliance with all health care laws
to the extent applicable to Parent or any of its products or activities, including, but not limited to the Health Care Laws, to the extent
applicable to Parent. To the knowledge of Parent, there are no facts or circumstances that reasonably would be expected to give rise
to any material liability under any Health Care Laws.
(b) Neither
Parent nor any of its Subsidiaries is not party to any material corporate integrity agreements, monitoring agreements, consent decrees,
settlement orders, or similar agreements with or imposed by any Governmental Entity.
(c) All
applications, notifications, submissions, information, claims, reports and statistical analyses, and other data and conclusions derived
therefrom, utilized as the basis for or submitted in connection with any and all requests for a Permit from the FDA or other Governmental
Entity relating to products that are regulated as biologics under Health Care Laws, including biological candidates, compounds or products
being researched, tested, stored, developed, labeled, manufactured, packed, imported, exported and/or distributed by Parent or any of
its Subsidiaries (“Parent Products”), including, without limitation, investigational new drug applications, when submitted
to the FDA or other Governmental Entity were true, complete and correct in all material respects as of the date of submission and any
necessary or required updates, changes, corrections or modification to such applications, submissions, information and data have been
submitted to the FDA or other Governmental Entity. Parent does not have knowledge of any facts or circumstances that would be reasonably
likely to lead the revocation, suspension, limitation, or cancellation of a Permit required under Health Care Laws.
(d) All
preclinical studies and clinical trials conducted by or, to the knowledge of Parent, on behalf of Parent in respect of a Parent Product
for submission to the FDA or other Governmental Entity have been since January 1, 2018, and if still pending are being, conducted
in compliance with research protocols and all applicable Health Care Laws, including, but not limited to, the FDCA and its applicable
implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58, 312, 314 and 812. No clinical trial conducted by or on behalf of Parent has
been conducted using any clinical investigators who have been disqualified. Except as set forth on Section 5.11(d) of
the Parent Disclosure Letter, no clinical trial conducted by or on behalf of the Company has been terminated or suspended prior to completion,
and no clinical investigator that has participated or is participating in, or institutional review board that has or has had jurisdiction
over, a clinical trial conducted by or on behalf of Parent has placed a clinical hold order on, or otherwise terminated, delayed or suspended,
such a clinical trial at a clinical research site based on an actual or alleged lack of safety or efficacy of any Parent Product or a
failure to conduct such clinical trial in compliance with applicable Health Care Laws.
(e) All
manufacturing operations conducted by or, to the knowledge of Parent, for the benefit of Parent have been and are being conducted in
material compliance with all Permits under applicable Health Care Laws, all applicable provisions of the FDA’s current good manufacturing
practice (cGMP) regulations at 21 C.F.R. Parts 210-211 and Parts 600 and 610 and FDA’s Quality System (QS) regulations at 21 C.F.R.
Part 820, and all comparable foreign regulatory requirements of any Governmental Entity.
(f) Parent
has not received any written communication that relates to an alleged violation or non-compliance with any Health Care Laws, including
any notification of any pending or threatened claim, suit, proceeding, hearing, enforcement, investigation, arbitration, import detention
or refusal, FDA Warning Letter or Untitled Letter, or any action by a Governmental Entity relating to any Health Care Laws. All Warning
Letters, Form-483 observations, or comparable findings from other Governmental Entities listed in Section 5.11(f) of
the Parent Disclosure Letter have been resolved to the satisfaction of the applicable Governmental Entity.
(g) There
have been no seizures, withdrawals, recalls, detentions, or suspensions of manufacturing, testing, or distribution relating to the Parent
Products required or requested by a Governmental Entity, or other Safety Notices. All Safety Notices listed in Section 5.11(g) of
the Parent Disclosure Letter have been resolved to the satisfaction of the applicable Governmental Entity.
(h) Except
as set forth in Section 5.11(h) of the Parent Disclosure Letter, there are no unresolved Safety Notices, and to the
knowledge Parent, there are no facts or circumstances that would be reasonably likely to result in a Safety Notice with respect to the
Parent Products or a termination or suspension of developing and testing of any of the Parent Products.
(i) Neither
Parent, nor, to the knowledge of Parent, any officer, employee, agent, or distributor of Parent has made an untrue statement of a material
fact or fraudulent or misleading statement to a Governmental Entity, failed to disclose a material fact required to be disclosed to a
Governmental Entity, or committed an act, made a statement, or failed to make a statement that would reasonably be expected to provide
a basis for the FDA to invoke its FDA Ethics Policy. None of the aforementioned is or has been under investigation resulting from any
allegedly untrue, fraudulent, misleading, or false statement or omission, including data fraud, or had any action pending or threatened
relating to the FDA Ethics Policy.
(j) All
reports, documents, claims, Permits and notices required to be filed, maintained or furnished to the FDA or any Governmental Entity by
Parent have been so filed, maintained or furnished, except where failure to file, maintain or furnish such reports, documents, claims,
Permits or notices have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
All such reports, documents, claims, Permits and notices were true and complete in all material respects on the date filed (or were corrected
in or supplemented by a subsequent filing).
(k) Neither
Parent nor, to the knowledge of Parent, any officer, employee, agent, or distributor of Parent has committed any act, made any statement
or failed to make any statement that violates the Federal Anti-Kickback Statute, 28 U.S.C. § 1320a-7b, the Federal False Claims
Act, 31 U.S.C. § 3729, other Health Care Laws, or any other similar federal, state, or ex-U.S. law applicable in the jurisdictions
in which the Parent Products are sold or intended to be sold.
(l) Neither
Parent nor, to the knowledge of Parent, any officer, employee, agent, or distributor of Parent has been convicted of any crime or engaged
in any conduct that has resulted, or would reasonably be expected to result, in debarment under applicable Law, including, without limitation,
21 U.S.C. § 335a, or exclusion under 42 U.S.C. § 1320a-7, or any other statutory provision or similar law applicable in other
jurisdictions in which the Parent Products are sold or intended to be sold. Neither Parent nor, to the knowledge of Parent, any officer,
employee, agent or distributor of Parent, has been excluded from participation in any federal health care program or convicted of any
crime or engaged in any conduct for which such Person could be excluded from participating in any federal health care program under Section 1128
of the Social Security Act of 1935, as amended, or any similar Health Care Law or program.
Section 5.12 Benefit
Plans.
(a) Section 5.12(a) of
the Parent Disclosure Letter contains a true, correct, and complete list of each material Parent Plan.
(b) Parent
has provided or made available to the Company a current, accurate and complete copy of each material Parent Plan, or if such Parent Plan
is not in written form, a written summary of all of the material terms of such Parent Plan. With respect to each Parent Plan, Parent
has furnished or made available to the Company a current, accurate and complete copy of, to the extent applicable: (i) all documents
embodying or governing such Parent Plan and any related trust agreement or other funding instrument, (ii) the most recent determination
letter of the IRS, (iii) any summary plan description, summary of material modifications, and other similar material written communications
(or a written description of any material oral communications) to the employees of Parent or any of its Subsidiaries concerning the extent
of the benefits provided under a Parent Plan, (iv) all non-routine correspondence to and from any governmental agency, and (v) for
the three most recent years and as applicable (A) the Form 5500 and attached schedules, (B) audited financial statements,
(C) nondiscrimination testing results and (D) actuarial valuation reports.
(c) Neither
Parent, its Subsidiaries or any member of their Controlled Group has ever sponsored, maintained, contributed to, or been required to
contribute to or incurred any liability (contingent or otherwise) with respect to: (i) a Multiemployer Plan, (ii) an “employee
pension benefit plan” (within the meaning of Section 3(2) of ERISA) that is subject to Title IV of ERISA or Section 412
of the Code or Section 302 of ERISA, (iii) any “multiple employer plan” as defined in Section 413 of the Code
or Section 210 of ERISA, (iv) a “funded welfare benefit plan” within the meaning of Section 419 of the Code
or (v) any “multiple employer welfare arrangement” (as such term is defined in Section 3(40) of ERISA).
(d) With
respect to the Parent Plans:
(i) each
Parent Plan is and has been established, operated and administered in all material respects with its terms and materially complies in
form and in operation with the applicable provisions of ERISA and the Code and all other applicable legal requirements;
(ii) no
Parent Plan is, or within the past six years has been, the subject of an application or filing under a government sponsored amnesty,
voluntary compliance, or similar program, or been the subject of any self-correction under any such program;
(iii) each
Parent Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination, advisory and/or
opinion letter, as applicable, from the IRS that it is so qualified and nothing has occurred to the knowledge of Parent since the date
of such letter that would reasonably be expected to cause the loss of the sponsor’s ability to rely upon such letter, and nothing
has occurred to the knowledge of Parent that would reasonably be expected to result in the loss of the qualified status of such Parent
Plan;
(iv) there
is no material Action (including any investigation, audit or other administrative proceeding) by the Department of Labor, the PBGC, the
IRS or any other Governmental Entity or by any plan participant or beneficiary pending, or to the knowledge of Parent, threatened, relating
to the Parent Plans, any fiduciaries thereof with respect to their duties to Parent Plans or the assets of any of the trusts under any
of Parent Plans (other than routine claims for benefits);
(v) none
of the Parent Plans currently provides, or reflects or represents any liability to provide post-termination or retiree welfare benefits
to any person for any reason, except as may be required by COBRA, and neither Parent nor any members of its Controlled Group has any
liability to provide post-termination or retiree welfare benefits to any person or ever represented, promised or contracted to any employee
or former employee of Parent (either individually or to Parent employees as a group) or any other person that such employee(s) or
other person would be provided with post-termination or retiree welfare benefits, except to the extent required by statute or except
with respect to a contractual obligation to reimburse any premiums such person may pay in order to obtain health coverage under COBRA;
(vi) all
payments and/or contributions required to have been timely made with respect to all Parent Plans either have been made or have been accrued
in accordance with the terms of the applicable Parent Plan and applicable law;
(vii) each
Parent Plan is subject exclusively to United States Law; and
(viii) the
execution and delivery of this Agreement, the Parent Stockholder Approval, and the consummation of the Merger will not, either alone
or in combination with any other event, (A) entitle any current or former employee, officer, director or consultant of Parent or
any of its Subsidiaries to severance pay, unemployment compensation or any other similar termination payment, or (B) accelerate
the time of payment or vesting, or increase the amount of or otherwise enhance any benefit due any such employee, officer, director or
consultant.
(e) Neither
Parent nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan (including any Parent Plan) that may reasonably
be expected to result, separately or in the aggregate, in connection with the Contemplated Transactions (either alone or in combination
with any other events), in the payment of any “parachute payments” within the meaning of Section 280G of the Code. There
is no agreement, plan or other arrangement to which Parent or any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries
is otherwise bound to compensate any person in respect of Taxes or other liabilities incurred with respect to Section 409A or 4999
of the Code.
(f) Each
Parent Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code (or any
comparable or similar provision of state, local, or foreign Law) complies in both form and operation in all material respects with the
requirements of Section 409A of the Code (or any comparable or similar provision of state, local, or foreign Law) and all applicable
IRS guidance issued with respect thereto (and has so complied for the entire period during which Section 409A of the Code has applied
to such Parent Plan) so that no amount paid or payable pursuant to any such Parent Plan is subject to any additional Tax or interest
under Section 409A of the Code (or any comparable or similar provision of state, local, or foreign Law).
(g) No
Parent Plan provides major medical health or long-term disability benefits that are not fully insured through an insurance contract.
Section 5.13 Labor
and Employment Matters.
(a) Parent
and each of its Subsidiaries are and, since January 1, 2021, have been in compliance in all material respects with all applicable
Laws relating to labor or employment matters, including those relating to employment practices, terms and conditions of employment, collective
bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation,
the collection and payment of withholding and/or payroll Taxes and similar Taxes, unemployment compensation, equal employment opportunity,
discrimination, harassment, employee and contractor classification, restrictive covenants, pay equity, information privacy and security,
and continuation coverage with respect to group health plans. Since January 1, 2021, there has not been, and as of the date of this
Agreement there is not pending or, to the knowledge of Parent, threatened, any labor dispute, work stoppage, labor strike or lockout
against Parent or any of its Subsidiaries by employees.
(b) No
employee of Parent or any of its Subsidiaries is, or since January 1, 2021 has been, covered by an effective or pending collective
bargaining agreement or similar labor agreement. To the knowledge of Parent, there has not been any activity on behalf of any labor union,
labor organization or similar employee group to organize any employees of Parent or any of its Subsidiaries. There are no and since January 1,
2021 there has not been any: (i) unfair labor practice charges or complaints against Parent or any of its Subsidiaries pending before
the National Labor Relations Board or any other labor relations tribunal or authority and to the knowledge of Parent no such representations,
claims or petitions are threatened, (ii) representations, claims or petitions pending before the National Labor Relations Board
or any other labor relations tribunal or authority or (iii) grievances or pending arbitration proceedings against Parent or any
of its Subsidiaries that arose out of or under any collective bargaining agreement.
(c) To
the knowledge of Parent, no current officer of Parent or any of its Subsidiaries intends, or is expected, to terminate such individual’s
employment relationship with Parent in connection with or as a result of the Contemplated Transactions.
(d) Since
January 1, 2021, (i) neither Parent nor any of its Subsidiaries has not effectuated a “plant closing” (as defined
in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility,
(ii) there has not occurred a “mass layoff” (as defined in the WARN Act) in connection with Parent or any of its Subsidiaries
affecting any site of employment or one or more facilities or operating units within any site of employment or facility and (iii) neither
Parent nor any of its Subsidiaries has not engaged in layoffs or employment terminations sufficient in number to trigger application
of any similar state, local or foreign law. Parent and its Subsidiaries properly classify and for the three (3) years immediately
preceding the date hereof have properly classified its and their (i) employees as exempt or non-exempt in accordance with applicable
overtime laws, (ii) contingent workers in accordance with applicable law and (iii) workers as employees or non-employees (e.g.,
consultants, independent contractors), in accordance with applicable law.
(e) Except
as set forth on Section 5.13(e) of the Parent Disclosure Letter, with respect to any current or former employee, officer,
consultant or other service provider of Parent, there are no Actions against Parent or any of its Subsidiaries pending, or to the knowledge
of Parent, threatened to be brought or filed, in connection with the employment or engagement of any current or former employee, officer,
consultant or other service provider of Parent, including, without limitation, any claim relating to employment discrimination, harassment,
retaliation, equal pay, employment classification, contractor classification, wages, hours, and benefits or any other employment related
matter arising under applicable Laws, except where such action would not, individually or in the aggregate, result in Parent incurring
a material liability.
(f) Except
as set forth on Section 5.13(f) of the Parent Disclosure Letter or with respect to any Parent Plan (which subject is
addressed in Section 5.12 above), the execution of this Agreement and the consummation of the transactions set forth in or
contemplated by this Agreement will not result in any breach or violation of, or cause any payment to be made under, any applicable Laws
respecting labor and employment or any collective bargaining agreement to which Parent or any of its Subsidiaries is a party.
(g) Since
January 1, 2021, (i) no allegations of harassment or discrimination (with respect to any category protected by applicable law,
including, without limitation, sexual harassment), retaliation on the basis of protected activity (including as a whistleblower) or protected
class status in accordance with applicable law, or other misconduct relating to the workplace have been made, initiated, filed or, to
the knowledge of Parent, threatened against or involving Parent or any of its Subsidiaries or any of their respective current or former
directors, officers or senior level management employees, (ii) to the knowledge of Parent, no incidents of any such workplace harassment,
discrimination, retaliation, or other misconduct have occurred, and (iii) Parent has not entered into any settlement agreement related
to allegations of such harassment, discrimination, retaliation or other workplace-related misconduct by any of their directors, officers
or employees described in clause (i) hereof or any independent contractor.
(h) No
employee or other worker of Parent is subject to any service relationship that is not “at-will” or that is terminable on
more than 30 days’ notice.
Section 5.14 Environmental
Matters.
(a) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (i) Parent
and its Subsidiaries have conducted its businesses in compliance with all, and have not violated any, applicable Environmental Laws;
(ii) Parent and its Subsidiaries have obtained all Permits of all Governmental Entities and any other Person that are required under
any Environmental Law; (iii) there has been no release of any Hazardous Substance by Parent or any of its Subsidiaries or any other
Person in any manner that has given or would reasonably be expected to give rise to any remedial or investigative obligation, corrective
action requirement or liability of Parent or any of its Subsidiaries under applicable Environmental Laws; (iv) Parent and its Subsidiaries
have not received any claims, notices, demand letters or requests for information (except for such claims, notices, demand letters or
requests for information the subject matter of which has been resolved prior to the date of this Agreement) from any federal, state,
local, foreign or provincial Governmental Entity or any other Person asserting that Parent or any of its Subsidiaries is in violation
of, or liable under, any Environmental Law; (v) no Hazardous Substance has been disposed of, arranged to be disposed of, released
or transported in violation of any applicable Environmental Law, or in a manner that has given rise to, or that would reasonably be expected
to give rise to, any liability under any Environmental Law, in each case, on, at, under or from any current or former properties or facilities
owned or operated by Parent or any of its Subsidiaries or as a result of any operations or activities of Parent or any of its Subsidiaries
at any location and, to the knowledge of Parent, Hazardous Substances are not otherwise present at or about any such properties or facilities
in amount or condition that has resulted in or would reasonably be expected to result in liability to Parent or any of its Subsidiaries
under any Environmental Law; and (vi) neither Parent or any of its Subsidiaries nor any of their properties or facilities are subject
to, or are threatened to become subject to, any liabilities relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law or any agreement relating to environmental liabilities.
Section 5.15 Taxes.
(a) Parent
and its Subsidiaries have (i) filed all income and other material Tax Returns required to be filed by or on behalf of it (taking
into account any applicable extensions thereof) and all such Tax Returns are true, accurate and complete in all material respects; and
(ii) paid in full (or caused to be timely paid in full) all material Taxes that are required to be paid by or with respect to it,
whether or not such Taxes were shown as due on such Tax Returns.
(b) All
material Taxes not yet due and payable by Parent as of the date of the balance sheet included in the financial statements (including
the related notes and schedules thereto) included (or incorporated by reference) in the Parent SEC Documents have been, in all respects,
properly accrued in accordance with GAAP on the financial statements (including the related notes and schedules thereto) included (or
incorporated by reference) in the Parent SEC Documents, and such financial statements (including the related notes and schedules thereto)
included (or incorporated by reference) in the Parent SEC Documents reflect an adequate reserve (in accordance with GAAP) for all material
Taxes accrued but unpaid by Parent through the date of such financial statements. Since the date of financial statements (including the
related notes and schedules thereto) included (or incorporated by reference) in the Parent SEC Documents, neither Parent nor any of its
Subsidiaries has incurred, individually or in the aggregate, any liability for Taxes outside the ordinary course of business consistent
with past practice.
(c) Neither
Parent nor any of its Subsidiaries has executed any waiver of any statute of limitations on, or extended the period for the assessment
or collection of, any amount of Tax, in each case that has not since expired.
(d) No
material Tax Action with respect to Taxes or any Tax Return of Parent or any of its Subsidiaries are presently in progress or have been
asserted, threatened or proposed in writing and to the knowledge of Parent, no such Tax Action is being contemplated. No deficiencies
or claims for a material amount of Taxes have been claimed, proposed, assessed or asserted in writing against Parent or any of its Subsidiaries
by a Governmental Entity, other than any such claim, proposal, assessment or assertion that has been satisfied by payment in full, settled
or withdrawn.
(e) Subject
to exceptions as would not be material, Parent and its Subsidiaries have timely withheld all Taxes required to have been withheld from
payments made (or deemed made) to its employees, independent contractors, creditors, shareholders and other third parties and, to the
extent required, such Taxes have been timely paid to the relevant Governmental Entity.
(f) Neither
Parent nor any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulations § 1.6011-4(b)(2).
(g) Neither
Parent nor any of its Subsidiaries (i) is a party to or bound by, or has any liability pursuant to, any Tax sharing, allocation,
indemnification or similar agreement or obligation other than any Ordinary Course Agreement; (ii) is or has been a member of a group
(other than a group the common parent of which is Parent) filing a consolidated, combined, affiliated, unitary or similar income Tax
Return; (iii) has liability for the Taxes of any Person (other than Parent or its Subsidiaries) pursuant to Treasury Regulations
§ 1.1502-6 (or any similar provision of state, local or non-United States Law) as a transferee or successor, by Contract, or otherwise
by operation of Law; or (iv) is or has been treated as a resident for any income Tax purpose, or as subject to Tax by virtue of
having a permanent establishment, an office or fixed place of business, in any country other than the country in which it was or is organized.
(h) No
private letter rulings, technical advice memoranda, or similar material agreements or rulings have been requested, entered into or issued
by any Governmental Entity with respect to Parent or any of its Subsidiaries which rulings remain in effect.
(i) Neither
Parent nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) a change in, or use of improper,
method of accounting requested or initiated on or prior to the Closing Date, (ii) a “closing agreement” as described
in Section 7121 of the Code (or any similar provision of Law) executed on or prior to the Closing Date, (iii) an installment
sale or open transaction disposition made on or prior to the Closing Date, (iv) any prepaid amount received or deferred revenue
accrued on or prior to the Closing Date, other than in respect of such amounts received in the ordinary course of business, or (v) to
the knowledge of Parent, an intercompany transaction or excess loss amount described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).
(j) There
are no liens for Taxes upon any of the assets of Parent or any of its Subsidiaries other than Liens described in clause (i) of the
definition of Permitted Liens.
(k) Neither
Parent nor any of its Subsidiaries has distributed stock of another Person or has had its stock distributed by another Person, in a transaction
(or series of transactions) that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code.
(l) Neither
Parent nor any of its Subsidiaries has been a United States real property holding corporation, as defined in Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) No
material claim has been made in writing by any Governmental Entity in a jurisdiction where Parent or any of its Subsidiaries does not
currently file a Tax Return of a certain type or pay Taxes of a certain type that Parent is or may be subject to taxation by such jurisdiction
of such type.
(n) There
are no outstanding shares of Parent stock issued in connection with the performance of services (within the meaning of Section 83
of the Code) that immediately prior to the First Effective Time are subject to a substantial risk of forfeiture (as such terms are defined
in Section 83 of the Code) for which a valid election under Section 83(b) of the Code has not been made.
(o) To
the knowledge of Parent, neither Parent nor any of its Subsidiaries has been, is, or immediately prior to the First Effective Time will
be, treated as an “investment company” within the meaning of Section 368(a)(2)(F) of the Code.
(p) Neither
Parent nor any of its Subsidiaries has taken, or failed to take, any action nor knows of any fact or circumstance that, in each case,
could reasonably be expected to prevent or impede the Merger from qualifying as a transaction qualifying for the Intended Tax Treatment.
For purposes of this Section 5.15,
where the context permits, each reference to Parent shall include a reference to any person for whose Taxes Parent is liable under applicable
law.
Section 5.16 Contracts.
(a) Except
for any Parent Plans (which are the subject of Section 5.12) and except as set forth in the Parent SEC Documents publicly
available prior to the date of this Agreement, Parent is not a party to or bound by any “material contract” (as such term
is defined in Item 601(b)(10) of Regulation S-K under the Securities Act) (all such contracts including those set forth in Section 5.16(b) of
the Parent Disclosure Letter, “Parent Material Contracts”).
(b) Section 5.16(b) of
the Parent Disclosure Letter lists the following contracts, which for the purposes of this Agreement shall be considered Parent Material
Contracts:
(i) each Contract relating
to any agreement of indemnification or guaranty not entered into in the ordinary course of business;
(ii) each Contract containing
(A) any covenant prohibiting Parent, its Subsidiaries or the Surviving Entity from engaging in any line of business or competing
with any Person, or limiting the development, manufacture or distribution of the Surviving Entity’s products or services (B) any
most-favored pricing arrangement, (C) any exclusivity provision in favor of a third party or (D) any non-solicitation provision
applicable to Parent or its Subsidiaries, in the case of the foregoing clause (D) which are material to Parent or its Subsidiaries,
as applicable, taken as a whole;
(iii) each Contract
relating to capital expenditures and requiring payments after the date of this Agreement in excess of $100,000 pursuant to its express
terms and not cancelable without penalty;
(iv) each Contract relating
to the disposition or acquisition of material assets or any ownership interest in any Person;
(v) each Contract relating
to any mortgages, indentures, loans, notes or credit agreements, security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit in excess of $100,000 or creating any material Liens with respect to any assets of the Parent
or any of its Subsidiaries or any loans or debt obligations with officers or directors of the Parent;
(vi) each Contract requiring
payment by or to the Parent after the date of this Agreement in excess of $100,000 pursuant to its express terms relating to: (A) any
Contract involving a dealer, distributor, joint marketing, alliance, joint venture, cooperation, research and/or development (including
pre-clinical and clinical research and/or development), material transfer, services (including technical writing and consulting), manufacturing,
supply, distribution or other agreement relating to the research, development, testing, labeling, manufacturing, marketing, commercialization,
or distribution of any product, technology or service, or any Contract pursuant to which any Intellectual Property is developed by or
for Parent or (B) any Contract to license any patent, trademark registration, service mark registration, trade name or copyright
registration to or from any third party to research, develop, test, label, manufacture, market, or produce any product, service or technology
of the Parent or any Contract to sell, distribute or commercialize any products or services of the Parent;
(vii) each Contract
with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services to the
Parent in connection with the Contemplated Transactions;
(viii) each Contract
relating to leases of real properties with respect to which the Parent directly or indirectly holds a valid leasehold interest as well
as any other real estate that is in the possession of or leased by Parent or any of its Subsidiaries;
(ix) each Contract to
which the Parent is a party or by which any of its assets and properties is currently bound, which involves annual obligations of payment
by, or annual payments to, the Parent in excess of $100,000; and
(x) any other Contract
that is not terminable at will (with no penalty or payment) by the Parent, and that is material to the business or operations of the
Parent.
(c) Each
Parent Material Contract is valid and binding on Parent, and to the knowledge of Parent, each other party thereto, and is in full force
and effect and enforceable in accordance with its terms; (ii) Parent, and, to the knowledge of Parent, each other party thereto,
has performed all material obligations required to be performed by it under each Parent Material Contract; and (iii) there is no
material default under any Parent Material Contract by Parent or, to the knowledge of Parent, any other party thereto, and no event or
condition has occurred that constitutes, or, after notice or lapse of time or both, would constitute, a material default on the part
of Parent or, to the knowledge of Parent, any other party thereto under any such Parent Material Contract, nor has Parent received any
notice of any such material default, event or condition. Parent has made available to the Company true and complete copies of all Parent
Material Contracts, including all amendments thereto. Except as set forth in Section 5.16(c) of the Parent Disclosure
Letter, there are no Parent Material Contracts that are not in written form. No Person is renegotiating, or has a right pursuant to the
terms of any Parent Material Contract to change, any material amount paid or payable to the Parent under any Parent Material Contract
or any other material term or provision of any Parent Material Contract.
(d) Parent
will terminate all Parent Material Contracts (including all statements of work, work orders, change orders, purchase orders, and any
other Contract thereunder) effective no later than the Closing Date. As of such termination: (i) other than those Contracts identified
in Section 5.16(d)(i) of the Parent Disclosure Letter, no party thereto or third party beneficiary thereof has or will
have any right, title, or interest (including under any license grants or by exercise of any options or technology transfer rights) in
or to any part of Parent Registered IP or material Company Registered IP; (ii) other than those Contracts identified in Section 5.16(d)(ii) of
the Parent Disclosure Letter, no payment under any such Parent Material Contract is or will be due or payable by Parent to any party
thereto or third party beneficiary thereof (including in connection with any completed work or work-in-progress; severance costs; non-cancellable
expenses or commitments; early termination penalties; termination costs; wind-down costs; royalties; or milestones); (iii) other
than those Contracts identified in Section 5.16(d)(iii) of the Parent Disclosure Letter, Parent is under no obligation
under such Parent Material Contracts, on its own or with any other party thereto or third party beneficiary thereof, to: (A) research,
develop, manufacture, or commercialize any product or service thereunder; (B) make any regulatory filing with respect thereto or
seek or obtain regulatory approval therefor; or (C) fund or commit any funding or resources, make any efforts, or prepare or submit
any reports (including information reports and progress reports), with respect to any of the foregoing; and (iv) other than those
Contracts identified in Section 5.16(d)(iv) of the Parent Disclosure Letter, no party thereto or third party beneficiary
thereof has or will have any outstanding subscriptions, options, warrants, calls, commitments, Contracts or other rights under such Parent
Material Contract to acquire or be issued, granted, delivered, sold, or cause to be issued, granted, delivered or sold, any shares of
capital stock of the Parent or any of its Subsidiaries, voting securities, stock appreciation rights, “phantom” stock rights,
performance units, interests in or rights to the ownership or earnings of the Parent or any of its Subsidiaries or other equity equivalent
or equity-based awards or rights, or equity interests or securities convertible into or exchangeable or exercisable for capital stock
or other voting securities or equity interests of the Parent or any of its Subsidiaries.
Section 5.17 Insurance.
Each of Parent and its Subsidiaries is covered by valid and currently effective insurance policies issued in favor of Parent or its Subsidiaries
that are customary and adequate for companies of similar size in the industries and locations in which Parent and its Subsidiaries operate.
Section 5.17 of the Parent Disclosure Letter sets forth, as of the date hereof, a true and complete list of all material
insurance policies issued in favor of Parent or any of its Subsidiaries, or pursuant to which Parent or any of its Subsidiaries is a
named insured or otherwise a beneficiary, as well as any historic incurrence-based policies still in force. With respect to each such
insurance policy, (a) such policy is in full force and effect and all premiums due thereon have been paid, (b) neither Parent
nor any of its Subsidiaries is in breach or default, and has not taken any action or failed to take any action which (with or without
notice or lapse of time, or both) would constitute such a breach or default, or would permit termination or modification of, any such
policy and (c) to the knowledge of Parent, no insurer issuing any such policy has been declared insolvent or placed in receivership,
conservatorship or liquidation. No notice of cancellation or termination has been received with respect to any such policy, nor will
any such cancellation or termination result from the consummation of the Contemplated Transactions.
Section 5.18 Properties.
(a) Parent
and its Subsidiaries has good and valid title to, or in the case of leased property and leased tangible assets, a valid leasehold interest
in, all of its real properties and tangible assets that are necessary for Parent and its Subsidiaries to conduct its businesses as currently
conducted, free and clear of all Liens other than Permitted Liens. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, the tangible personal property currently used in the operation of
the business of Parent and its Subsidiaries is in good working order (reasonable wear and tear excepted).
(b) Each
of Parent and its Subsidiaries has complied with the terms of all leases to which it is a party, and all such leases are in full force
and effect, except for any such noncompliance or failure to be in full force and effect that, individually or in the aggregate, has not
had and would not reasonably be expected to have a Parent Material Adverse Effect. Each of Parent and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except for any such failure to do so that, individually or in the aggregate, has not
had and would not reasonably be expected to have a Parent Material Adverse Effect.
(c) Section 5.18(c) of
the Parent Disclosure Letter sets forth a true and complete list of (i) all real property owned by Parent or any of its Subsidiaries
and (ii) all real property leased for the benefit of Parent or any of its Subsidiaries.
(d) This
Section 5.18 does not relate to intellectual property, which is the subject of Section 5.19.
Section 5.19 Intellectual
Property.
(a) Section 5.19(a) of
the Parent Disclosure Letter sets forth a true and complete list of all (i) patents and patent applications; (ii) trademark
registrations and applications; and (iii) material copyright registrations and applications, in each case owned or licensed by Parent
and its Subsidiaries (collectively, “Parent Registered IP”) and a true and complete list of all domain names
owned or exclusively licensed by Parent and its Subsidiaries. Except as, individually or in the aggregate, has not had and would not
reasonably be expected to have a Parent Material Adverse Effect (i) all of the Parent Registered IP is subsisting and, solely in
the case of any Parent Registered IP that is registered or issued and to the knowledge of Parent, valid and enforceable, (ii) no
Parent Registered IP, is involved in any interference, reissue, derivation, reexamination, opposition, cancellation or similar proceeding
and, to the knowledge of Parent, no such action is threatened with respect to any of the Parent Registered IP and (iii) Parent and
its Subsidiaries own exclusively, free and clear of any and all Liens (other than Permitted Liens), all Parent Owned IP, including all
Intellectual Property created on behalf of Parent or its Subsidiaries by employees or independent contractors.
(b) Parent
and its Subsidiaries have taken commercially reasonable measures to maintain the confidentiality of all information that constitutes
or constituted a material Trade Secret of Parent and its Subsidiaries, including requiring all Persons having access thereto to execute
written non-disclosure agreements or other binding obligations to maintain confidentiality of such information.
(c) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (i) to
the knowledge of Parent, the conduct of the businesses of Parent and its Subsidiaries, including the manufacture, marketing, offering
for sale, sale, importation, use or intended use or other disposal of any product as currently sold or under development by Parent or
any of its Subsidiaries, has not infringed, misappropriated or diluted, and does not infringe, misappropriate or dilute, any Intellectual
Property of any Person, (ii) neither Parent nor any of its Subsidiaries have received any written notice or claim asserting or suggesting
that any such infringement, misappropriation, or dilution is or may be occurring or has or may have occurred and (iii) to the knowledge
of Parent, no Person is infringing, misappropriating, or diluting in any material respect any Parent Registered IP.
(d) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (i) Parent
and its Subsidiaries have taken commercially reasonable steps to protect the confidentiality and security of the computer and information
technology systems used by Parent or any of its Subsidiaries (the “Parent IT Systems”) and the information and transactions
stored or contained therein or transmitted thereby, (ii) to the knowledge of Parent, during the past two (2) years, there has
been no unauthorized or improper use, loss, access, transmittal, modification or corruption of any such information or data, and (iii) during
the past two (2) years, there have been no material failures, crashes, viruses, security breaches (including any unauthorized access
to any personally identifiable information), affecting the Parent IT Systems.
(e) Except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (i) to
the knowledge of Parent, Parent and its Subsidiaries have at all times complied in all material respects with all applicable Privacy
Laws, (ii) during the past two (2) years since the First Effective Time, no claims have been asserted or, to the knowledge
of Parent, threatened in writing against Parent or any of its Subsidiaries alleging a violation of any Person’s privacy or Personal
Information, (iii) neither this Agreement nor the consummation of the Contemplated Transactions will breach or otherwise violate
any Privacy Laws and (iv) Parent and its Subsidiaries have taken commercially reasonable steps to protect the Personal Information
collected, used or held for use by Parent or any of its Subsidiaries against loss and unauthorized access, use, modification or disclosure,
or other misuse.
(f) To
the knowledge of Parent, no government funding, facilities or resources of a university, college, other educational institution or research
center or funding from third parties was used in the development of the Parent Owned IP or any Intellectual Property exclusively licensed
to Parent or any of its Subsidiaries, and no Governmental Entity, university, college, other educational institution or research center
has, to the knowledge of Parent, any claim or right in or to such Intellectual Property. Except as set forth on Section 5.19(f) of
the Parent Disclosure Letter, the execution, delivery and performance by Parent of this Agreement, and the consummation of the Contemplated
Transactions, will not result in the loss of, or give rise to any right of any third party to terminate or modify any of the rights or
obligations of Parent or any of its Subsidiaries under any agreement under which Parent or any of its Subsidiaries grants to any Person,
or any Person grants to Parent or any of its Subsidiaries, a license or right under or with respect to any Intellectual Property that
is material to any of the businesses of Parent or any of its Subsidiaries.
Section 5.20 Related
Party Transactions. Since January 1, 2022 through the date of this Agreement, there have been no transactions, agreements, arrangements
or understandings between Parent or any of its Subsidiaries, on the one hand, and the Affiliates of Parent or any of its Subsidiaries,
on the other hand that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act and that have not
been so disclosed in the Parent SEC Documents.
Section 5.21 Certain
Payments. For the five (5) years immediately preceding the date hereof, neither Parent nor any of its Subsidiaries nor, to the
knowledge of Parent, any of their directors, executives, representatives, agents or employees (a) has used or is using any corporate
funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) has used
or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees,
(c) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, as amended, (d) has established
or maintained, or is maintaining, any unlawful fund of corporate monies or other properties, or (e) has made any bribe, unlawful
rebate, payoff, influence payment, kickback or other unlawful payment of any nature.
Section 5.22 Trade
Control Laws. Since April 24, 2019, Parent and its Subsidiaries have been in material compliance with all applicable Trade Laws
and have obtained, or are otherwise qualified to rely upon, all material Trade Approvals. There are no pending or threatened claims against
the Parent or its Subsidiaries, nor any actions, conditions, facts or circumstances that would reasonably be expected to give rise to
any material future claims with respect to the Trade Laws or Trade Approvals.
Section 5.23 Brokers.
No broker, investment banker, financial advisor or other Person, other than Wedbush Securities Inc. and Lucid Capital Markets, LLC, the
fees and expenses of which will be paid by Parent or any of its Subsidiaries, is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the Contemplated Transactions based upon arrangements made by or
on behalf of Parent, any of its Subsidiaries or any of its Affiliates. Parent has furnished to Company a true and complete copy of any
Contract between Parent and each of Wedbush Securities Inc. and Lucid Capital Markets, LLC pursuant to which Wedbush Securities Inc.
and Lucid Capital Markets, LLC, as applicable, could be entitled to any payment from Parent relating to the Contemplated Transactions.
Section 5.24 Opinion
of Financial Advisor. Parent Board has received the opinion of Lucid Capital Markets, LLC, dated the date of this Agreement, to the
effect that, as of such date and based upon and subject to the qualifications, limitations, assumptions and other matters set forth therein,
the Exchange Ratio is fair, from a financial point of view, to the stockholders of Parent, a signed true and complete copy of which opinion
has been or will promptly be provided on a non-reliance basis to the Company.
Section 5.25 State
Takeover Statutes. No Takeover Laws or any similar anti-takeover provision in the Certificate of Incorporation or bylaws of Parent
applicable to Parent is, or at the First Effective Time will be, applicable to this Agreement, the Merger, the Parent Common Stock Issuance,
or any of the other Contemplated Transactions. The Parent Board and the Merger Subs board have taken and will take all actions necessary
to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL are, and will be, inapplicable
to the execution, delivery and performance of this Agreement, the Parent Support Agreements and to the consummation of the Contemplated
Transactions or the Parent Support Agreements.
Section 5.26 No
Other Representations or Warranties. Except for the representations and warranties contained in Article IV, each of Parent
and Merger Subs acknowledges and agrees that none of the Company or any other Person on behalf of the Company makes any other express
or implied representation or warranty whatsoever, and specifically (but without limiting the generality of the foregoing) that none of
the Company, its Subsidiaries, or any other Person on behalf of the Company or any of its Subsidiaries makes any representation or warranty
with respect to any projections or forecasts delivered or made available to Parent, Merger Subs or any of their respective Representatives
of future revenues, results of operations (or any component thereof), cash flows or financial condition (or any component thereof) of
the Company (including any such projections or forecasts made available to Parent, Merger Subs or any of their respective Representatives
in certain “data rooms” or management presentations in expectation of the Contemplated Transactions), and none of Parent
or Merger Subs has relied on any such information or any representation or warranty not set forth in Article IV.
Article VI
COVENANTS
Section 6.1 Operation
of Parent’s Business.
(a) Except
as expressly contemplated or permitted by this Agreement, as expressly required by applicable Law or unless the Company shall otherwise
consent in writing (email being sufficient), during the period commencing on the date of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article IX and the First Effective Time (the “Pre-Closing
Period”), Parent shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to (x) conduct its business
and operations in the Ordinary Course and in material compliance with the applicable Law and the requirements of all Contracts that constitute
Parent Material Contracts and (y) continue to pay material outstanding accounts payable and other material current liabilities (including
payroll) when due and payable.
(b) Except
(i) as expressly contemplated or permitted by this Agreement, (ii) as set forth in Section 6.1(b) of the Parent
Disclosure Letter, (iii) as required by applicable Law or (iv) with the prior written consent of the Company (which consent
shall not be unreasonably withheld, delayed or conditioned), at all times during the Pre-Closing Period, Parent shall not, nor shall
it cause or permit any of its Subsidiaries to, do any of the following:
(i) declare,
accrue, set aside or pay any dividend or make any other distribution in respect of any shares of its capital stock or repurchase, redeem
or otherwise reacquire any shares of its capital stock or other securities (except for shares of Parent Common Stock from terminated
employees, directors or consultants of Parent in accordance with agreements in effect on the date of this Agreement providing for the
repurchase of shares at no more than the purchase price thereof in connection with any termination of services to Parent or any of its
Subsidiaries);
(ii) sell,
issue, grant, pledge or otherwise dispose of or encumber or authorize the issuance of: (A) any capital stock or other security (except
for Parent Common Stock issued upon the valid exercise or settlement of outstanding Parent Options or Parent Restricted Stock Unit Awards
as applicable), (B) any option, warrant or right to acquire any capital stock or any other security or (C) any instrument convertible
into or exchangeable for any capital stock or other security;
(iii) except
as required to give effect to anything in contemplation of the Closing, amend any of its organizational documents, or effect or be a
party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split,
reverse stock split or similar transaction except, for the avoidance of doubt, the Contemplated Transactions;
(iv) form
any Subsidiary or acquire any equity interest or other interest in any other entity or enter into a joint venture with any other entity;
(v) (A) lend
money to any Person, (B) incur or guarantee any indebtedness for borrowed money, (C) guarantee any debt securities or others
or (D) make any capital expenditure or commitment;
(vi) other
than as expressly required by applicable Law or the terms of any Parent Plan in effect as of the date of this Agreement: (A) adopt,
establish or enter into any Parent Plan, including, for the avoidance of doubt, any equity award plans, (B) cause or permit any
Parent Plan to be amended other than as required by Law or in order to make amendments for the purposes of Section 409A of the Code,
(C) pay any bonus or make any profit-sharing or similar payment to (except with respect to obligations in place on the date of this
Agreement pursuant to any Parent Plan), or increase the amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to, any of its employees, directors or consultants, (D) increase the severance or change of control benefits
offered to any current or new employees, directors or consultants, or (E) hire or terminate (other than for cause, or absent such
a definition of cause, for conduct that the Parent or such Subsidiary determines in good faith constitutes material misconduct) any officer,
employee or consultant;
(vii) enter
into any material transaction outside the Ordinary Course ;
(viii) acquire
any material asset or sell, lease, license or otherwise irrevocably dispose of any of its assets or properties, or grant any Lien with
respect to such assets or properties;
(ix) make,
change or revoke any material Tax election; file any amended income or other material amendment to any Tax Return; settle or compromise
any material Tax claim; waive or extend any statute of limitations in respect of a period within which an assessment or reassessment
of material Taxes may be issued (other than any extension pursuant to an extension to file any Tax Return); enter into any “closing
agreement” as described in Section 7121 of the Code (or any similar Law) with any Governmental Entity; surrender any material
claim for refund; or adopt or change any material accounting method in respect of Taxes;
(x) waive,
settle or compromise any pending or threatened Action against Parent or any of its Subsidiaries, other than waivers, settlements or agreements
(A) for an amount not in excess of $100,000 in the aggregate (excluding amounts to be paid under existing insurance policies or
renewals thereof) and (B) that do not impose any material restrictions on the operations or businesses of Parent or its Subsidiaries,
taken as a whole, or any equitable relief on, or the admission of wrongdoing by Parent or any of its Subsidiaries;
(xi) delay
or fail to repay when due any material obligation, including accounts payable and accrued expenses;
(xii) forgive
any loans to any Person, including its employees, officers, directors or Affiliate;
(xiii) sell,
assign, transfer, license, sublicense or otherwise dispose of any Intellectual Property of the Parent (other than in the Ordinary Course);
(xiv) terminate
or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy;
(xv) enter
into, amend, terminate, or waive any material option or right under, any Parent Material Contract;
(xvi) enter
into any agreement to purchase or sell any interest in real property, grant any security interest in any real property, enter into any
lease, sublease, license or other occupancy agreement with respect to any real property or alter, amend, modify, exercise any extension
or expansion right under or violate or terminate any of the terms of any real property leases of Parent;
(xvii) other
than as expressly required by Law or GAAP, take any action to change accounting policies or procedures;
(xviii) (A) materially
change pricing or royalties or other payments set or charged by Parent or any of Subsidiaries to its customers or licensees or (B) agree
to materially change pricing or royalties or other payments set or charged by Persons who have licensed Intellectual Property to Parent
or any of its Subsidiaries; or
(xix) agree,
resolve or commit to do any of the foregoing.
Nothing contained in this Agreement shall give
the Company, directly or indirectly, the right to control or direct the operations of Parent prior to the First Effective Time. Prior
to the First Effective Time, Parent shall exercise, consistent with the terms and conditions of this Agreement, complete unilateral control
and supervision over its business operations.
(c) Notwithstanding
any provision herein to the contrary (including the foregoing provisions of this Section 6.1), Parent may engage in the sale,
license, transfer, disposition, divestiture or other monetization transaction (i.e., a royalty transaction) and/or winding down of, and/or
the sale, license, transfer, disposition, divestiture or other monetization transaction (i.e., a royalty transaction) or other disposition
of any Parent Legacy Assets (each, an “Parent Legacy Transaction”); provided, however, that to the extent any Parent
Legacy Transaction results in any obligations of or adverse consequences to Parent or its Subsidiaries that could extend beyond Closing,
or contemplates that any consideration paid in respect thereof is in anything other than immediately available cash, or otherwise interferes
with or delays in any manner the ability of Parent to perform its obligations under this Agreement or timely consummate the transaction
contemplated hereby, Parent shall procure prior written consent of the Company prior to entering into any Parent Legacy Transaction and
any such post-Closing obligations shall be treated as a reduction to Net Cash hereunder. Notwithstanding anything to the contrary herein,
Parent (i) shall permit the Company and its counsel to review and comment on the transaction documents related to the Parent Legacy
Transaction; (ii) shall consider any such comments in good faith and shall accept all reasonable additions, deletions or changes
suggested by the Company and its counsel in connection therewith; and (iii) shall not sign any agreements, contracts or other definitive
documents (not including term sheets or letters of intent) related to Parent Legacy Transaction without first providing the Company and
its counsel the opportunity to exercise their rights under clauses (i) and (ii) above. Any consideration actually received
by Parent prior to the Closing in any such sale or license of any Parent Legacy Assets, net of all liability and obligations relating
to such transaction, would be added to Net Cash.
(d) Notwithstanding
any provision herein to the contrary (including the foregoing provisions of this Section 6.1), Parent may declare the Pre-Closing
Cash Dividend.
Section 6.2 Operation
of Company’s Business.
(a) Except
(i) as expressly contemplated or permitted by this Agreement or the Securities Purchase Agreement (including actions in connection
with the Concurrent Investment), (ii) as set forth in Section 6.2(a) of the Company Disclosure Letter, (iii) with
respect to the issuance of any Company Notes, which is expressly permitted, (iv) as expressly required by applicable Law or (v) unless
Parent shall otherwise consent in writing (email being sufficient), during the Pre-Closing Period, the Company shall, and shall cause
its Subsidiaries to, use commercially reasonable efforts to conduct its business and operations in the Ordinary Course and in material
compliance with the applicable Law and the requirements of all Contracts that constitute Material Contracts.
(b) Except
(i) as expressly contemplated or permitted by this Agreement, including the Securities Purchase Agreement, (ii) as set forth
in Section 6.2(b) of the Company Disclosure Letter, (iii) with respect to the issuance of any Company Notes, which
is expressly permitted, (iv) as expressly required by applicable Law or (v) with the prior written consent of Parent (which
consent shall not be unreasonably withheld, delayed or conditioned), at all times during the Pre-Closing Period, the Company shall not,
nor shall it cause or permit any of its Subsidiaries to, do any of the following:
(i) declare,
accrue, set aside or pay any dividend or make any other distribution in respect of any shares of its capital stock or repurchase, redeem
or otherwise reacquire any shares of its capital stock or other securities (except for shares of Company Common Stock from terminated
employees, directors or consultants of the Company);
(ii) other
than in the Ordinary Course (including grants of Company Options under the Company Equity Plan), sell, issue, grant, pledge or otherwise
dispose of or encumber or authorize the issuance of any of the foregoing actions with respect to more than 25% of the shares of Company
Capital Stock outstanding as of the date of this Agreement: (A) any capital stock or other security (except for Company Common Stock
issued upon the valid exercise or settlement of outstanding Company Options), (B) any option, warrant or right to acquire any capital
stock or any other security or (C) any instrument convertible into or exchangeable for any capital stock or other security;
(iii) except
as required to give effect to anything in contemplation of the Closing, amend any of its organizational documents, or effect or be a
party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split,
reverse stock split or similar transaction except, for the avoidance of doubt, the Contemplated Transactions;
(iv) other
than in the Ordinary Course, form any Subsidiary or acquire any equity interest or other interest in any other entity or enter into a
joint venture with any other entity;
(v) (A) lend
money to any Person, (B) incur or guarantee any indebtedness for borrowed money, or (C) guarantee any debt securities;
(vi) sell,
lease, license or otherwise irrevocably dispose of any of its assets or properties, or grant any Lien with respect to such assets or
properties, except in the Ordinary Course;
(vii) waive,
settle or compromise any pending or threatened Action against the Company or any of its Subsidiaries, other than waivers, settlements
or agreements (A) for an amount not in excess of $100,000 in the aggregate (excluding amounts to be paid under existing insurance
policies or renewals thereof) and (B) that do not impose any material restrictions on the operations or businesses of the Company
or its Subsidiaries, taken as a whole, or any equitable relief on, or the admission of wrongdoing by the Company or any of its Subsidiaries;
(viii) delay
or fail to repay when due any material obligation, including accounts payable and accrued expenses, other than in the Ordinary Course;
(ix) sell,
assign, transfer, license, sublicense or otherwise dispose of any material Intellectual Property of the Company (other than in the Ordinary
Couse); or
(x) agree,
resolve or commit to do any of the foregoing.
Nothing contained in this Agreement shall give Parent, directly or
indirectly, the right to control or direct the operations of the Company prior to the First Effective Time. Prior to the First Effective
Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete unilateral control and supervision
over its business operations.
Section 6.3 Access
and Investigation.
(a) Subject
to the terms of the Confidentiality Agreement, which the parties agree will continue in full force following the date of this Agreement,
during the Pre-Closing Period, upon reasonable advance written notice, Parent, on the one hand, and the Company, on the other hand, shall
and shall use commercially reasonable efforts to cause such party’s Representatives to: (a) provide the other party and such
other party’s Representatives with reasonable access during normal business hours to such party’s Representatives, personnel,
property and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to such
party and its Subsidiaries, (b) provide the other party and such other party’s Representatives with such copies of the existing
books, records, Tax Returns, work papers, product data and other documents and information relating to such party and its Subsidiaries,
and with such additional financial, operating and other data and information regarding such party and its Subsidiaries as the other party
may reasonably request, (c) permit the other party’s officers and other employees to meet, upon reasonable notice and during
normal business hours, with the chief financial officer and other officers and managers of such party responsible for such party’s
financial statements and the internal controls of such party to discuss such matters as the other party may deem necessary and (d) make
available to the other party copies of any material notice, report or other document filed with or sent to or received from any Governmental
Entity in connection with the Contemplated Transactions. Any investigation conducted by either Parent or the Company pursuant to this
Section 6.3(a) shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of
the other party.
(b) Notwithstanding
anything herein to the contrary in this Section 6.3(b), no access or examination contemplated by this Section 6.3(b) shall
be permitted to the extent that it would require any party or its Subsidiaries (i) to waive the attorney-client privilege or attorney
work product privilege, (ii) violate any applicable Law or (iii) breach such party’s confidentiality obligations to a
third party; provided, that such party or its Subsidiary (A) shall be entitled to withhold only such information that may not be
provided without causing such violation or waiver, (B) shall provide to the other party all related information that may be provided
without causing such violation or waiver (including, to the extent permitted, redacted versions of any such information), (C) shall
enter into such effective and appropriate joint-defense agreements or other protective arrangements as may be reasonably requested by
the other party in order that all such information may be provide to the other party without causing such violation or waiver, and (D) in
the case of subsection (iii) above, upon the other party’s reasonable request, such party shall use its reasonable efforts
to obtain such third party’s consent to permit such other party access to such information, subject to appropriate confidentiality
protections. In addition, no access or examination contemplated by this Section 6.3 shall be permitted to the extent that
it would require any party or its Subsidiaries, except as otherwise expressly required by this Agreement, to provide information to the
other party that relates to (1) the negotiation of this Agreement, or (2) the valuation of the other party in connection with
this Agreement or the Contemplated Transactions.
Section 6.4 No
Solicitation.
(a) Each
of Parent and the Company agrees that, during the Pre-Closing Period, neither it nor any of its Subsidiaries shall, nor shall it or any
of its Subsidiaries authorize any of its Representatives to, directly or indirectly: (i) solicit, initiate or knowingly encourage,
induce or facilitate the communication, making, submission or announcement of any Acquisition Proposal or Acquisition Inquiry or take
any action that could reasonably be expected to lead to an Acquisition Proposal or Acquisition Inquiry, (ii) furnish any nonpublic
information regarding such party to any Person in connection with or in response to an Acquisition Proposal or Acquisition Inquiry, (iii) engage
in discussions or negotiations with any Person with respect to any Acquisition Proposal or Acquisition Inquiry, (iv) approve, endorse
or recommend any Acquisition Proposal (subject to Section 7.2 and Section 7.3), (v) execute or enter into
any letter of intent or any Contract contemplating or otherwise relating to any Acquisition Transaction, (vi) take any action that
could reasonably be expected to lead to an Acquisition Proposal or Acquisition Inquiry or (vii) publicly propose to do any of the
following; provided, however, that, notwithstanding anything contained in this Section 6.4 and subject to compliance with
this Section 6.4, prior to obtaining the Parent Stockholder Approval, Parent may furnish nonpublic information regarding
Parent and its Subsidiaries to, and enter into discussions or negotiations with, any Person in response to a bona fide written Acquisition
Proposal by such Person which the Parent Board determines in good faith, after consultation with its financial advisors and outside legal
counsel, constitutes, or is reasonably likely to result in, a Superior Offer (and is not withdrawn) if: (A) such Acquisition Proposal
was not obtained or made as a direct or indirect result of any breach of this Agreement, (B) the Parent Board concludes in good
faith, after consulting with outside counsel, that the failure to take such action would reasonably be expected to constitute a violation
of the Parent Board’s fiduciary duties under applicable Law, (C) at least two (2) Business Days prior to initially furnishing
any such nonpublic information to, or enter into discussions with, such Person, (D) Parent receives from such Person an executed
Acceptable Confidentiality Agreement and (E) at least two (2) Business Days prior to furnishing any such nonpublic information
to such Person, Parent furnishes such nonpublic information to the Company (to the extent such information has not been previously furnished
by Parent to the Company). Without limiting the generality of the foregoing, each party acknowledges and agrees that, in the event any
Representative of such party takes any action that, if taken by such party, would constitute a breach of this Section 6.4
by such party, the taking of such action by such Representative shall be deemed to constitute a breach of this Section 6.4
by such party for purposes of this Agreement.
(b) If
any party or any Representative of such party receives an Acquisition Proposal or Acquisition Inquiry at any time during the Pre-Closing
Period, then such party shall promptly (and in no event later than one (1) Business Day after such party becomes aware of such Acquisition
Proposal or Acquisition Inquiry (including the identity of the Person making or submitting such Acquisition Proposal or Acquisition Inquiry,
and the terms thereof). Such party shall keep the other party reasonably informed with respect to the status and terms of any such Acquisition
Proposal or Acquisition Inquiry and any material modification or material proposed modification thereto.
(c) Each
party shall immediately cease and cause to be terminated any existing discussions, negotiations and communications with any Person that
relate to any Acquisition Proposal or Acquisition Inquiry as of the date of this Agreement and request the destruction or return of any
nonpublic information provided to such Person.
Section 6.5 Notification
of Certain Matters. During the Pre-Closing Period, each of the Company, on the one hand, and Parent, on the other hand, shall promptly
notify the other (and, if in writing, furnish copies of) if any of the following occurs: (a) any notice or other communication is
received from any Person alleging that the consent of such Person is or may be required in connection with any of the Contemplated Transactions,
(b) any Action against or involving or otherwise affecting such party or its Subsidiaries is commenced, or, to the knowledge of
such party, threatened against such party or, to the knowledge of such party, any director, officer or employee of such party, (c) such
party becomes aware of any inaccuracy in any representation or warranty made by such party in this Agreement or (d) the failure
of such party to comply with any covenant or obligation of such party; in each case that could reasonably be expected to make the timely
satisfaction of any of the conditions set forth in Article VII or Article VIII, as applicable, impossible or materially
less likely. No such notice shall be deemed to supplement or amend the Company Disclosure Letter or the Parent Disclosure Letter for
the purpose of (x) determining the accuracy of any of the representations and warranties made by the Company or Parent in this Agreement
or (y) determining whether any condition set forth in Article VII or Article VIII has been satisfied. Any failure
by either party to provide notice pursuant to this Section 6.5 shall not be deemed to be a breach for purposes of Section 8.2(b) and
Section 8.3(b), as applicable, unless such failure to provide such notice was knowing and intentional.
Section 6.6 Parent
Options. Prior to the Closing Date, the Parent Board shall have adopted appropriate resolutions and taken all other actions necessary
and appropriate to provide that (a) each outstanding Parent OTM Option will be cancelled for no consideration and (b) the vesting
and exercisability of each unexpired, unexercised and unvested Parent ITM Option shall be accelerated in full, in each case, effective
as of immediately prior to the First Effective Time, contingent on the occurrence of the Closing Date. At the First Effective Time, each
Parent ITM Option that is then outstanding shall be canceled and the holder thereof shall be entitled to receive (i) an amount in
cash without interest, less any applicable tax withholding, equal to the product obtained by multiplying (A) the excess of the Parent
Closing Price over the exercise price per share of the Parent Common Stock underlying such Parent Option by (B) the number of shares
of the Parent Common Stock underlying such Parent Option (such amount, the “Parent Stock Option Cash Consideration”).
Parent shall cause the Surviving Entity to pay the Parent Stock Option Cash Consideration, less applicable withholdings, at or within
ten (10) business days after the First Effective Time.
Section 6.7 Parent
Restricted Stock Unit Awards. Prior to the Closing Date, the Parent Board shall have adopted appropriate resolutions and taken all
other actions necessary and appropriate to provide that (a) the vesting of each outstanding and unvested Parent Restricted Stock
Unit Award shall be accelerated in full effective as of immediately prior to the First Effective Time, contingent on the occurrence of
the Closing and (b) for each outstanding and unsettled Parent Restricted Stock Unit Award, the holder thereof shall receive, immediately
prior to the First Effective Time, a number of shares of Parent Common Stock equal to the number of vested and unsettled shares of Parent
Common Stock underlying such Parent Restricted Stock Unit Award. Notwithstanding anything herein to the contrary, the Tax withholding
obligations for each holder receiving shares of Parent Common Stock in accordance with the preceding sentence shall be satisfied by Parent
withholding from issuance that number of shares of Parent Common Stock calculated by multiplying the maximum statutory withholding rate
for such holder in connection with such issuance by the number of shares of Parent Common Stock to be issued in accordance with the preceding
sentence, and rounding up to the nearest whole share and remitting such withholding in cash to the appropriate taxing authorities.
Section 6.8 Parent
ESPP. As soon as reasonably practicable following the date of this Agreement, the Parent Board shall adopt appropriate resolutions
to provide that (a) no offering periods or purchase periods shall be commenced following or in addition to the offering period underway
as of the date hereof under the Parent ESPP (the “Current Offering Period”), (b) no payroll deductions or other
contributions shall be made or effected after the Current Offering Period with respect to the Parent ESPP after the date of such resolutions,
and (c) the Current Offering Period shall be terminated and each Parent ESPP participant’s accumulated contributions under
the Parent ESPP shall be returned to the participant in accordance with the terms of the Parent ESPP.
Section 6.9 Parent
401(K) Plan. Unless otherwise requested by the Company in writing at least ten (10) Business Days prior to the Closing
Date, the Parent Board or an authorized committee thereof shall take (or cause to be taken) all actions to adopt such resolutions as
may be necessary or appropriate to terminate, effective no later than the day prior to the Closing Date but subject to the Closing, any
Parent Plan that contains a cash or deferred arrangement intended to qualify under Section 401(k) of the Code (a “Parent
401(k) Plan”). If Parent is required to terminate any Parent 401(k) Plan, then Parent shall provide to the Company
prior to the Closing Date written evidence of the adoption by the Parent Board or an authorized committee thereof of resolutions authorizing
the termination of such Parent 401(k) Plan (the form and substance of which shall be subject to the reasonable prior review and
approval of the Company, not to be unreasonably withheld, conditioned or delayed).
Article VII
ADDITIONAL AGREEMENTS
Section 7.1 Registration
Statement; Proxy Statement.
(a) As
promptly as practicable (but in any event, no later than seven (7) Business Days after the date of this Agreement), (i) Parent
shall prepare, and file with the SEC a proxy statement relating to the Parent Stockholders Meeting to be held in connection with the
Merger (together with any amendments thereof or supplements thereto, the “Proxy Statement”) and (ii) Parent,
in cooperation with the Company, shall prepare and file with the SEC a registration statement on Form S-4 (the “Form S-4”),
in which the Proxy Statement shall be included as a part (the Proxy Statement and the Form S-4, collectively, the “Registration
Statement”), in connection with the registration under the Securities Act of the shares of Parent Common Stock (including any
Parent Common Stock issuable upon conversion of the Parent Convertible Preferred Stock and exercise of the Assumed Warrants) to be issued
by virtue of the Contemplated Transactions, other than any shares of Parent Capital Stock which are not permitted to be registered on
Form S-4 pursuant to applicable Law. Parent shall use its reasonable best efforts to (i) cause the Registration Statement to
comply with the applicable rules and regulations promulgated by the SEC, (ii) cause the 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 Registration
Statement. Parent shall take all or any action required under any applicable federal, state, securities and other Laws in connection
with the issuance of shares of Parent Capital Stock pursuant to the Contemplated Transactions (including any Parent Common Stock issuable
upon conversion of the Parent Convertible Preferred Stock and exercise of the Assumed Warrants). Each of the parties shall reasonably
cooperate with the other party and furnish all information concerning itself and their Affiliates, as applicable, to the other parties
that is required by law to be included in the Registration Statement as the other parties may reasonably request in connection with such
actions and the preparation of the Registration Statement.
(b) Parent
covenants and agrees that the Registration Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith)
will (i) comply as to form in all material respects with the requirements of applicable U.S. federal securities laws and the DGCL,
and (ii) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The Company covenants and agrees that the information supplied by or on behalf of the Company, concerning itself, to Parent for inclusion
in the Registration Statement (including the Company Interim Financial Statements) will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make such information, in light of the
circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither party makes any covenant, representation
or warranty with respect to statements made in the Registration Statement (and the letter to stockholders, notice of meeting and form
of proxy included therewith), if any, based on information provided by the other party or any of their Representatives regarding such
other party or its Affiliates for inclusion therein.
(c) Parent
shall use commercially reasonable efforts to cause the Proxy Statement to be mailed to Parent’s stockholders as promptly as practicable
after the Registration Statement is declared effective under the Securities Act.
(d) If
at any time before the First Effective Time (i) any party (A) becomes aware of any event or information that, pursuant to the
Securities Act or the Exchange Act, should be disclosed in an amendment or supplement to the Registration Statement, (B) receives
notice of any SEC request for an amendment or supplement to the Registration Statement or for additional information related thereto,
or (C) receives SEC comments on the Registration Statement, or (ii) the information provided in the Registration Statement
has become “stale” and new information should be disclosed in an amendment or supplement to the Registration Statement; then,
in each case such party, as the case may be, shall promptly inform the other parties thereof and shall cooperate with such other parties
in filing such amendment or supplement with the SEC (and, if appropriate, in mailing such amendment or supplement to the Parent stockholders)
or otherwise addressing such SEC request or comments and each party shall use their commercially reasonable efforts to cause any such
amendment to become effective, if required. Parent shall promptly notify the Company if it becomes aware (1) that the Registration
Statement has become effective, (2) of the issuance of any stop order or suspension of the qualification or registration of the
Parent Capital Stock issuance in connection with the Contemplated Transactions (including any Parent Common Stock issuable upon conversion
of the Parent Convertible Preferred Stock and exercise of the Assumed Warrants) for offering or sale in any jurisdiction, or (3) any
order of the SEC related to the Registration Statement, and shall promptly provide to the Company copies of all written correspondence
between it or any of its Representatives, on the one hand, and the SEC or staff of the SEC, on the other hand, with respect to the Registration
Statement and all orders of the SEC relating to the Registration Statement.
(e) The
Company shall reasonably cooperate with Parent and provide, and cause its Representatives to provide, Parent and its Representatives,
with all true, correct and complete information regarding the Company and its Subsidiaries that is required by law to be included in
the Registration Statement or reasonably requested by Parent to be included in the Registration Statement. Without limiting the Company’s
obligations in Section 7.1(a), the Company will use commercially reasonable efforts to cause to be delivered to Parent a
letter of the Company’s independent accounting firm, dated no more than two (2) Business Days before the date on which the
Registration Statement becomes effective (and reasonably satisfactory in form and substance to Parent), that is customary in scope and
substance for letters delivered by independent public accountants in connection with registration statements similar to the Registration
Statement.
(f) The
Company and its legal counsel shall be given reasonable opportunity to review and comment on the Registration Statement, including all
amendments and supplements thereto, prior to the filing thereof with the SEC, and on the response to any comments of the SEC on the Registration
Statement, prior to the filing thereof with the SEC. No filing of, or amendment or supplement to, the Registration Statement will be
made by Parent, and no filing of, or amendment or supplement to, the Registration Statement will be made by Parent, in each case, without
the prior consent of the Company, which shall not be unreasonably withheld, conditioned or delayed.
(g) As
promptly as reasonably practicable following the date of this Agreement (but in any event, no later than seven (7) Business Days
after the date of the Agreement), the Company will use commercially reasonable efforts to furnish to Parent (i) audited financial
statements for each of its fiscal years required to be included in the Registration Statement (the “Company Audited Financial
Statements”) and (ii) unaudited interim financial statements for each interim period completed prior to Closing that would
be required to be included in the Registration Statement or any periodic report due prior to the Closing if the Company were subject
to the periodic reporting requirements under the Securities Act or the Exchange Act (the “Company Interim Financial Statements”).
Each of the Company Audited Financial Statements and the Company Interim Financial Statements will be prepared in accordance with GAAP
as applied on a consistent basis during the periods involved (except in each case as described in the notes thereto and except, in the
case of any unaudited financial statements, to normal year-end audit adjustments) and on that basis will present fairly, in all material
respects, the financial position and the results of operations, changes in stockholders’ equity, and cash flows of the Company
as of the dates of and for the periods referred to in the Company Audited Financial Statements or the Company Interim Financial Statements,
as the case may be.
Section 7.2 Company
Stockholder Approval.
(a) Promptly
after the Registration Statement has been declared effective under the Securities Act, and in any event no later than two (2) Business
Days thereafter, the Company shall solicit for approval the Company Stockholder Approval. Under no circumstances shall the Company assert
that any other approval or consent is necessary by its stockholders to approve this Agreement and the Contemplated Transactions.
(b) Reasonably
promptly following receipt of the Company Stockholder Approval, the Company shall prepare and mail the Registration Statement (or a portion
thereof constituting a notice of the Contemplated Transactions and of the Company Stockholder Approval) to every stockholder of the Company
that did not execute the Company Stockholder Approval, if any (the “Stockholder Notice”). The Stockholder Notice shall
(i) be a statement to the effect that the Company Board determined that the Merger is advisable in accordance with Section 251(b) of
the DGCL and in the best interests of the stockholders of the Company and approved and adopted this Agreement, the Merger and the other
Contemplated Transactions and (ii) provide the stockholders of the Company to whom it is sent with notice of the availability of
appraisal rights and notice of the actions taken in the Company Stockholder Approval, including the adoption and approval of this Agreement,
the Merger and the other Contemplated Transactions in accordance with Sections 228(e) and 262 of the DGCL and the organizational
documents of the Company. All materials (including any amendments thereto) submitted to the stockholders of the Company in accordance
with this Section 7.2(b) shall be subject to Parent’s advanced review and reasonable approval.
(c) The
Company agrees that: (i) the Company Board shall recommend that the Company’s stockholders vote to adopt and approve this
Agreement and the Contemplated Transactions and shall use commercially reasonable efforts to solicit such approval within the time set
forth in Section 7.2(a) (the recommendation of the Company Board that the Company’s stockholders vote to adopt
and approve this Agreement being referred to as the “Company Board Recommendation”) and (ii) the Company Board
Recommendation shall not be withdrawn or modified (and the Company Board shall not publicly propose to withdraw or modify the Company
Board Recommendation) in a manner adverse to Parent, and no resolution by the Company Board or any committee thereof to withdraw or modify
the Company Board Recommendation in a manner adverse to Parent or to adopt, approve or recommend (or publicly adopt, approve or recommend)
any Acquisition Proposal shall be adopted or proposed (the actions set forth in the foregoing clause (ii), collectively, a “Company
Board Adverse Recommendation Change”).
(d) Notwithstanding
anything to the contrary contained in Section 7.2(c), and subject to compliance with Section 6.4 and Section 7.2,
if at any time prior to approval and adoption of this Agreement by the Company Stockholder Approval, (i) the Company receives a
bona fide written Superior Offer, or (ii) as a result of a material development or change in circumstances (other than any such
event, development or change to the extent related to (A) any Acquisition Proposal, Acquisition Inquiry, Acquisition Transaction
or the consequences thereof or (B) the fact, in and of itself, that the Company meets or exceeds internal budgets, plans or forecasts
of its revenues, earnings or other financial performance or results of operations) that affects the business, assets or operations of
the Company that occurs or arises after the date of this Agreement (a “Company Intervening Event”), the Company Board
may make a Company Board Adverse Recommendation Change if, but only if, in the case of a Superior Offer, following the receipt of and
on account of such Superior Offer, (1) the Company Board determines in good faith, after consulting with outside legal counsel,
that the failure to withhold, amend, withdraw or modify such recommendation would reasonably be expected to be inconsistent with its
fiduciary duties under applicable Law, (2) the Company has, and has caused its financial advisors and outside legal counsel to,
during the Company Notice Period, negotiate with Parent in good faith to make such adjustments to the terms and conditions of this Agreement
so that such Acquisition Proposal ceases to constitute a Superior Offer (to the extent Parent desires to negotiate) and (3) if after
Parent shall have delivered to the Company an irrevocable written offer to alter the terms or conditions of this Agreement during the
Company Notice Period, the Company Board shall have determined in good faith, based on the advice of its outside legal counsel, that
the failure to withhold, amend, withdraw or modify the Company Board Recommendation would reasonably be expected to be inconsistent with
its fiduciary duties under applicable Law (after taking into account such alterations of the terms and conditions of this Agreement);
provided that (x) Parent receives written notice from the Company confirming that the Company Board has determined to change its
recommendation at least four (4) Business Days in advance of the Company Board Adverse Recommendation Change (the “Company
Notice Period”), which notice shall include a description in reasonable detail of the reasons for such Company Board Adverse
Recommendation Change, and written copies of any relevant proposed transaction agreements with any party making a potential Superior
Offer, (y) during any Company Notice Period, Parent shall be entitled to deliver to the Company one or more counterproposals to
such Acquisition Proposal and the Company will, and cause its Representatives to, negotiate with Parent in good faith (to the extent
Parent desires to negotiate) to make such adjustments in the terms and conditions of this Agreement so that the applicable Acquisition
Proposal ceases to constitute a Superior Offer and (z) in the event of any material amendment to any Superior Offer (including any
revision in the amount, form or mix of consideration or percentage of the combined company that the Company’s stockholders would
receive as a result of such potential Superior Offer), the Company shall be required to provide Parent with notice of such material amendment
and the Company Notice Period shall be extended, if applicable, to ensure that at least two (2) Business Days remain in the Company
Notice Period following such notification during which the parties shall comply again with the requirements of this Section 7.2(d) and
the Company Board shall not make a Company Board Adverse Recommendation Change prior to the end of such Company Notice Period as so extended
(it being understood that there may be multiple extensions) or (ii) in the case of a Company Intervening Event, the Company promptly
notifies Parent, in writing, within the Company Notice Period before making a Company Board Adverse Recommendation Change, which notice
shall state expressly the material facts and circumstances related to the applicable Company Intervening Event and that the Company Board
intends to make a Company Board Adverse Recommendation Change.
Section 7.3 Parent
Stockholders’ Meeting.
(a) Parent
shall take all action necessary under applicable Law to call, give notice of and hold a meeting of the holders of Parent Common Stock
(the “Parent Stockholder Meeting”) to consider and obtain the Parent Stockholder Approval and thereby approve the
Contemplated Transactions and the Parent Charter Amendment and, if deemed necessary by Parent, any the Parent Legacy Transaction (the
“Parent Stockholder Proposals”). The Parent Stockholder Meeting shall be held as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, and in any event no later than forty-five (45) days after the
effective date of the Registration Statement. Parent shall take reasonable measures to ensure that all proxies solicited in connection
with the Parent Stockholder Meeting are solicited in compliance with all applicable Law. Notwithstanding anything to the contrary contained
herein, if on the date of the Parent Stockholder Meeting, or a date preceding the date on which the Parent Stockholder Meeting is scheduled,
Parent reasonably believes that (i) it will not receive proxies sufficient to obtain the Parent Stockholder Approval, whether or
not a quorum would be present or (ii) it will not have sufficient shares of Parent Common Stock represented (whether in person or
by proxy) to constitute a quorum necessary to conduct the business of the Parent Stockholder Meeting, Parent may postpone or adjourn,
or make one or more successive postponements or adjournments of, the Parent Stockholder Meeting as long as the date of the Parent Stockholder
Meeting is not postponed or adjourned by more than an aggregate of thirty (30) days in connection with any postponements or adjournments.
(b) Parent
agrees that, subject to Section 7.3(c), (i) the Parent Board shall recommend that the holders of Parent Common Stock
vote to approve the Parent Stockholder Proposals and shall use commercially reasonable efforts to solicit such approval within the timeframe
set forth in Section 7.3(a) above and (ii) the Proxy Statement shall include a statement to the effect that the
Parent Board recommends that Parent’s stockholders vote to approve the Parent Stockholder Proposal (the recommendation of the Parent
Board being referred to as the “Parent Board Recommendation”) and (iii) the Parent Board Recommendation shall
not be withheld, amended, withdrawn or modified (and the Parent Board shall not publicly propose to withhold, amend, withdraw or modify
the Parent Board Recommendation) in a manner adverse to the Company, and no resolution by the Parent Board or any committee thereof to
withdraw or modify the Parent Board Recommendation in a manner adverse to the Company or to adopt, approve or recommend (or publicly
propose to adopt, approve or recommend) any Acquisition Proposal shall be adopted or proposed (the actions set forth in the foregoing
clause (iii), collectively, a “Parent Board Adverse Recommendation Change”).
(c) Notwithstanding
anything to the contrary contained in Section 7.3(b), and subject to compliance with Section 6.4 and Section 7.3,
at any time prior to the approval of the Parent Stockholder Proposal by the Parent Stockholder Approval, (i) if Parent receives
a bona fide written Superior Offer or (ii) as a result of a material development or change in circumstances (other than any such
event, development or change to the extent related to (A) any Acquisition Proposal, Acquisition Inquiry, Acquisition Transaction
or the consequences thereof or (B) the fact, in and of itself, that Parent meets or exceeds internal budgets, plans or forecasts
of its revenues, earnings or other financial performance or results of operations) that affects the business, assets or operations of
Parent that occurs or arises after the date of this Agreement (a “Parent Intervening Event”), the Parent Board may
make a Parent Board Adverse Recommendation Change if, but only if in the case of a Superior Offer, following the receipt of and
on account of such Superior Offer, (1) the Parent Board determines in good faith, after consulting with outside legal counsel, that
the failure to withhold, amend, withdraw or modify such recommendation would reasonably be expected to be inconsistent with its fiduciary
duties under applicable Law, (2) Parent has, and has caused its financial advisors and outside legal counsel to, during the Parent
Notice Period, negotiate with the Company in good faith to make such adjustments to the terms and conditions of this Agreement so that
such Acquisition Proposal ceases to constitute a Superior Offer (to the extent the Company desires to negotiate) and (3) if after
the Company shall have delivered to Parent an irrevocable written offer to alter the terms or conditions of this Agreement during the
Parent Notice Period, the Parent Board shall have determined in good faith, based on the advice of its outside legal counsel, that the
failure to withhold, amend, withdraw or modify the Parent Board Recommendation would reasonably be expected to be inconsistent with its
fiduciary duties under applicable Law (after taking into account such alterations of the terms and conditions of this Agreement); provided
that (x) the Company receives written notice from Parent confirming that the Parent Board has determined to change its recommendation
at least four (4) Business Days in advance of the Parent Board Adverse Recommendation Change (the “Parent Notice Period”
), which notice shall include a description in reasonable detail of the reasons for such Parent Board Adverse Recommendation Change,
and written copies of any relevant proposed transaction agreements with any party making a potential Superior Offer, (y) during
any Parent Notice Period, the Company shall be entitled to deliver to Parent one or more counterproposals to such Acquisition Proposal
and Parent will, and cause its Representatives to, negotiate with the Company in good faith (to the extent the Company desires to negotiate)
to make such adjustments in the terms and conditions of this Agreement so that the applicable Acquisition Proposal ceases to constitute
a Superior Offer and (z) in the event of any material amendment to any Superior Offer (including any revision in the amount, form
or mix of consideration or percentage of the combined company that Parent’s stockholders would receive as a result of such potential
Superior Offer), Parent shall be required to provide the Company with notice of such material amendment and the Parent Notice Period
shall be extended, if applicable, to ensure that at least two (2) Business Days remain in the Parent Notice Period following such
notification during which the parties shall comply again with the requirements of this Section 7.3(c) and the Parent
Board shall not make a Parent Board Adverse Recommendation Change prior to the end of such Parent Notice Period as so extended (it being
understood that there may be multiple extensions) or (ii) in the case of a Parent Intervening Event, Parent promptly notifies the
Company, in writing, within the Parent Notice Period before making a Parent Board Adverse Recommendation Change, which notice shall state
expressly the material facts and circumstances related to the applicable Parent Intervening Event and that the Parent Board intends to
make a Parent Board Adverse Recommendation Change.
(d) Unless
this Agreement is validly terminated pursuant to Section 9.1(j), Parent’s obligation to call, give notice of and hold
the Parent Stockholder Meeting in accordance with Section 7.3(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission of any Superior Offer or Acquisition Proposal, or by any withdrawal or modification
of the Parent Board Recommendation or any Parent Board Adverse Recommendation Change.
(e) Nothing
contained in this Agreement shall prohibit Parent or the Parent Board from complying with Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act; provided however, that any disclosure made by Parent or the Parent Board pursuant to Rules 14d-9 and 14e-2(a) shall
be limited to a statement that Parent is unable to take a position with respect to the bidder’s tender offer unless the Parent
Board determines in good faith, after consultation with its outside legal counsel, that such statement would reasonably be expected to
be inconsistent with its fiduciary duties under applicable Law.
Section 7.4 Efforts;
Regulatory Approvals; Transaction Litigation.
(a) The
parties shall use commercially reasonable efforts to consummate the Contemplated Transactions. Without limiting the generality of the
foregoing, each party: (i) shall promptly as practicable and in any event no more than five (5) Business Days after the date
of this Agreement, make or cause to be made any filings required by each of them or any of their respective Affiliates under the HSR
Act, (ii) shall make all filings and other submissions (if any) and give all notices (if any) required to be made and given
by such party in connection with the Contemplated Transactions, (iii) shall use commercially reasonable efforts to obtain each consent
(if any) reasonably required to be obtained (pursuant to any applicable law or Contract, or otherwise) by such party in connection with
the Contemplated Transactions or for such Contract to remain in full force and effect, (iv) shall use commercially reasonable efforts
to lift any injunction prohibiting, or any other legal bar to, the Contemplated Transactions and (v) shall use commercially reasonable
efforts to satisfy the conditions precedent to the consummations of this Agreement.
(b) Notwithstanding
the generality of the foregoing, each party shall use commercially reasonable efforts to file or otherwise submit, as soon as practicable
after the date of this Agreement, all applications, notices, reports and other documents reasonably required to be filed by such party
with or otherwise submitted by such party to any Governmental Entity with respect to the Contemplated Transactions, and to submit promptly
any additional information requested by any such Governmental Entity.
(c) Without
limiting the generality of the foregoing, Parent shall give the Company prompt (but not later than within two (2) Business Days)
written notice of any “demand letter” or any litigation initiated, or threatened or in writing against Parent and/or its
directors relating to this Agreement or the Contemplated Transactions (the “Transaction Litigation”) (including by
providing copies of all pleadings with respect thereto) and keep the Company reasonably informed with respect to the status thereof.
Parent will (i) give the Company the opportunity to participate in the defense, settlement or prosecution of any Transaction Litigation,
(ii) consult with the Company with respect to the defense, settlement and prosecution of any Transaction Litigation, (iii) consider
in good faith the Company’s advice with respect to such Transaction Litigation and (iv) will not settle or consent or agree
to settle or compromise any Transaction Litigation without the Company’s prior written consent (which such consent shall not be
unreasonably withheld or delayed). Without otherwise limiting the rights of current or former directors and officers of Parent with regard
to the right to counsel, following the First Effective Time, current or former directors and officers of Parent with rights to indemnification
as described in Section 7.5 shall be entitled to retain any counsel selected by such indemnified parties to defend any Transaction
Litigation as it relates to such indemnified parties in accordance with Section 7.5.
Section 7.5 Indemnification,
Exculpation and Insurance.
(a) From
the First Effective Time through the sixth (6th) anniversary of the date on which the First Effective Time occurs, each of Parent and
the Surviving Entity shall indemnify and hold harmless each Person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the First Effective Time, a director or officer of Parent or the Company, respectively (the “D&O Indemnified
Parties”), against all demands, claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses,
including attorneys’ fees and disbursements, incurred in connection with any claim, Action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the D&O Indemnified Party
is or was a director or officer of Parent or of the Company, whether asserted or claimed prior to, at or after the First Effective Time,
in each case, to the fullest extent permitted under the DGCL. Each D&O Indemnified Party will be entitled to advancement of fees,
costs and expenses incurred in the defense of any such demand, claim, Action, suit, proceeding or investigation from each of Parent and
the Surviving Entity, jointly and severally, upon receipt by Parent or the Surviving Entity from the D&O Indemnified Party of a request
therefor; provided, that any such D&O Indemnified Party to whom expenses are advanced provides an undertaking to Parent, to
the extent then required by the DGCL, to repay such advances if it is ultimately determined that such D&O Indemnified Party is not
entitled to indemnification. Such undertaking, if required, shall be unsecured and made without reference to the D&O Indemnified
Party’s ability to repay such advances or, except as may be limited by applicable Law, ultimate entitlement to indemnification.
No other form of undertaking shall be required. All rights to indemnification, exculpation and advancement of expenses or other protection
in respect of any claim asserted or made, and for which a D&O Indemnified Party delivers a written notice to Parent or the Surviving
Entity prior to the sixth (6th) anniversary of the First Effective Time asserting a claim for such protections pursuant to
this Section 7.5, shall continue until the final disposition of such claim.
(b) The
certificate of incorporation and bylaws of the Surviving Entity shall contain, and Parent shall cause the certificate of incorporation
and bylaws of the Surviving Entity to so contain, provisions no less favorable with respect to indemnification, advancement of expenses
and exculpation of present and former directors and officers as those presently set forth in the certificate of incorporation and bylaws
of Parent.
(c) From
and after the First Effective Time, (i) the Surviving Entity shall fulfill and honor in all respects the obligations of the Company
to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under the Company’s
organizational documents and pursuant to any indemnification agreements between the Company and such D&O Indemnified Parties, with
respect to demands, claims, Actions, suits, proceedings or investigations whether asserted or claimed prior to, at or after the First
Effective Time, arising out of matters occurring at or prior to the First Effective Time and (ii) Parent shall fulfill and honor
in all respects the obligations of Parent to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification
provisions under Parent’s organizational documents and pursuant to any indemnification agreements between Parent and such D&O
Indemnified Parties, with respect to demands, claims, Actions, suits, proceedings or investigations whether asserted or claimed prior
to, at or after the First Effective Time, arising out of matters occurring at or prior to the First Effective Time.
(d) From
and after the First Effective Time, Parent shall maintain directors’ and officers’ liability insurance policies, with an
effective date as of the Closing Date, on commercially reasonable terms and conditions and with coverage limits customary for U.S. public
companies similarly situated to Parent. In addition, Parent shall purchase, prior to the First Effective Time, a six-year prepaid “D&O
tail policy” for the non-cancellable extension of the directors’ and officers’ liability coverage of Parent’s
existing directors’ and officers’ insurance policies for a claims reporting or discovery period of at least six years from
and after the First Effective Time with respect to any claim related to any period of time at or prior to the First Effective Time with
terms, conditions, exclusions, retentions and limits of liability that are no less favorable than the coverage provided under Parent’s
existing policies as of the date of this Agreement with respect to any actual or alleged error, misstatement, misleading statement, act,
omission, neglect, breach of duty or any matter claimed against a director or officer of Parent by reason of him or her serving in such
capacity that existed or occurred at or prior to the First Effective Time (including in connection with this Agreement or the Contemplated
Transactions or in connection with Parent’s initial public offering of shares of Parent Common Stock).
(e) From
and after the First Effective Time, Parent shall pay all expenses, including reasonable attorneys’ fees, including in advance (subject
to the advancement requirements set forth in Section 7.5(a)), that are incurred by the persons referred to in this Section 7.5
in connection with their enforcement of the rights provided to such persons in this Section 7.5.
(f) The
provisions of this Section 7.5 are intended to be in addition to the rights otherwise available to the current and former
officers and directors of Parent and the Company by Law, charter, statute, bylaw or agreement, and shall operate for the benefit of,
and shall be enforceable by, each of the D&O Indemnified Parties, their heirs and their Representatives.
(g) In
the event Parent or the Surviving Entity or any of their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving company or entity of such consolidation or merger or (ii) transfers all
or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that
the successors and assigns of Parent or the Surviving Entity, as the case may be, shall succeed to the obligations set forth in this
Section 7.5. Parent shall cause the Surviving Entity to perform all of the obligations of the Surviving Entity under this
Section 7.5.
Section 7.6 Section 16
Matters. Prior to the First Effective Time, each of Parent and the Company shall take all such steps as may be necessary or appropriate
to cause the acquisitions of Parent Capital Stock (including derivative securities with respect to such Parent Common Stock) resulting
from the Contemplated Transactions by each individual who will become subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to Parent to be exempt under Rule 16b promulgated under the Exchange Act.
Section 7.7 Disclosure.
The parties shall use their commercially reasonable efforts to agree to the text of any initial press release and Parent’s Form 8-K
announcing the execution and delivery of this Agreement. Without limiting any party’s obligations under the Confidentiality Agreement,
no party shall, and no party shall permit any of its Subsidiaries or any of its Representatives to, issue any press release or make any
disclosure (to any customers or employees of such party, to the public or otherwise) regarding the Contemplated Transactions unless (a) the
other party shall have approved such press release or disclosure in writing, such approval not to be unreasonably conditioned, withheld
or delayed; or (b) such party shall have determined in good faith, upon the advice of outside legal counsel, that such disclosure
is requited by applicable Law and, to the extent practicable, before such press release or disclosure is issued or made, such party advises
the other party of, and consults with the other party regarding, the text of such press release or disclosure; provided, however, that
each of the Company and Parent may make any public statement in response to specific questions by the press, analysts, investors or those
attending industry conferences or financial analyst conference calls, so long as any such statements made by the Company or Parent in
compliance with this Section 7.7. Notwithstanding the foregoing, a party need not consult with any other parties in connection
with such portion of any press release, public statement or filing to be issued or made pursuant to Section 7.3(d) or
with respect to any Acquisition Proposal, Company Board Adverse Recommendation Change, Parent Board Adverse Recommendation Change, or
pursuant to Section 7.3(e).
Section 7.8 Listing.
From the date hereof until the First Effective Time, Parent shall maintain its existing listing on Nasdaq until the First Effective Time.
At or prior to the First Effective Time, (a) Parent shall obtain approval of the listing of the combined corporation on Nasdaq,
(b) to the extent required by the rules and regulations of Nasdaq, prepare for the Company’s review and submit (with
the prior approval of the Company) to Nasdaq a notification form for the listing of shares of Parent Common Stock to be issued in connection
with the Contemplated Transactions, and to cause such shares to be approved for listing (subject to official notice of issuance), and
(c) prepare and timely submit to Nasdaq a notification form for the Nasdaq Reverse Stock Split (if required) and submit a copy of
the amendment to Parent’s certificate of incorporation effecting the Nasdaq Reverse Stock Split, certified by the Secretary of
State of the State of Delaware, to Nasdaq on the Closing Date. To the extent required by Nasdaq Marketplace Rule 5110, the Company
shall prepare and file an initial listing application for the Parent Common Stock on Nasdaq (including any Parent Common Stock issuable
upon conversion of the Parent Convertible Preferred Stock) (the “Nasdaq Listing Application”), and from the date hereof
until the First Effective Time, Parent shall assist the Company in preparing and filing such Nasdaq Listing Application and to cause
such Nasdaq Listing Application to be conditionally approved prior to the First Effective Time. Each party will reasonably promptly inform
the other party of all verbal or written communications between Nasdaq and such party or its Representatives. The parties will use commercially
reasonable efforts to coordinate with respect to compliance with Nasdaq rules and regulations. Parent will cooperate with the Company
as reasonably requested by the Company with respect to the Nasdaq Listing Application and promptly furnish to the Company all information
concerning Parent that may be required or reasonably requested in connection with any action contemplated by this Section 7.8.
All of the Nasdaq Fees associated with any action contemplated by this Section 7.8 shall be shared equally by the Company
and Parent.
Section 7.9 Tax
Matters.
(a) Each
of Parent and the Company will (and will cause its respective Affiliates to) (i) use reasonable best efforts to cause the Merger
to qualify for the Intended Tax Treatment and (ii) not take any action, or fail to take any action, that could reasonably be expected
to prevent or impede the Merger from qualifying for the Intended Tax Treatment. Parent shall file (or cause its Affiliates, including
the Company, to file) all U.S. federal, state or local Tax Return after the Closing Date in a manner that is consistent with the treatment
of the Merger as a transaction qualifying for the Intended Tax Treatment, and shall not take any inconsistent position during the course
of any audit, litigation or other proceeding with respect to Taxes, in each case, unless otherwise required by a “determination”
that is final within the meaning of Section 1313(a) of the Code.
(b) All
transfer, documentary, sales, use, stamp, registration, excise, recording, registration value added and other such similar Taxes and
fees (including any penalties and interest) that become payable in connection with or by reason of the execution of this Agreement and
the Contemplated Transactions shall be borne and paid equally by the Parent and the Company. Unless otherwise required by applicable
Law, the Company shall timely file any Tax Return or other document with respect to such Taxes or fees (and Parent shall reasonably cooperate
with respect thereto as necessary).
(c) If
the SEC requires that an opinion with respect to the Intended Tax Treatment be prepared and submitted in connection with the Registration
Statement, (i) the Company and Parent shall each use its reasonable best efforts to cause Gibson, Dunn and Crutcher LLP (or such
other nationally recognized law or accounting firm reasonably satisfactory to the Company) and Goodwin Procter LLP (or such other nationally
recognized law or accounting firm reasonably satisfactory to Parent), respectively, to furnish such opinion (as so required and subject
to customary assumptions and limitations) and (ii) Parent and the Company shall each deliver to Gibson, Dunn and Crutcher LLP (or
such other nationally recognized law or accounting firm reasonably satisfactory to the Company) and Goodwin Procter LLP (or such other
nationally recognized law or accounting firm reasonably satisfactory to the Parent) a Tax certificate, signed by an officer of Parent
or the Company, as applicable, containing customary representations and covenants reasonably acceptable to the Company and Parent, as
applicable, in each case, as reasonably necessary and appropriate to enable each such tax advisor to render such opinion (the “Tax
Certificates”). Each of Parent and the Company shall use its reasonable best efforts not to take or cause to be taken any action
that would cause to be untrue (or fail to take or cause not to be taken any action which would cause to be untrue) any of the certifications,
covenants or representations included in the Tax Certificates.
Section 7.10 Directors
and Officers. Until successors are duly elected or appointed and qualified in accordance with applicable Law, the parties shall use
commercially reasonable efforts to take all necessary actions so that the Persons listed on Sections 2.6(c) and 2.6(d) of
the Company Disclosure Letter are elected or appointed, as applicable, to the positions of officers and directors of Parent and the Surviving
Entity, as set forth therein, to serve in such positions effective as of the First Effective Time. If any Person listed on Section 2.6(c) and
2.6(d) of the Company Disclosure Letter is unable or unwilling to serve as officer or director of Parent or the Surviving
Entity, as set forth therein, the party appointing such Person (as set forth on Sections 2.6(c) and 2.6(d) of
the Company Disclosure Letter) shall designate a successor. The parties shall use reasonable best efforts to have each of the Persons
that will serve as directors and officers of the Parent following the Closing to execute and deliver a Lock-Up Agreement prior to Closing.
Section 7.11 Termination
of Certain Agreements and Rights.
(a) Except
as set forth on Section 7.11(a) of the Parent Disclosure Letter or Company Disclosure Letter, as applicable, each of
Parent and the Company shall use commercially reasonable efforts to cause any stockholder agreements, voting agreements, registration
rights agreements, co-sale agreements and any other similar Contracts between either Parent or the Company and any holders of Parent
Common Stock or Company Common Stock, respectively, including any such Contract granting any Person investor rights, rights of first
refusal, registration rights or director registration rights (collectively, the “Investor Agreements”), to be terminated
immediately prior to the First Effective Time, without any liability being imposed on the party of Parent or the Surviving Entity.
(b) Parent
shall use commercially reasonable efforts to cause all Contracts set forth in Section 7.11(b) of the Parent Disclosure
Letter to be terminated effective no later than the First Effective Time (or, to the extent specified on such Section 7.11(b) of
the Parent Disclosure Letter, any applicable rights thereunder waived).
Section 7.12 Obligations
of Merger Subs. Parent will take all action necessary to cause Merger Subs to perform their respective obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this Agreement.
Section 7.13 Allocation
Certificate. The Company will prepare and deliver to Parent at least two (2) Business Days prior to the Closing Date a spreadsheet
setting forth (as of immediately prior to the First Effective Time) (a) each holder of the Company Capital Stock, (b) such
holder’s name and physical address, (c) the number or percentage and type of the Company Capital Stock held as of the Closing
Date for each such holder and (d) the number of shares of Parent Capital Stock to be issued to such holder pursuant to this Agreement
in respect of the Company Capital Stock held by such holder as of immediately prior to the First Effective Time (the “Allocation
Certificate”).
Section 7.14 Pre-Closing
Cash Dividend. Prior to the First Effective Time, the Parent Board shall set a record date for the Pre-Closing Cash Dividend (the
“Dividend Record Date”), which date shall be as close as reasonably practicable to (but not later than) the anticipated
Closing Date. Parent shall ensure that the declaration of the Dividend Record Date and the payment of the Pre-Closing Cash Dividend shall
be implemented and performed such the Pre-Closing Cash Dividend be up to an amount equal in the aggregate to Parent’s reasonable,
good faith approximation of the amount by which the Final Parent Net Cash will exceed $0 (the “Pre-Closing Cash Dividend Amount”),
subject to any adjustments as may be mutually agreed between Parent and the Company. The Parent Board shall cause to be paid the Pre-Closing
Cash Dividend as soon as practicable after the Dividend Record Date, but in any case, not prior to the date upon which the Final Parent
Net Cash has been finally determined in accordance with Section 3.6 and not later than sixty (60) days after the
Dividend Record Date. Parent shall announce, declare and pay (or cause to be paid) the Pre-Closing Cash Dividend in compliance with all
applicable Law, including, without limitation, any rule or regulation of Nasdaq applicable to Parent. The amount of the Pre-Closing
Cash Dividend shall be reduced by any Taxes required to be withheld from such payment (including, for the avoidance of doubt, because
at the time of payment it is not known whether Parent will have current or accumulated earnings and profits for U.S. federal income tax
purposes in the year in which the Pre-Closing Cash Dividend is paid), and any amounts that are deducted or withheld shall be treated
as having been paid to the stockholder of Parent in respect of whom such payment was made.
Section 7.15 Concurrent
Investment.
(a) Subject
to the terms and conditions of this Agreement, the Company shall use commercially reasonable efforts to obtain the Concurrent Investment
on the terms and conditions described in the Securities Purchase Agreement and satisfy the conditions to the Concurrent Investment as
described in the Securities Purchase Agreement and shall not permit any termination, amendment or modification to be made to, or any
waiver of any provision under, or any replacement of, the Securities Purchase Agreement if such termination, amendment, modification,
waiver or replacement (i) reduces the aggregate amount of the Concurrent Investment Amount or (ii) adversely impact the ability
of the Company to enforce its rights against other parties to the Securities Purchase Agreement. The Company shall promptly deliver to
Parent copies of any such termination, amendment, modification, waiver or replacement.
(b) The
Company shall use commercially reasonable efforts (i) to maintain in effect the Securities Purchase Agreement, (ii) to enforce
its rights under the Securities Purchase Agreement and (iii) to comply with its obligations under the Securities Purchase Agreement.
(c) The
Company shall use commercially reasonable efforts to give Parent prompt notice (i) of any material breach or default by any party
to the Securities Purchase Agreement or definitive agreements related to the Concurrent Investment of which the Company becomes aware,
(ii) of the receipt of any written notice or other written communication from any Concurrent Investment Investor with respect to
any (x) actual material breach, default, termination or repudiation by any party to the Securities Purchase Agreement or definitive
agreements related to the Concurrent Investment of any provisions of the Securities Purchase Agreement or definitive agreements related
to the Concurrent Investment or (y) material dispute or disagreement relating to the Concurrent Investment with respect to the obligation
to fund the Concurrent Investment at or substantially simultaneously with the Closing, and (iii) if at any time for any reason the
Company believes in good faith that it will not be able to obtain all or any portion of the Concurrent Investment on the terms and conditions,
in the manner or from the sources contemplated by the Securities Purchase Agreement or definitive agreements related to the Concurrent
Investment. The Company shall promptly provide information reasonably requested by Parent relating to the circumstances referred to in
clauses (i), (ii) or (iii) of the immediately preceding sentence.
Section 7.16 Parent
Equity Plans.
(a) Prior
to the First Effective Time, the Parent Board will adopt the 2024 Equity Incentive Plan, subject to the Closing and effective as of the
First Effective Time, and will include provisions in the Proxy Statement for the stockholders of Parent to approve the 2024 Equity Incentive
Plan. Subject to the approval of the 2024 Equity Incentive Plan by the stockholders of Parent prior to the First Effective Time, Parent
shall file with the SEC, promptly after the First Effective Time and at the Company’s expense, a registration statement on Form S-8
(or any successor form), if available for use by Parent, relating to the shares of Parent Common Stock issuable with respect to the 2024
Equity Incentive Plan.
(b) Prior
to the First Effective Time, the Parent Board will adopt the 2024 ESPP, subject to the Closing and effective as of the First Effective
Time, and will include provisions in the Proxy Statement for the stockholders of Parent to approve the 2024 ESPP. Subject to the approval
of the 2024 ESPP by the stockholders of Parent prior to the First Effective Time, Parent shall file with the SEC, promptly after the
First Effective Time and the Company’s expense, a registration statement on Form S-8 (or any successor form), if available
for use by Parent, relating to the shares of Parent Common Stock issuable with respect to the 2024 ESPP.
(c) For
the avoidance of doubt, approval of the 2024 Plans by the stockholders of Parent shall not be a condition to Closing.
Section 7.17 Wind-Down
Activities. From the date hereof through the Closing, Parent shall use its commercially reasonable efforts to continue the wind-down
activities of Parent set forth on Section 7.17 of the Parent Disclosure Letter.
Section 7.18 Parent
SEC Documents. From the date of this Agreement to the First Effective Time, Parent shall timely file with the SEC all Parent SEC
Documents. As of its filing date, or if amended after the date of this Agreement, as of the date of the last such amendment, each Parent
SEC Document filed by Parent with the SEC (a) shall comply in all material respects with the applicable requirements of the Exchange
Act and the Securities Act, and (b) shall not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading.
Article VIII
CLOSING CONDITIONS
Section 8.1 Conditions
Precedent of each Party. The obligations of each party to effect the Merger and otherwise consummate the Contemplated Transactions
to be consummated at the Closing are subject to the satisfaction or, to the extent permitted by applicable Law, the written waiver by
each of the parties, at or prior to the Closing, of each of the following conditions:
(a) The
Registration Statement shall have become effective in accordance with the provisions of the Securities Act, and shall not be subject
to any stop order or proceeding seeking a stop order with respect to the Registration Statement and has not been withdrawn. Any material
state securities Laws applicable to the issuance of the shares of Parent Common Stock in connection with the Contemplated Transactions
shall have been complied with and no stop order (or similar order) shall have been issued or threatened in writing in respect of such
shares of Parent Common Stock by any applicable state securities commissioner or court of competent jurisdiction.
(b) Any
applicable waiting periods (or extensions thereof) under the HSR Act shall have expired or otherwise been terminated.
(c) No
temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Contemplated Transactions
shall have been issued by any court of competent jurisdiction or other Governmental Entity of competent jurisdiction and remain in effect
and there shall not be any Law which has the effect of making the consummation of the Contemplated Transactions illegal.
(d) (i) Parent
shall have obtained the Parent Stockholder Approval and (ii) the Company shall have obtained the Company Stockholder Approval.
(e) The
Lock-Up Agreements will continue to be in full force and effect as of immediately following the First Effective Time.
(f) The
Parent Charter Amendment shall have been duly filed with the Secretary of State of the State of Delaware, containing such amendments
as are necessary to consummate the transactions contemplated by this Agreement.
(g) Parent
shall have filed the Certificate of Designation with the Secretary of State of the State of Delaware.
(h) The
Securities Purchase Agreement shall be in full force and effect and cash proceeds of not less than the Concurrent Investment Amount shall
have been received by the Company, or will be received by the Company substantially simultaneously with the Closing, in connection with
the consummation of the transactions contemplated by the Securities Purchase Agreement.
(i) (i) The
approval of the listing of the additional shares pursuant to the Nasdaq Listing Application shall have been approved for listing (subject
to official notice of issuance) on Nasdaq and (ii) Parent has maintained its existing listing on Nasdaq and obtained approval of
the listing of the combined corporation on Nasdaq.
Section 8.2 Conditions
Precedent to Obligation of the Company. The obligations of the Company to effect the Merger and otherwise consummate the transactions
to be consummated at the Closing are subject to the satisfaction or the written waiver by the Company, at or prior to the Closing, of
each of the following conditions:
(a) Accuracy
of Representations. The representations and warranties of Parent and Merger Subs made in this Agreement (other than the Parent Fundamental
Representations) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct on and
as of the Closing Date with the same force and effect as if made on and as of the Closing Date except (a) in each case, or in the
aggregate, where the failure to be so true and correct would not reasonably be expected to have a Parent Material Adverse Effect (without
giving effect to any references therein to any Parent Material Adverse Effect or other materiality qualifications) or (b) for those
representations and warranties which address matters only as of a particular date (which representations shall have been true and correct,
subject to the qualifications as set forth in the preceding clause (a), as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, any update of or modification to the Parent Disclosure Letter made
or purported to have been made after the date of this Agreement shall be disregarded). The Parent Fundamental Representations shall have
been true and correct except in de minimis respects as of the date of this Agreement and shall be true and correct except in de minimis
respects on and as of the Closing Date with the same force and effect as if made on and as of such date, except, in each case, (x) in
respect of Section 5.2 for such inaccuracies which are de minimis, individually or in the aggregate or (y) for those
representations and warranties which address matters only as of a particular date (which representations and warranties shall have been
true and correct, subject to the qualifications as set forth in the preceding clause (x), as of such particular date).
(b) Performance
of Covenants. Parent shall have performed or complied with in all material respects all agreements and covenants required to be performed
or complied with by it under this Agreement at or prior to the First Effective Time.
(c) No
Parent Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Parent Material Adverse Effect.
(d) Termination
of the Investor Agreements. The Investor Agreements shall have been terminated.
(e) Documents.
The Company shall have received the following documents, each of which shall be in full force and effect:
(i) a
certificate executed by an officer of Parent certifying that the conditions set forth in Section 8.2(a), (b), (c) and
(d) have been duly satisfied;
(ii) written
resignations in forms reasonably satisfactory to the Company, dated as of the Closing Date and effective as of the Closing executed by
the officers and directors of Parent who are not to continue as officers or directors of Parent pursuant to Section 7.10;
and
(iii) the
Parent Net Cash Schedule.
(f) If
Parent declares the Pre-Closing Cash Dividend, then the Pre-Closing Cash Dividend Amount shall have been deposited by Parent with Parent’s
transfer agent for further distribution to the holders of the shares of Parent Capital Stock outstanding as of the record date of the
Pre-Closing Cash Dividend.
Section 8.3 Conditions
Precedent of Parent and Merger Subs. The obligations of Parent and Merger Subs to effect the Merger and otherwise consummate the
transactions to be consummated at the Closing are subject to the satisfaction or the written waiver by Parent, at or prior to the Closing,
of each of the following conditions:
(a) Accuracy
of Representations. The representations and warranties of the Company made in this Agreement (other than the Company Fundamental
Representations) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct on and
as of the Closing Date with the same force and effect as if made on and as of the Closing Date except (a) in each case, or in the
aggregate, where the failure to be so true and correct would not reasonably be expected to have a Material Adverse Effect (without giving
effect to any references therein to any Material Adverse Effect or other materiality qualifications) or (b) for those representations
and warranties which address matters only as of a particular date (which representations shall have been true and correct, subject to
the qualifications as set forth in the preceding clause (a), as of such particular date) (it being understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or modification to the Company Disclosure Letter made or purported
to have been made after the date of this Agreement shall be disregarded). The Company Fundamental Representations shall have been true
and correct except in de minimis respects as of the date of this Agreement and shall be true and correct except in de minimis respects
on and as of the Closing Date with the same force and effect as if made on and as of such date, except, in each case, (x) in respect
of Section 4.2 for such inaccuracies which are de minimis, individually or in the aggregate, (y) for those representations
and warranties which address matters only as of a particular date (which representations and warranties shall have been true and correct,
subject to the qualifications as set forth in the preceding clause (x), as of such particular date), or (z) variances arising solely
due to the transactions contemplated under the Securities Purchase Agreement.
(b) Performance
of Covenants. The Company shall have performed or complied with in all material respects all agreements and covenants required to
be performed or complied with by it under this Agreement at or prior to the First Effective Time.
(c) No
Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect.
(d) Closing
Certificate. Parent shall have received a certificate executed by an officer of the Company certifying (i)that the conditions set
forth in Section 8.3(a), (b), and (c) have been duly satisfied and (ii) that the information set
forth in the Allocation Certificate delivered by the Company in accordance with Section 7.13 is true and accurate in all
respects as of the Closing Date.
Article IX
TERMINATION
Section 9.1 Termination.
This Agreement may be terminated prior to the First Effective Time (whether before or after the adoption of this Agreement by the Company’s
stockholders and whether before or after approval of the Parent Stockholder Proposal by Parent’s stockholders, unless otherwise
specified below):
(a) by
mutual consent of Parent and the Company;
(b) by
either Parent or the Company if the Merger shall not have been consummated by April 30, 2025 (the “End Date”);
provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to the
Company or Parent if such party’s (or in the case of Parent, Merger Subs’) breach of this Agreement has been a principal
cause of the failure of the Merger to occur on or before the End Date;
(c) by
either Parent or the Company if a court of competent jurisdiction or other Governmental Entity shall have issued a final and nonappealable
order, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Contemplated
Transactions, provided, however, that the right to terminate this Agreement under this Section 9.1(c) shall not be available
to a party if such party’s (or in the case of Parent, Merger Subs’) breach of this Agreement is a principal cause of any
such Governmental Entity issuing any such order or taking any such other action;
(d) by
either Parent or the Company if the Company Stockholder Approval shall not have been obtained by written consent of the Company’s
stockholders in lieu of a meeting within two (2) Business Days of the Registration Statement becoming effective in accordance with
the provisions of the Securities Act; provided, however, that once the Company Stockholder Approval has been obtained, neither party
may terminate this Agreement pursuant to this Section 9.1(d) and (ii) the right to terminate this Agreement under
this Section 9.1(d) shall not be available to a party if such party’s (or in the case of Parent or Merger Subs’)
breach of this Agreement is a principal cause of the failure of the Company Stockholder Approval to have been obtained on or before such
second (2nd) Business Day;
(e) by
either Parent or the Company if (i) the Parent Stockholder Meeting (including any adjournments and postponements thereof) shall
have been held and completed and Parent’s stockholders shall have taken a final vote on the Parent Stockholder Proposal and (ii) the
Parent Stockholder Approval shall not have been obtained at the Parent Stockholder Meeting (or any adjournment or postponement thereof);
provided, however, that the right to terminate this Agreement under this Section 9.1(e) shall not be available to a
party if such party’s (or in the case of Parent, Merger Subs’) breach of this Agreement is a principal cause of the failure
of the Parent Stockholder Approval to have been obtained at the Parent Stockholder Meeting;
(f) by
the Company (at any time prior to obtaining the Parent Stockholder Approval) if any Parent Triggering Event shall have occurred;
(g) by
Parent (at any time prior to obtaining the Company Stockholder Approval) if any Company Triggering Event shall have occurred;
(h) by
the Company, upon a breach of any representation, warranty, covenant or agreement set forth in this Agreement by Parent or Merger Subs
or if any representation or warranty of Parent or Merger Subs shall have become inaccurate, in either case, such that the conditions
set forth in Section 8.2(a) or Section 8.2(b) would not be satisfied as of the time of such breach
or as of the time such representation or warranty shall have become inaccurate; provided that the Company is not then in material breach
of any representation, warranty, covenant or agreement under this Agreement; provided, further that if such inaccuracy in Parent’s
or Merger Subs’ representations and warranties or breach by Parent or Merger Subs is curable by Parent or Merger Subs, then this
Agreement shall not terminate pursuant to this Section 9.1(h) as a result of such particular breach or inaccuracy until
the earlier of (i) the expiration of a 30-day period commencing upon delivery of written notice from the Company to Parent or Merger
Subs of such breach or inaccuracy and its intention to terminate pursuant to this Section 9.1(h) and (ii) Parent
or Merger Subs (as applicable) ceasing to exercise commercially reasonable efforts to cure such breach following delivery of written
notice from the Company to Parent or Merger Subs of such breach or inaccuracy and its intention to terminate pursuant to this Section 9.1(h) (it
being understood that this Agreement shall not terminate pursuant to this Section 9.1(h) as a result of such particular
breach or inaccuracy if such breach by Parent or Merger Subs is cured prior to such termination becoming effective);
(i) by
the Parent, upon a breach of any representation, warranty, covenant or agreement set forth in this Agreement by the Company or if any
representation or warranty of Parent or Merger Subs shall have become inaccurate, in either case, such that the conditions set forth
in Section 8.3(a) or Section 8.3(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become inaccurate; provided that Parent is not then in material breach of any representation,
warranty, covenant or agreement under this Agreement; provided, further that if such inaccuracy in the Company’s representations
and warranties or breach by the Company is curable by the Company, then this Agreement shall not terminate pursuant to this Section 9.1(i) as
a result of such particular breach or inaccuracy until the earlier of (i) the expiration of a 30-day period commencing upon delivery
of written notice from the Parent to the Company of such breach or inaccuracy and its intention to terminate pursuant to this Section 9.1(i) and
(ii) the Company ceasing to exercise commercially reasonable efforts to cure such breach following delivery of written notice from
Parent to the Company of such breach or inaccuracy and its intention to terminate pursuant to this Section 9.1(i) (it
being understood that this Agreement shall not terminate pursuant to this Section 9.1(i) as a result of such particular
breach or inaccuracy if such breach by the Company is cured prior to such termination becoming effective); or
(j) by
Parent (at any time prior to obtaining the Parent Stockholder Approval) and following compliance with all of the requirements set forth
in the proviso to this Section 9.1(j), concurrently with Parent’s entering into a definitive agreement for a Superior
Offer (a “Permitted Alternative Agreement”) and after having paid to the Company the Company Termination Fee pursuant
to Section 9.3(c); provided, however, that Parent shall not enter into any Permitted Alternative Agreement unless: (i) the
Company shall have received written notice from Parent of Parent’s intention to enter into such Permitted Alternative Agreement
at least four (4) Business Days in advance, with such notice describing in reasonable detail the reasons for such intention as well
as the material terms and conditions of such Permitted Alternative Agreement, including the identity of the counterparty together with
copies of the then current draft of such Permitted Alternative Agreement and any other related principal transaction documents, (ii) Parent
shall have complied in all material respects with its obligations under Section 6.4 and Section 7.3, and (iii) the
Parent Board shall have determined in good faith, after consultation with its outside legal counsel, that the failure to enter into such
Permitted Alternative Agreement would reasonably be expected to be inconsistent with its fiduciary obligations under applicable Law.
The party desiring to terminate this Agreement
pursuant to this Section 9.1 (other than pursuant to Section 9.1(a)) shall give a notice of such termination
to the other party specifying the provisions hereof pursuant to which such termination is made and the basis therefor described in reasonable
detail.
Section 9.2 Effect
of Termination. In the event of the termination of this Agreement as provided in Section 9.1, this Agreement shall be
of no further force or effect; provided, however, that (a) this Section 9.2, Section 9.3 and Article X
(and the related definitions of the defined terms in such section) shall survive the termination of this Agreement and shall remain
in full force and effect and (b) the termination of this Agreement and the provisions of Section 9.3 shall not relieve
any party of any liability for fraud or for any willful and material breach of any representation, warranty, covenant, obligation or
other provision contained in this Agreement.
Section 9.3 Expenses;
Termination Fees.
(a) Except
as set forth in this Section 9.3 and Section 7.9 all fees and expenses incurred in connection with this Agreement
and the Contemplated Transactions shall be paid by the party incurring such expenses, whether or not the Merger is consummated provided,
however, that Parent and the Company shall share equally all fees and expenses incurred in relation to the printing and filing with the
SEC of the Registration Statement (including any financial statements and exhibits) and any amendments or supplements thereto and paid
to a financial printer or the SEC.
(b) If
(i) this Agreement is terminated by Parent or the Company pursuant to Section 9.1(e) or by the Company pursuant
to Section 9.1(f), (ii) at any time after the date of this Agreement and prior to the Parent Stockholder Meeting an
Acquisition Proposal with respect to Parent shall have been publicly announced, disclosed or otherwise communicated to the Parent Board
(and shall not have been withdrawn) and (iii) within twelve (12) months after the date of such termination, Parent enters into a
definitive agreement with respect to a Subsequent Transaction or consummates a Subsequent Transaction, then Parent shall pay the Company,
within ten (10) Business Days after termination (or, if applicable, upon such entry into a definitive agreement and/or consummation
of a Subsequent Transaction), a nonrefundable fee in an amount equal to $2,340,000 (the “Company Termination Fee”).
(c) If
this Agreement is terminated (i) by the Company pursuant to Section 9.1(b) or Section 9.1(e) (in
which the Company has the right to terminate this Agreement pursuant Section 9.1(f)) or (ii) by Parent pursuant to Section 9.1(j),
then Parent shall pay to the Company the Company Termination Fee, by wire transfer of same day funds to an account designated by the
Company, (x) in the case of a termination by Parent referred to in the foregoing clause (i) or (ii), prior (and as a condition)
to such termination or (y) in the case of a termination by the Company described in the foregoing clause (i), within two (2) Business
Days after such termination.
(d) If
(i) this Agreement is terminated by Parent or the Company pursuant to Section 9.1(d) or by Parent pursuant to Section 9.1(g),
(ii) at any time after the date of this Agreement and prior to obtaining the Company Stockholder Approval, an Acquisition Proposal
with respect to the Company shall have been publicly announced, disclosed or otherwise communicated to the Company Board (and shall not
have been withdrawn) and (iii) within six (6) months after the date of such termination, the Company enters into a definitive
agreement with respect to a Subsequent Transaction or consummates a Subsequent Transaction, then the Company shall pay to Parent, within
ten (10) Business Days after termination (or, if applicable, upon the earlier of such entry into a definitive agreement and/or the
consummation of a Subsequent Transaction), a nonrefundable fee in an amount equal to $5,250,000 (the “Parent Termination Fee”),
by wire transfer of same-day funds to an account designated by Parent.
(e) If
this Agreement is terminated by Parent pursuant to Section 9.1(g) (or by the Company in circumstances in which Parent
has the right to terminate this Agreement pursuant to Section 9.1(g)), then the Company shall pay to Parent the Parent Termination
Fee, by wire transfer of same day funds to an account designated by Parent, (x) in the case of a termination by the Company referred
to in the foregoing clause, prior (and as a condition) to such termination or (y) in the case of a termination by Parent described
in the foregoing clause, within two (2) Business Days after such termination.
(f) If
either party fails to pay when due any amount payable by it under this Section 9.3, then (i) such party shall reimburse
the other party for reasonable costs and expenses (including reasonable fees and disbursements of counsel) incurred in connection with
the collection of such overdue amount and the enforcement by the other party of its rights under this Section 9.3 and (ii) such
party shall pay to the other party interest on such overdue amount (for the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such overdue amount is actually paid to the other party in full) at a rate per
annum equal to the “prime rate” (as announced by Bank of America or any successor thereto) in effect on the date such overdue
amount was originally required to be paid plus three percent.
(g) The
parties agree that, subject to Section 9.2, the payment of fees and expenses set forth in this Section 9.3 shall
be the sole and exclusive remedy of each party following a termination of this Agreement under the circumstances described in this Section 9.3,
it being understood that in no event shall either Parent or the Company be required to pay the individual fees, damages payable pursuant
to this Section 9.3 on more than one occasion. Subject to Section 9.2, following the payment of the fees and
expenses set forth in this Section 9.3 by a party, (i) such party shall have no further liability to the other party
in connection with or arising out of this Agreement or the termination thereof, any breach of this Agreement by the other party giving
rise to such termination, or the failure of the Contemplated Transactions to be consummated, (ii) no other party or their respective
Affiliates shall be entitled to bring or maintain any other claim, action or proceeding against such party or seek to obtain any recovery,
judgment or damages of any kind against such party (or any partner, member, stockholder, director, officer, employee, Subsidiary, Affiliate,
agent or other Representative of such party) in connection with or arising out of this Agreement or the termination thereof, any breach
by such party giving rise to such termination or the failure of the Contemplated Transactions to be consummated and (iii) all other
parties and their respective Affiliates shall be precluded from any other remedy against such party and its Affiliates, at law or in
equity or otherwise, in connection with or arising out of this Agreement or the termination thereof, any breach by such party giving
rise to such termination or the failure of the Contemplated Transactions to be consummated. Each of the parties acknowledges that (x) the
agreements contained in this Section 9.3 are an integral part of the Contemplated Transactions, (y) without these agreements,
the parties would not enter into this Agreement and (z) any amount payable pursuant to this Section 9.3 is not a penalty,
but rather is liquidated damages in a reasonable amount that will compensate the parties in the circumstances in which such amount is
payable; provided, however, that nothing in this Section 9.3(g) shall limit the rights of the parties under Section 10.3.
Article X
GENERAL PROVISIONS
Section 10.1 Non-survival
of Representations and Warranties. None of the representations, warranties, covenants or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the First Effective Time, other than this Article X and those covenants or agreements
of the parties which by their terms apply, or are to be performed in whole or in part, after the First Effective Time.
Section 10.2 Amendment
or Supplement. This Agreement may be amended, modified or supplemented by the parties by action taken or authorized by their respective
Boards of Directors at any time, whether before or after Company Stockholder Approval or the Parent Stockholder Approval has been obtained;
provided, however, that after the Company Stockholder Approval or the Parent Stockholder Approval has been obtained, no
amendment shall be made that pursuant to applicable Law requires further approval or adoption by the stockholders of the Company or Parent,
as applicable, without such further approval or adoption. This Agreement may not be amended, modified or supplemented in any manner,
whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed
on behalf of each of the parties in interest at the time of the amendment.
Section 10.3 Waiver.
The parties may, by action taken or authorized by their respective Boards of Directors, to the extent permitted by applicable Law, waive
compliance with any of the agreements or conditions of the other parties contained herein; provided, however, that after
the Company Stockholder Approval or the Parent Stockholder Approval has been obtained, no waiver may be made that pursuant to applicable
Law requires further approval or adoption by the stockholders of the Company or Parent, as applicable, without such further approval
or adoption. Any agreement on the part of a party to any such waiver shall be valid only if set forth in a written instrument executed
and delivered by a duly authorized officer on behalf of such party. No failure or delay of any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or
the exercise of any other right or power. No party shall be deemed to have waived any claim arising out of this Agreement, or any power,
right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such party and any such waiver shall not be applicable or have
any effect except in the specific instance in which it is given. The rights and remedies of the parties hereunder are cumulative and
are not exclusive of any rights or remedies which they would otherwise have hereunder.
Section 10.4 Fees
and Expenses. Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement,
the Merger and the other Contemplated Transactions shall be paid by the party incurring such fees or expenses.
Section 10.5 Notices.
All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or if by e-mail, upon written confirmation of receipt by e-mail or otherwise, (b) on the first (1st) Business
Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier
of confirmed receipt or the fifth (5th) Business Day following the date of mailing if delivered by registered or certified mail, return
receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such notice:
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(i) |
if to Parent, Merger Subs, to: |
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Aerovate Therapeutics, Inc. |
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930 Winter Street |
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Waltham, MA 02451 |
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Attention: Timothy P. Noyes |
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with a copy (which shall not constitute notice) to: |
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Goodwin Procter LLP |
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The New York Times Building |
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620 Eighth Avenue |
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New York, NY 10018 |
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Attention: Edwin O’Connor |
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Tevia K. Pollard |
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(ii) |
if to Company, to: |
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Jade Biosciences, Inc. |
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221 Crescent Street, Building 23, Suite 105 Waltham, MA 02453 |
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Attention: |
Tom Frohlich |
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E-mail: |
[***] |
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with a copy (which shall not constitute notice) to: |
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Gibson, Dunn & Crutcher LLP |
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One Embarcadero Center, Suite 2600 |
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San Francisco, CA 94111 |
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Attention: Ryan Murr, Branden Berns, Chris Trester |
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Email: [***], [***], [***] |
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Section 10.6 Entire
Agreement. This Agreement (including the Exhibits hereto), the Company Disclosure Letter, the Parent Disclosure Letter, the Securities
Purchase Agreements, and the Confidentiality Agreement constitute the entire agreement, and supersede all prior written agreements, arrangements,
communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings
among the parties with respect to the subject matter hereof and thereof; provided, however, that the Confidentiality Agreement shall
not be superseded and shall remain in full force and effect in accordance with its terms; provided, further, that only Exhibit E
(including Exhibit A to such Exhibit) is incorporated by reference and made a part hereof for purposes of Section 251 of the
DGCL.
Section 10.7 No
Third Party Beneficiaries.
(a) Nothing
in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors
and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement, except as provided
in Section 7.5.
(b) Except
as set forth in the Securities Purchase Agreement, the representations and warranties in this Agreement are the product of negotiations
among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties
are subject to waiver by the parties hereto in accordance with Section 10.3 without notice or liability to any other Person.
In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks
associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, except as set forth in the
Securities Purchase Agreement, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement
as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 10.8 Governing
Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the Contemplated Transactions
shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any
other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.
Section 10.9 Submission
to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement
brought by any party or its Affiliates against any other party or its Affiliates shall be brought and determined in the Court of Chancery
of the State of Delaware; provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware,
then any such legal action or proceeding may be brought in any federal court located in the State of Delaware or any other Delaware state
court. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its
property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and
the Contemplated Transactions. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the
courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award
rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute
sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby
irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any
action or proceeding arising out of or relating to this Agreement or the Contemplated Transactions, (a) any claim that it is not
personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property
is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that
(i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 10.10 Assignment;
Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated,
in whole or in part, by operation of law or otherwise, by any party without the prior written consent of the other parties, and any such
assignment without such prior written consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 10.11 Specific
Performance. The parties agree that irreparable damage would occur in the event that the parties hereto do not perform the provisions
of this Agreement in accordance with its terms or otherwise breach such provisions. Accordingly, the parties acknowledge and agree that
each party shall be entitled to seek an injunction, specific performance and other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in the Court of Chancery of the State of Delaware, provided, that
if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then in any federal court located in the State
of Delaware or any other Delaware state court, this being in addition to any other remedy to which such party is entitled at law or in
equity. Each of the parties hereby further waives and will not oppose the granting of an injunction, specific performance or other
equitable relief on the basis of (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 any bond, surety or other security as a prerequisite to obtaining equitable relief.
Section 10.12 Severability.
Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained
herein.
Section 10.13 Waiver
of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS.
Section 10.14 Counterparts.
This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to the other party.
Section 10.15 Facsimile
or .pdf Signature. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute
an original for all purposes.
Section 10.16 No
Presumption Against Drafting Party. Each of Parent, Merger Subs and the Company acknowledges that each party to this Agreement has
been represented by counsel in connection with this Agreement and the Contemplated Transactions. Accordingly, any rule of law or
any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application
and is expressly waived.
[The remainder of this page is intentionally
left blank.]
IN WITNESS WHEREOF, the parties
have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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AEROVATE THERAPEUTICS, INC. |
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By: |
/s/ Timothy P. Noyes |
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Name: Timothy P. Noyes |
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Title: Chief Executive Officer |
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CARIBBEAN MERGER SUB I, INC. |
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By: |
/s/ Timothy P. Noyes |
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Name: Timothy P. Noyes |
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Title: President |
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CARIBBEAN MERGER SUB II, LLC |
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By: Aerovate Therapeutics, Inc., its Manager |
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By: |
/s/ Timothy P. Noyes |
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Name: Timothy P. Noyes |
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Title: Chief Executive Officer |
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JADE BIOSCIENCES, INC. |
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By: |
/s/ Tom Frolich |
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Name: Tom Frolich |
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Title: Chief Executive Officer |
Exhibit A
FORM OF PARENT STOCKHOLDER SUPPORT AGREEMENT
This Support Agreement (this
“Agreement”) is made and entered into as of October 30, 2024, by and among Jade Biosciences, Inc., a Delaware
corporation (the “Company”), Aerovate Therapeutics, Inc., a Delaware corporation (“Parent”),
and the undersigned holder (the “Stockholder”) of Shares (as defined below) of Parent. Capitalized terms used herein
but not otherwise defined shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).
RECITALS
WHEREAS, concurrently with
the execution and delivery hereof, Parent, the Company, Caribbean Merger Sub I, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent (the “First Merger Sub”) and Caribbean Merger Sub II, LLC, a Delaware limited liability company
and a wholly owned subsidiary of Parent (“Second Merger Sub,” and together with First Merger Sub, “Merger
Sub”), have entered into an Agreement and Plan of Merger, dated of even date herewith (as such agreement may be amended or
supplemented from time to time pursuant to the terms thereof, the “Merger Agreement”), pursuant to which (i) First
Merger Sub will merge with and into the Company (the “First Merger”), with the Company surviving the First Merger
as the surviving corporation and a wholly owned subsidiary of Parent, and (ii) the Company will merge with and into Second Merger
Sub (the “Second Merger” and, together with the First Merger, the “Merger”), with the Company surviving
the Second Merger as the surviving corporation, in each case, upon the terms and subject to the conditions set forth in the Merger Agreement.
WHEREAS, as of the date
hereof, the Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) and has sole or shared voting
power with respect to such number of Shares, and holds Parent Options or Parent Restricted Stock Units to acquire the number of Shares,
as indicated in Appendix A.
WHEREAS, as an inducement
and a condition to the willingness of the Company to enter into the Merger Agreement, each Stockholder has agreed to enter into and perform
this Agreement.
NOW, THEREFORE, in consideration
of, and as a condition to, the Company’s entering into the Merger Agreement, each Stockholder, Parent and the Company agree as
follows:
1. Certain
Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.
For all purposes of this Agreement, the following terms shall have the following respective meanings:
(a) “Constructive
Sale” means, with respect to any security, a short sale with respect to such security, entering into or acquiring a derivative
contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security or entering
into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic
benefits or risks of ownership of such security.
(b) “Shares”
means (i) all shares of Parent Common Stock owned, beneficially or of record, by the Stockholder as of the date hereof, (ii) all
additional shares of Parent Common Stock acquired by the Stockholder, beneficially or of record, during the period commencing with the
execution and delivery of this Agreement and expiring on the Expiration Date (as defined below) and (iii) any shares of capital
stock or other equity securities of Parent that such Stockholder acquires or with respect to which such Stockholder otherwise acquires
sole or shared voting power (including any proxy) after the execution and delivery of this Agreement and expiring on the Expiration Date,
whether by exercise of any Parent Options or otherwise, including, without limitation, by gift, succession, in the event of a stock split
or as a dividend or distribution of any Shares.
(c) “Transfer”
or “Transferred” means, with respect to any security, the direct or indirect assignment, sale, transfer, tender, exchange,
pledge or hypothecation, or the grant, creation or suffrage of a lien, security interest or encumbrance in or upon, or the gift, grant
or placement in trust, or the Constructive Sale or other disposition of such security (including transfers by testamentary or intestate
succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title or interest therein
(including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or
otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer, Constructive Sale or other disposition,
and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.
2. Transfer
and Voting Restrictions. The Stockholder covenants to Parent and the Company as follows:
(a) Except
as otherwise permitted by Section 2(c), during the period commencing with the execution and delivery of this Agreement and expiring
on the Expiration Date, the Stockholder shall not Transfer any of the Stockholder’s Shares, or publicly announce its intention
to Transfer any of its Shares.
(b) Except
as otherwise permitted by this Agreement or otherwise permitted or required or by order of a court of competent jurisdiction or a Governmental
Entity, the Stockholder will not commit any act that would restrict the Stockholder’s legal power, authority and right to vote
all of the Shares held by the Stockholder or otherwise prevent or disable the Stockholder from performing any of his, her or its obligations
under this Agreement. Without limiting the generality of the foregoing, except for this Agreement and as otherwise permitted by this
Agreement, the Stockholder shall not enter into any voting agreement with any person or entity with respect to any of the Stockholder’s
Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Shares, deposit
any Shares in a voting trust or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the
Stockholder’s legal power, authority or right to vote the Stockholder’s Shares in favor of the Parent Stockholder Proposals
and against any other Acquisition Proposals.
(c) Except
as otherwise permitted by this Agreement or otherwise permitted or required by order of a court of competent jurisdiction or a Governmental
Entity, the Stockholder will not enter into any Contract, option, commitment or other arrangement or understanding with respect to the
direct or indirect Transfer of any right, title or interest (including any right or power to vote to which the holder thereof may be
entitled whether such right or power is granted by proxy or otherwise) to any Shares or take any action that would reasonably be expected
to make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of restricting the
Stockholder’s legal power, authority and right to vote all of the Shares or would otherwise prevent or disable such Stockholder
from performing any of such Stockholder’s obligations under this Agreement.
(d) Notwithstanding
anything else herein to the contrary, the Stockholder may, at any time, Transfer Shares (i) by will or other testamentary document
or by intestacy, (ii) to any investment fund or other entity controlled or managed by the Stockholder or the investment adviser
or general partner of the Stockholder, or an entity under common control or management with the Stockholders (in each case, directly
or indirectly), (iii) to any member of the Stockholder’s immediate family (or, if the Stockholder is a corporation, partnership
or other entity, to an immediate family member of a beneficial owner of the Shares held by the Stockholder), (iv) to any trust or
other entity for the direct or indirect benefit of the Stockholder or the immediate family of the Stockholder (or, if the Stockholder
is a corporation, partnership or other entity, for the direct or indirect benefit of an immediate family member of a beneficial owner
of the Shares held by the Stockholder) or otherwise for estate tax or estate planning purposes, (v) in the case of a Stockholder
who is not a natural person, by pro rata distributions from the Stockholder to its members, partners, or shareholders pursuant to the
Stockholder’s organizational documents, (vi) with respect to such Stockholder’s Parent Options (and any Shares underlying
such Parent Options) which expire on or prior to the Expiration Date, Transfers of Shares to Parent (or effecting a “net exercise”
of a Parent Option) as payment for the (a) exercise price of such Stockholder’s Parent Options and (b) taxes applicable
to the exercise of such Stockholder’s Parent Options, (vii) with respect to such Stockholder’s Parent Restricted Stock
Units, (a) transfers for the net settlement of Stockholder’s Parent Restricted Stock Units settled in Shares (to pay any tax
withholding obligations) or (b) transfers for receipt upon settlement of such Stockholder’s Parent Restricted Stock Units,
and the sale of a sufficient number of such Shares acquired upon settlement of such securities as would generate sales proceeds sufficient
to pay the aggregate taxes payable by such Stockholder as a result of the settlement, (viii) transfers to another holder of capital
stock of Parent that has signed a support agreement that is reasonably acceptable to the Company, (ix) transfers, sales or other
dispositions as the Company may otherwise agree in writing in its sole discretion; provided, that in the cases of clauses (i)-(ix),
(1) such Transferred Shares shall continue to be bound by this Agreement and () the applicable direct transferee (if any) of such
Transferred Shares shall have executed and delivered to Parent and the Company a support agreement substantially identical to this Agreement
upon consummation of the Transfer, (x) purchased from the Company on or about the Closing Date but prior to the Closing (including
any shares of the Company issued upon conversion of any pre-funded Company Warrants), or (xi) to the extent required by applicable
Law.
(e) Notwithstanding
anything to the contrary herein, nothing in this Agreement shall obligate the Stockholder to exercise any option or any other right to
acquire any shares of Parent Common Stock.
3. Agreement
to Vote Shares. The Stockholder covenants to Parent and the Company as follows:
(a) Until
the Expiration Date, at any meeting of the stockholders of Parent, however called, and at every adjournment or postponement thereof,
and on every action or approval by written consent of the stockholders of Parent, the Stockholder shall be (i) appear at such meeting
as present (in person or by proxy) for purposes of calculating a quorum and (ii) vote, or exercise its right to consent with respect
to, all Shares held by the Stockholder (1)(A) in favor of the Parent Stockholder Proposals, (B) in favor of any matter that
could reasonably be expected to facilitate the Merger, the Concurrent Investment and the transactions contemplated by the Merger Agreement,
and (C) against any Acquisition Proposals, or any agreement, transaction or other matter that is intended to, or would reasonably
be expected to impede, interfere with, delay, postpone or materially and adversely affect the consummation of the Merger, the Concurrent
Investment and the transactions contemplated in the Merger Agreement and (2) to approve any proposal to adjourn or postpone the
meeting to a later date, if there are not sufficient votes for the issuance of the shares of Parent Common Stock by virtue of the Merger
on the date on which such meeting is held. Stockholder shall not take or commit or agree to take any action inconsistent with the foregoing.
(b) If
the Stockholder is the beneficial owner, but not the record holder, of Shares, the Stockholder agrees to take all actions necessary to
cause the record holder and any nominees to be present (in person or by proxy) and vote all the Stockholder’s Shares in accordance
with this Section 3.
(c) In
the event of a stock split, stock dividend or distribution, or any change in the capital stock of Parent by reason of any split-up, reverse
stock split, recapitalization, combination, reclassification, reincorporation, exchange of shares or the like, the term “Shares”
shall be deemed to refer to and include such shares as well as all such stock dividends and distributions and any securities into which
or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
4. Action
in Stockholder Capacity Only. The Stockholder is entering into this Agreement solely in the Stockholder’s capacity as a record
holder and/or beneficial owner, as applicable, of its Shares and not in the Stockholder’s capacity as a director or officer of
Parent. Nothing herein shall limit or affect the Stockholder’s ability to act as an officer or director of Parent.
5. Irrevocable
Proxy. The Stockholder hereby revokes (or agrees to cause to be revoked) any proxies that the Stockholder has heretofore granted
with respect to its Shares. In the event and to the extent that the Stockholder fails to vote the Shares in accordance with Section 3
at any applicable meeting of the stockholders of Parent or pursuant to any applicable written consent of the stockholders of Parent,
the Stockholder shall be deemed to have irrevocably granted to, and appointed, Parent, and any individual designated in writing by it,
and each of them individually, as his, her or its proxy and attorney-in-fact (with full power of substitution), for and in its name,
place and stead, to vote his, her or its Shares in any action by written consent of Parent stockholders or at any meeting of Parent’s
stockholders called with respect to any of the matters specified in, and in accordance and consistent with, Section 3 of
this Agreement. Parent agrees not to exercise the proxy granted herein for any purpose other than the purposes described in this Agreement
and the Stockholder affirms that the proxy set forth in this Section 5 is given in connection with, and granted in consideration
of, and as an inducement to the Company, Parent and Merger Sub to enter into the Merger Agreement and that such proxy is given to secure
the obligations of the Stockholder under Section 3. Except as otherwise provided for herein, the Stockholder hereby affirms
that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked and that such irrevocable proxy is executed
and intended to be irrevocable. The irrevocable proxy and power of attorney granted herein shall survive the death or incapacity of such
Stockholder and the obligations of such Stockholder shall be binding on such Stockholder’s heirs, personal representatives, successors,
transferees and assigns. Notwithstanding any other provisions of this Agreement, the irrevocable proxy granted hereunder shall automatically
terminate upon the termination of this Agreement.
6. No
Solicitation. Subject to Section 4, the Stockholder agrees not to, directly or indirectly, including through any of its
officers, directors or agents, take any action that Parent is prohibited from taking pursuant to Section 6.4 of the Merger Agreement
and Section 6.4 of the Merger Agreement is hereby incorporated by reference mutatis mutandis.
7. No
Exercise of Appraisal Rights; Waivers. The Stockholder hereby irrevocably and unconditionally (a) waives, and
agrees to cause to be waived and to prevent the exercise of, any rights of appraisal, any dissenters’ rights and any similar rights
(including any notice requirements related thereto) relating to the Merger that Stockholder may have by virtue of, or with respect to,
any Shares (including all rights under Section 262 of the DGCL) and (b) agrees that the Stockholder will not bring, commence,
institute, maintain, prosecute or voluntarily aid or participate in any action, claim, suit or cause of action, in law or in equity,
in any court or before any Governmental Entity, which (i) challenges the validity of or seeks to enjoin the operation of any provision
of this Agreement or (ii) alleges that the execution and delivery of this Agreement by the Stockholder, or the approval of the Merger
Agreement by the Parent Board, breaches any fiduciary duty of the Parent Board or any member thereof; provided, that the Stockholder
may defend against, contest or settle any such action, claim, suit or cause of action brought against the Stockholder that relates solely
to the Stockholder’s capacity as a director, officer or securityholder of Parent.
8. Representations
and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and the Company as follows:
(a) (i) The
Stockholder is the beneficial or record owner of the shares of Parent Common Stock, Parent Options and/or Parent Restricted Stock Units
indicated in Appendix A (each of which shall be deemed to be “held” by the Stockholder for purposes of Section 3
unless otherwise expressly stated with respect to any shares in Appendix A), free and clear of any and all Liens; and (ii) the
Stockholder does not beneficially own any securities of Parent other than the shares of Parent Common Stock and rights to purchase shares
Parent Common Stock set forth in Appendix A.
(b) With
respect to any Stockholder that is an entity, the Stockholder is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation and is qualified to conduct its business in those jurisdictions necessary to perform this Agreement.
(c) Except
as otherwise provided in this Agreement, the Stockholder has full power, legal capacity and authority to (i) make, enter into and
carry out the terms of this Agreement and (ii) vote all of its Shares in the manner set forth in this Agreement without the consent
or approval of, or any other action on the part of, any other person or entity (including any Governmental Entity). Without limiting
the generality of the foregoing, the Stockholder has not entered into any voting agreement (other than this Agreement) with any person
with respect to any of the Stockholder’s Shares, granted any person any proxy (revocable or irrevocable) or power of attorney with
respect to any of the Stockholder’s Shares, deposited any of the Stockholder’s Shares in a voting trust or entered into any
arrangement or agreement with any person limiting or affecting the Stockholder’s legal power, authority or right to vote the Stockholder’s
Shares on any matter contemplated by this Agreement.
(d) This
Agreement has been duly and validly executed and delivered by the Stockholder and (assuming the due authorization, execution and delivery
by the other parties hereto) constitutes a valid and binding agreement of the Stockholder enforceable against the Stockholder in accordance
with its terms, subject to (a) Laws of general application relating to bankruptcy, insolvency and the relief of debtors and (b) rules of
law governing specific performance, injunctive relief and other equitable remedies. The execution and delivery of this Agreement by the
Stockholder and the performance by the Stockholder of the agreements and obligations hereunder will not result in any breach or violation
of or be in conflict with or constitute a default under any term of any Contract or if applicable any provision of an organizational
document (including a certificate of incorporation) to or by which the Stockholder is a party or bound, or any applicable law to which
the Stockholder (or any of the Stockholder’s assets) is subject or bound, except for any such breach, violation, conflict or default
which, individually or in the aggregate, would not reasonably be expected to materially impair or adversely affect the Stockholder’s
ability to perform its obligations under this Agreement.
(e) The
execution, delivery and performance of this Agreement by the Stockholder do not and will not require any consent, approval, authorization
or permit of, action by, filing with or notification to, any Governmental Entity, except for any such consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain, individually or in the aggregate, has not and would not
materially impair the Stockholder’s ability to perform its obligations under this Agreement.
(f) The
Stockholder has had the opportunity to review the Merger Agreement and this Agreement with counsel of the Stockholder’s own choosing.
The Stockholder has had an opportunity to review with its own tax advisors the tax consequences of the Merger and the transactions contemplated
thereby. The Stockholder understands that it must rely solely on its advisors and not on any statements or representations made by Parent,
the Company or any of their respective agents or representatives with respect to the tax consequences of the Merger and the transactions
contemplated thereby. The Stockholder understands that such Stockholder (and not Parent, the Company or the Surviving Corporation) shall
be responsible for such Stockholder’s tax liability that may arise as a result of the Merger or the transactions contemplated thereby.
The Stockholder understands and acknowledges that the Company, Parent and Merger Sub are entering into the Merger Agreement in reliance
upon the Stockholder’s execution, delivery and performance of this Agreement.
(g) With
respect to the Stockholder, as of the date hereof, there is no action, suit, investigation or proceeding pending against, or, to the
knowledge of the Stockholder, threatened against, the Stockholder or any of the Stockholder’s properties or assets (including the
Shares) that would reasonably be expected to prevent or materially delay or impair the ability of the Stockholder to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
9. Termination.
This Agreement shall terminate and shall cease to be of any further force or effect as of the earliest of (a) such date and time
as the Merger Agreement shall have been terminated pursuant to the terms thereof, (b) the Effective Time or (c) the mutual
written agreement of the parties to terminate this Agreement (clauses (a)-(c), the “Expiration Date”);
provided, however, that (i) Section 10 shall survive the termination of this Agreement, and (ii) the
termination of this Agreement shall not relieve any party hereto from any liability for any material and willful breach of this Agreement
prior to the Effective Time.
10. Miscellaneous
Provisions.
(a) Amendments.
No amendment of this Agreement shall be effective against any party unless it shall be in writing and signed by each of the parties hereto.
(b) Entire
Agreement. This Agreement constitutes the entire agreement between the parties to this Agreement and supersedes all other
prior agreements, arrangements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
(c) Governing
Law. All matters arising out of or relating to this Agreement and the transactions contemplated hereby (including its interpretation,
construction, performance and enforcement) shall be governed by and construed in accordance with the internal laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of laws of any jurisdictions other than those of the State of Delaware.
(d) Jurisdiction.
Each of the parties to this Agreement (i) consents to submit itself to the exclusive personal jurisdiction of the Court of Chancery
of the State of Delaware, New Castle County, or, if that court does not have jurisdiction, a federal court sitting in Wilmington, Delaware
in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that all claims in respect of such action or proceeding shall be heard and determined in any such court, (iii) agrees that it shall
not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iv) agrees
not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement
in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Any party may
make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 10(j). Nothing in this Section 10(d), however, shall affect the
right of any party to serve legal process in any other manner permitted by law.
(e) WAIVER
OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF ANY PARTY TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
(f) Assignment.
Except as otherwise provided in Section 2(d) hereof, no party may assign any of its rights or delegate any of its performance
obligations under this Agreement, in whole or in part, by operation of law or otherwise, without the prior written consent of the other
parties hereto, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns. Any purported assignment of rights or delegation of performance obligations in violation of this Section 10(f) is
void.
(g) No
Third Party Rights. This Agreement is not intended to, and shall not, confer upon any other person any rights or remedies hereunder
other than the parties hereto to the extent expressly set forth herein.
(h) Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power
to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted
to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable
term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable
term.
(i) Specific
Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage for which monetary damages,
even if available, would not be an adequate remedy, would occur in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or in equity, and each of the parties waives any bond, surety
or other security that might be required of any other party with respect thereto. Each of the parties further agrees that it will not
oppose the granting of an injunction, specific performance or other equitable relief on the basis that any other party has an adequate
remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.
(j) Notices.
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery), by facsimile transmission (providing confirmation of transmission) or by electronic transmission
(upon confirmation of receipt of transmission) to the Company or Parent, as the case may be, in accordance with Section 10.5 of
the Merger Agreement and to each Stockholder at his, her or its address or email address (upon confirmation of receipt of transmission)
set forth on Appendix A attached hereto (or at such other address for a party as shall be specified by like notice).
(k) Counterparts.
This Agreement may be executed in two or more counterparts (including by facsimile, by an electronic scan delivered by electronic mail
or any electronic signature), each of which shall be deemed an original but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties,
it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile, by
an electronic scan delivered by electronic mail or by delivery of any electronic signature.
(l) Confidentiality.
Except to the extent required by applicable Law or regulation, the Stockholder shall hold any non-public information regarding this Agreement,
the Merger Agreement and the Merger in strict confidence and shall not divulge any such information to any third person until Parent
has publicly disclosed its entry into the Merger Agreement and this Agreement; provided, however, that the Stockholder may disclose such
information to its Affiliates, partners, members, stockholders, parents, subsidiaries, attorneys, accountants, consultants, trustees,
beneficiaries and other representatives (provided that such Persons are subject to confidentiality obligations at least as restrictive
as those contained herein). Neither the Stockholder nor any of its Affiliates (other than Parent, whose actions shall be governed by
the Merger Agreement), shall issue or cause the publication of any press release or other public announcement with respect to this Agreement,
the Merger, the Merger Agreement or the other transactions contemplated hereby or thereby without the prior written consent of the Company
and Parent, except as may be required by applicable Law in which circumstance such announcing party shall make reasonable efforts to
consult with the Company and Parent to the extent practicable. The Company is an intended third-party beneficiary of this Section 10(l).
(m) Further
Assurances. Each Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional
or further consents, documents and other instruments as the Company or Parent may reasonably request for the purpose of effectively carrying
out the transactions contemplated by this Agreement and the transactions contemplated by the Merger Agreement.
(n) Disclosure.
Each Stockholder hereby agrees that Parent and the Company may publish and disclose in the Registration Statement, any prospectus or
registration statement filed with any regulatory authority in connection with the transactions contemplated by the Merger Agreement and
any related documents filed with such regulatory authority and as otherwise required by Law, such Stockholder’s identity and ownership
of the Shares and the nature of such Stockholder’s commitments, arrangements and understandings under this Agreement and may further
file this Agreement as an exhibit to the Registration Statement, prospectus or registration statement or in any other filing made by
Parent or the Company as required by Law or the terms of the Merger Agreement, including with the SEC or other regulatory authority,
relating to the transactions contemplated by the Merger Agreement. In the event of any such required disclosure, Parent or Company shall
use commercially reasonable efforts to provide the Stockholder advance written notice of, and an opportunity to review, any such disclosure
that identifies the Stockholder. Prior to the Closing, each Stockholder shall not, and shall use its reasonable best efforts to cause
its representatives not to, directly or indirectly, make any press release, public announcement or other public communication with respect
to this Agreement, the Merger, the Merger Agreement or the transactions contemplated thereby without the prior written consent of Parent
and the Company, provided that the foregoing shall not limit or affect any actions taken by such Stockholder (or any affiliated officer
or director of such Stockholder) that would be permitted to be taken by such Stockholder, Parent or the Company pursuant to the Merger
Agreement; provided, further, that the foregoing shall not affect any actions of Stockholder the prohibition of which would be prohibited
under applicable Law and shall not prohibit Stockholder or its Affiliates from making any publicly-available filings required by applicable
law, regulation or legal process.
(o) Fees
and Expenses. Except as otherwise specifically provided herein, the Merger Agreement or any other agreement contemplated by the Merger
Agreement to which a party hereto is a party, each party hereto shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
(p) No
Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Company or Parent any direct or indirect ownership
or incidence of ownership of or with respect to any Shares. All rights, ownership and economic benefits of and relating to the Shares
shall remain vested in and belong to such Stockholder, and neither the Company nor Parent has authority to manage, direct, superintend,
restrict, regulate, govern, or administer any of the policies or operations of Parent or exercise any power or authority to direct such
Stockholder in the voting of any of the Shares, except as otherwise provided herein.
(q) Interpretation.
When reference is made in this Agreement to a Section or Appendix, such reference shall be to a Section of or Appendix to this
Agreement, unless otherwise indicated. The headings contained in this Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement. The language used in this Agreement shall be deemed to be the language chosen
by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. Whenever
the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural, and vice versa. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.
Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The word “or” is not exclusive. “Writing,”
“written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media)
in a visible form. References to any agreement or Contract are to that agreement or Contract as amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of
that Person. References to any statute are to that statute and to the rules and regulations promulgated thereunder, in each case
as amended, modified, re-enacted thereof, substituted, from time to time. References to “$” and “dollars” are
to the currency of the United States. All accounting terms used herein will be interpreted, and all accounting determinations hereunder
will be made, in accordance with GAAP unless otherwise expressly specified. References from or through any date shall mean, unless otherwise
specified, from and including or through and including, respectively. All references to “days” shall be to calendar days
unless otherwise indicated as a “Business Day.” Except as otherwise specifically indicated, for purposes of measuring the
beginning and ending of time periods in this Agreement (including for purposes of “Business Day” and for hours in a day or
Business Day), the time at which a thing, occurrence or event shall begin or end shall be deemed to occur in the Eastern time zone of
the United States. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the
drafting Party shall not be applied in the construction or interpretation of this Agreement.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, the undersigned have caused
this Agreement to be duly executed as of the date first above written.
| COMPANY: | |
| Jade Biosciences, Inc. | |
| | |
| | |
| | |
| By: |
| |
| Title: |
| |
| | |
| | |
| PARENT: | |
| Aerovate Therapeutics, Inc. | |
| | |
| | |
| | |
| By: |
| |
| Title: |
| |
| | |
| | |
| [STOCKHOLDER], | |
| in his/her capacity as the Stockholder: | |
| | |
| | |
| Signature: |
| |
| | |
| Address: |
| |
| | |
| | |
| | |
[Signature Page to Parent
Support Agreement]
Appendix A
Name, Address and Email
Address of Stockholder |
Shares of Parent
Common Stock |
Parent
Options |
Parent Restricted Stock Units |
| _________________________ |
_____________ |
__________ |
_____________________ |
Exhibit B
FORM OF COMPANY STOCKHOLDER SUPPORT AGREEMENT
This Support Agreement (this
“Agreement”) is made and entered into as of October 30, 2024, by and among Jade Biosciences, Inc., a Delaware
corporation (the “Company”), Aerovate Therapeutics, Inc., a Delaware corporation (“Parent”),
and the undersigned holder (the “Stockholder”) of Shares (as defined below) of the Company. Capitalized terms used
herein but not otherwise defined shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).
RECITALS
WHEREAS, concurrently with
the execution and delivery hereof, Parent, the Company, Caribbean Merger Sub I, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent (the “First Merger Sub”) and Caribbean Merger Sub II, LLC, a Delaware limited liability company
and a wholly owned subsidiary of Parent (“Second Merger Sub,” and together with First Merger Sub, “Merger
Sub”), have entered into an Agreement and Plan of Merger, dated of even date herewith (as such agreement may be amended or
supplemented from time to time pursuant to the terms thereof, the “Merger Agreement”), pursuant to which (i) First
Merger Sub will merge with and into the Company (the “First Merger”), with the Company surviving the First Merger
as the surviving corporation and a wholly owned subsidiary of Parent, and (ii) the Company will merge with and into Second Merger
Sub (the “Second Merger” and, together with the First Merger, the “Merger”), with the Company surviving
the Second Merger as the surviving corporation, in each case, upon the terms and subject to the conditions set forth in the Merger Agreement.
WHEREAS, as of the date
hereof, the Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) and has sole or shared voting
power with respect to such number of Shares, and holds Company Options to acquire the number of Shares, as indicated in Appendix A.
WHEREAS, as an inducement
and a condition to the willingness of Parent to enter into the Merger Agreement, each Stockholder has agreed to enter into and perform
this Agreement.
NOW, THEREFORE, in consideration
of, and as a condition to, Parent entering into the Merger Agreement, each Stockholder, Parent and the Company agree as follows:
11. Certain
Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.
For all purposes of this Agreement, the following terms shall have the following respective meanings:
(a) “Constructive
Sale” means, with respect to any security, a short sale with respect to such security, entering into or acquiring a derivative
contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security or entering
into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic
benefits or risks of ownership of such security.
(b) “Shares”
means (i) all shares of Company Common Stock owned, beneficially or of record, by the Stockholder as of the date hereof, (ii) all
additional shares of Company Common Stock acquired by the Stockholder, beneficially or of record, during the period commencing with the
execution and delivery of this Agreement and expiring on the Expiration Date (as defined below) and (iii) any shares of capital
stock or other equity securities of the Company that such Stockholder acquires or with respect to which such Stockholder otherwise acquires
sole or shared voting power (including any proxy) after the execution and delivery of this Agreement and expiring on the Expiration Date,
whether by exercise of any Company Options or otherwise, including, without limitation, by gift, succession, in the event of a stock
split or as a dividend or distribution of any Shares.
(c) “Transfer”
or “Transferred” means, with respect to any security, the direct or indirect assignment, sale, transfer, tender, exchange,
pledge or hypothecation, or the grant, creation or suffrage of a lien, security interest or encumbrance in or upon, or the gift, grant
or placement in trust, or the Constructive Sale or other disposition of such security (including transfers by testamentary or intestate
succession, by domestic relations order or other court order, or otherwise by operation of law) or any right, title or interest therein
(including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or
otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer, Constructive Sale or other disposition,
and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.
12. Transfer
and Voting Restrictions. The Stockholder covenants to the Company and Parent as follows:
(a) Except
as otherwise permitted by Section 2(c), during the period commencing with the execution and delivery of this Agreement and expiring
on the Expiration Date, the Stockholder shall not Transfer any of the Stockholder’s Shares, or publicly announce its intention
to Transfer any of its Shares.
(b) Except
as otherwise permitted by this Agreement or otherwise permitted or required or by order of a court of competent jurisdiction or a Governmental
Entity, the Stockholder will not commit any act that would restrict the Stockholder’s legal power, authority and right to vote
all of the Shares held by the Stockholder or otherwise prevent or disable the Stockholder from performing any of his, her or its obligations
under this Agreement. Without limiting the generality of the foregoing, except for this Agreement and as otherwise permitted by this
Agreement, the Stockholder shall not enter into any voting agreement with any person or entity with respect to any of the Stockholder’s
Shares, grant any person or entity any proxy (revocable or irrevocable) or power of attorney with respect to any of the Shares, deposit
any Shares in a voting trust or otherwise enter into any agreement or arrangement with any person or entity limiting or affecting the
Stockholder’s legal power, authority or right to execute and deliver the Company Stockholder Approval.
(c) Except
as otherwise permitted by this Agreement or otherwise permitted or required by order of a court of competent jurisdiction or a Governmental
Entity, the Stockholder will not enter into any Contract, option, commitment or other arrangement or understanding with respect to the
direct or indirect Transfer of any right, title or interest (including any right or power to vote to which the holder thereof may be
entitled whether such right or power is granted by proxy or otherwise) to any Shares or take any action that would reasonably be expected
to make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of restricting the
Stockholder’s legal power, authority and right to vote all of the Shares or would otherwise prevent or disable such Stockholder
from performing any of such Stockholder’s obligations under this Agreement.
(d) Notwithstanding
anything else herein to the contrary, the Stockholder may, at any time, Transfer Shares (i) by will or other testamentary document
or by intestacy, (ii) to any investment fund or other entity controlled or managed by the Stockholder or the investment adviser
or general partner of the Stockholder, or an entity under common control or management with the Stockholders (in each case, directly
or indirectly), (iii) to any member of the Stockholder’s immediate family (or, if the Stockholder is a corporation, partnership
or other entity, to an immediate family member of a beneficial owner of the Shares held by the Stockholder), (iv) to any trust or
other entity for the direct or indirect benefit of the Stockholder or the immediate family of the Stockholder (or, if the Stockholder
is a corporation, partnership or other entity, for the direct or indirect benefit of an immediate family member of a beneficial owner
of the Shares held by the Stockholder) or otherwise for estate tax or estate planning purposes, (v) in the case of a Stockholder
who is not a natural person, by pro rata distributions from the Stockholder to its members, partners, or shareholders pursuant to the
Stockholder’s organizational documents, (vi) with respect to such Stockholder’s Company Options (and any Shares underlying
such Company Options) which expire on or prior to the Expiration Date, Transfers of Shares to the Company (or effecting a “net
exercise” of a Company Option) as payment for the (a) exercise price of such Stockholder’s Company Options and (b) taxes
applicable to the exercise of such Stockholder’s Company Options, (vii) transfers to another holder of capital stock of the
Company that has signed a support agreement that is reasonably acceptable to Parent, (viii) transfers, sales or other dispositions
as Parent may otherwise agree in writing in its sole discretion; provided, that in the cases of clauses (i)-(viii), (1) such
Transferred Shares shall continue to be bound by this Agreement and (2) the applicable direct transferee (if any) of such Transferred
Shares shall have executed and delivered to Parent and the Company a support agreement substantially identical to this Agreement upon
consummation of the Transfer, (x) purchased from the Company on or about the Closing Date but prior to the Closing (including any
shares of the Company issued upon conversion of any pre-funded Company Warrants), or (xi) to the extent required by applicable Law.
(e) Notwithstanding
anything to the contrary herein, nothing in this Agreement shall obligate the Stockholder to exercise any option or any other right to
acquire any shares of Company Capital Stock.
13. Agreement
to Vote Shares. The Stockholder covenants to the Company and Parent as follows:
(a) Until
the Expiration Date, at any meeting of the stockholders of the Company, however called, and at every adjournment or postponement thereof,
and on every action or approval by written consent of the stockholders of the Company, the Stockholder shall (i) appear at such
meeting as present (in person or by proxy) for purposes of calculating a quorum and (ii) vote, or exercise its right to consent
with respect to, all Shares held by the Stockholder (A) in favor of the adoption and approval of the Merger Agreement, (B) in
favor of the Contemplated Transactions, including any matter that could reasonably be expected to facilitate the Contemplated Transactions,
and (C) against any Acquisition Proposals, or any agreement, transaction or other matter that is intended to, or would reasonably
be expected to impede, interfere with, delay, postpone or materially and adversely affect the consummation of the Merger and the other
Contemplated Transactions. Stockholder shall not take or commit or agree to take any action inconsistent with the foregoing.
(b) If
the Stockholder is the beneficial owner, but not the record holder, of Shares, the Stockholder agrees to take all actions necessary to
cause the record holder and any nominees to be present (in person or by proxy) and vote all the Stockholder’s Shares in accordance
with this Section 3.
(c) In
the event of a stock split, stock dividend or distribution, or any change in the capital stock of the Company by reason of any split-up,
reverse stock split, recapitalization, combination, reclassification, reincorporation, exchange of shares or the like, the term “Shares”
shall be deemed to refer to and include such shares as well as all such stock dividends and distributions and any securities into which
or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
14. Action
in Stockholder Capacity Only. The Stockholder is entering into this Agreement solely in the Stockholder’s capacity as a record
holder and/or beneficial owner, as applicable, of its Shares and not in the Stockholder’s capacity as a director or officer of
the Company. Nothing herein shall limit or affect the Stockholder’s ability to act as an officer or director of the Company.
15. Irrevocable
Proxy. The Stockholder hereby revokes (or agrees to cause to be revoked) any proxies that the Stockholder has heretofore granted
with respect to its Shares. In the event and to the extent that the Stockholder fails to vote the Shares in accordance with Section 3
at any applicable meeting of the stockholders of the Company or pursuant to any applicable written consent of the stockholders of
the Company, the Stockholder shall be deemed to have irrevocably granted to, and appointed, the Company, and any individual designated
in writing by it, and each of them individually, as his, her or its proxy and attorney-in-fact (with full power of substitution), for
and in its name, place and stead, to vote his, her or its Shares in any action by written consent of Company stockholders or at any meeting
of the Company’s stockholders called with respect to any of the matters specified in, and in accordance and consistent with, Section 3
of this Agreement. The Company agrees not to exercise the proxy granted herein for any purpose other than the purposes described
in this Agreement and the Stockholder affirms that the proxy set forth in this Section 5 is given in connection with, and
granted in consideration of, and as an inducement to the Company, Parent and Merger Sub to enter into the Merger Agreement and that such
proxy is given to secure the obligations of the Stockholder under Section 3. Except as otherwise provided for herein, the
Stockholder hereby affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked and that
such irrevocable proxy is executed and intended to be irrevocable. The irrevocable proxy and power of attorney granted herein shall survive
the death or incapacity of such Stockholder and the obligations of such Stockholder shall be binding on such Stockholder’s heirs,
personal representatives, successors, transferees and assigns. Notwithstanding any other provisions of this Agreement, the irrevocable
proxy granted hereunder shall automatically terminate upon the termination of this Agreement.
16. No
Solicitation. Subject to Section 4, the Stockholder agrees not to, directly or indirectly, including through any of its
officers, directors or agents, take any action that the Company is prohibited from taking pursuant to Section 6.4 of the Merger
Agreement and Section 6.4 of the Merger Agreement is hereby incorporated by reference mutatis mutandis.
17. No
Exercise of Appraisal Rights; Waivers. The Stockholder hereby irrevocably and unconditionally (a) waives, and
agrees to cause to be waived and to prevent the exercise of, any rights of appraisal, any dissenters’ rights and any similar rights
(including any notice requirements related thereto) relating to the Merger that Stockholder may have by virtue of, or with respect to,
any Shares (including all rights under Section 262 of the DGCL) and (b) agrees that the Stockholder will not bring, commence,
institute, maintain, prosecute or voluntarily aid or participate in any action, claim, suit or cause of action, in law or in equity,
in any court or before any Governmental Entity, which (i) challenges the validity of or seeks to enjoin the operation of any provision
of this Agreement or (ii) alleges that the execution and delivery of this Agreement by the Stockholder, or the approval of the Merger
Agreement by the Company Board, breaches any fiduciary duty of the Company Board or any member thereof; provided, that the Stockholder
may defend against, contest or settle any such action, claim, suit or cause of action brought against the Stockholder that relates solely
to the Stockholder’s capacity as a director, officer or securityholder of the Company.
18. Representations
and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent and the Company as follows:
(a) (i) The
Stockholder is the beneficial or record owner of the shares of Company Common Stock and/or Company Options indicated in Appendix A
(each of which shall be deemed to be “held” by the Stockholder for purposes of Section 3 unless otherwise
expressly stated with respect to any shares in Appendix A), free and clear of any and all Liens; and (ii) the Stockholder
does not beneficially own any securities of the Company other than the shares of Company Common Stock and rights to purchase shares Company
Common Stock set forth in Appendix A.
(b) With
respect to any Stockholder that is an entity, the Stockholder is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation and is qualified to conduct its business in those jurisdictions necessary to perform this Agreement.
(c) Except
as otherwise provided in this Agreement, the Stockholder has full power, legal capacity and authority to (i) make, enter into and
carry out the terms of this Agreement and (ii) vote all of its Shares in the manner set forth in this Agreement without the consent
or approval of, or any other action on the part of, any other person or entity (including any Governmental Entity). Without limiting
the generality of the foregoing, the Stockholder has not entered into any voting agreement (other than this Agreement) with any person
with respect to any of the Stockholder’s Shares, granted any person any proxy (revocable or irrevocable) or power of attorney with
respect to any of the Stockholder’s Shares, deposited any of the Stockholder’s Shares in a voting trust or entered into any
arrangement or agreement with any person limiting or affecting the Stockholder’s legal power, authority or right to vote the Stockholder’s
Shares on any matter contemplated by this Agreement.
(d) This
Agreement has been duly and validly executed and delivered by the Stockholder and (assuming the due authorization, execution and delivery
by the other parties hereto) constitutes a valid and binding agreement of the Stockholder enforceable against the Stockholder in accordance
with its terms, subject to (a) Laws of general application relating to bankruptcy, insolvency and the relief of debtors and (b) rules of
law governing specific performance, injunctive relief and other equitable remedies. The execution and delivery of this Agreement by the
Stockholder and the performance by the Stockholder of the agreements and obligations hereunder will not result in any breach or violation
of or be in conflict with or constitute a default under any term of any Contract or if applicable any provision of an organizational
document (including a certificate of incorporation) to or by which the Stockholder is a party or bound, or any applicable law to which
the Stockholder (or any of the Stockholder’s assets) is subject or bound, except for any such breach, violation, conflict or default
which, individually or in the aggregate, would not reasonably be expected to materially impair or adversely affect the Stockholder’s
ability to perform its obligations under this Agreement.
(e) The
execution, delivery and performance of this Agreement by the Stockholder do not and will not require any consent, approval, authorization
or permit of, action by, filing with or notification to, any Governmental Entity, except for any such consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain, individually or in the aggregate, has not and would not
materially impair the Stockholder’s ability to perform its obligations under this Agreement.
(f) The
Stockholder has had the opportunity to review the Merger Agreement and this Agreement with counsel of the Stockholder’s own choosing.
The Stockholder has had an opportunity to review with its own tax advisors the tax consequences of the Merger and the other Contemplated
Transactions. The Stockholder understands that it must rely solely on its advisors and not on any statements or representations made
by Parent, the Company or any of their respective agents or representatives with respect to the tax consequences of the Merger and the
other Contemplated Transactions. The Stockholder understands that such Stockholder (and not Parent, the Company or the Surviving Corporation)
shall be responsible for such Stockholder’s tax liability that may arise as a result of the Merger or the other Contemplated Transactions.
The Stockholder understands and acknowledges that the Company, Parent and Merger Sub are entering into the Merger Agreement in reliance
upon the Stockholder’s execution, delivery and performance of this Agreement.
(g) With
respect to the Stockholder, as of the date hereof, there is no action, suit, investigation or proceeding pending against, or, to the
knowledge of the Stockholder, threatened against, the Stockholder or any of the Stockholder’s properties or assets (including the
Shares) that would reasonably be expected to prevent or materially delay or impair the ability of the Stockholder to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
19. Termination.
This Agreement shall terminate and shall cease to be of any further force or effect as of the earliest of (a) such date and time
as the Merger Agreement shall have been terminated pursuant to the terms thereof, (b) the Effective Time or (c) the mutual
written agreement of the parties to terminate this Agreement (clauses (a)-(c), the “Expiration Date”);
provided, however, that (i) Section 10 shall survive the termination of this Agreement, and (ii) the
termination of this Agreement shall not relieve any party hereto from any liability for any material and willful breach of this Agreement
prior to the Effective Time.
20. Miscellaneous
Provisions.
(a) Amendments.
No amendment of this Agreement shall be effective against any party unless it shall be in writing and signed by each of the parties hereto.
(b) Entire
Agreement. This Agreement constitutes the entire agreement between the parties to this Agreement and supersedes all other
prior agreements, arrangements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
(c) Governing
Law. All matters arising out of or relating to this Agreement and the transactions contemplated hereby (including its interpretation,
construction, performance and enforcement) shall be governed by and construed in accordance with the internal laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of laws of any jurisdictions other than those of the State of Delaware.
(d) Jurisdiction.
Each of the parties to this Agreement (i) consents to submit itself to the exclusive personal jurisdiction of the Court of Chancery
of the State of Delaware, New Castle County, or, if that court does not have jurisdiction, a federal court sitting in Wilmington, Delaware
in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that all claims in respect of such action or proceeding shall be heard and determined in any such court, (iii) agrees that it shall
not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iv) agrees
not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement
in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Any party may
make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 10(j). Nothing in this Section 10(d), however, shall affect the
right of any party to serve legal process in any other manner permitted by law.
(e) WAIVER
OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF ANY PARTY TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
(f) Assignment.
Except as otherwise provided in Section 2(d) hereof, no party may assign any of its rights or delegate any of its performance
obligations under this Agreement, in whole or in part, by operation of law or otherwise, without the prior written consent of the other
parties hereto, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns. Any purported assignment of rights or delegation of performance obligations in violation of this Section 10(f) is
void.
(g) No
Third Party Rights. This Agreement is not intended to, and shall not, confer upon any other person any rights or remedies hereunder
other than the parties hereto to the extent expressly set forth herein.
(h) Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power
to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted
to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable
term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable
term.
(i) Specific
Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage for which monetary damages,
even if available, would not be an adequate remedy, would occur in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or in equity, and each of the parties waives any bond, surety
or other security that might be required of any other party with respect thereto. Each of the parties further agrees that it will not
oppose the granting of an injunction, specific performance or other equitable relief on the basis that any other party has an adequate
remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.
(j) Notices.
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery), by facsimile transmission (providing confirmation of transmission) or by electronic transmission
(upon confirmation of receipt of transmission) to the Company or Parent, as the case may be, in accordance with Section 10.5 of
the Merger Agreement and to each Stockholder at his, her or its address or email address (upon confirmation of receipt of transmission)
set forth on Appendix A attached hereto (or at such other address for a party as shall be specified by like notice).
(k) Counterparts.
This Agreement may be executed in two or more counterparts (including by facsimile, by an electronic scan delivered by electronic mail
or any electronic signature), each of which shall be deemed an original but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties,
it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile, by
an electronic scan delivered by electronic mail or by delivery of any electronic signature.
(l) Confidentiality.
Except to the extent required by applicable Law or regulation, the Stockholder shall hold any non-public information regarding this Agreement,
the Merger Agreement and the Merger in strict confidence and shall not divulge any such information to any third person until the Company
and Parent have publicly disclosed their entry into the Merger Agreement and this Agreement; provided, however, that the Stockholder
may disclose such information to its Affiliates, partners, members, stockholders, parents, subsidiaries, attorneys, accountants, consultants,
trustees, beneficiaries and other representatives (provided that such Persons are subject to confidentiality obligations at least as
restrictive as those contained herein). Neither the Stockholder nor any of its Affiliates (other than the Company, whose actions shall
be governed by the Merger Agreement), shall issue or cause the publication of any press release or other public announcement with respect
to this Agreement, the Merger, the Merger Agreement or the other transactions contemplated hereby or thereby without the prior written
consent of the Company and Parent, except as may be required by applicable Law in which circumstance such announcing party shall make
reasonable efforts to consult with the Company and Parent to the extent practicable. Parent is an intended third-party beneficiary of
this Section 10(l).
(m) Further
Assurances. Each Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional
or further consents, documents and other instruments as the Company or Parent may reasonably request for the purpose of effectively carrying
out the transactions contemplated by this Agreement and the transactions contemplated by the Merger Agreement.
(n) Disclosure.
Each Stockholder hereby agrees that Parent and the Company may publish and disclose in the Registration Statement, any prospectus or
registration statement filed with any regulatory authority in connection with the transactions contemplated by the Merger Agreement and
any related documents filed with such regulatory authority and as otherwise required by Law, such Stockholder’s identity and ownership
of the Shares and the nature of such Stockholder’s commitments, arrangements and understandings under this Agreement and may further
file this Agreement as an exhibit to the Registration Statement, prospectus or registration statement or in any other filing made by
Parent or the Company as required by Law or the terms of the Merger Agreement, including with the SEC or other regulatory authority,
relating to the transactions contemplated by the Merger Agreement. In the event of any such required disclosure, Parent or Company shall
use commercially reasonable efforts to provide the Stockholder advance written notice of, and an opportunity to review, any such disclosure
that identifies the Stockholder. Prior to the Closing, each Stockholder shall not, and shall use its reasonable best efforts to cause
its representatives not to, directly or indirectly, make any press release, public announcement or other public communication with respect
to this Agreement, the Merger, the Merger Agreement or the other Contemplated Transactions without the prior written consent of Parent
and the Company, provided that the foregoing shall not limit or affect any actions taken by such Stockholder (or any affiliated officer
or director of such Stockholder) that would be permitted to be taken by such Stockholder, Parent or the Company pursuant to the Merger
Agreement; provided, further, that the foregoing shall not affect any actions of Stockholder the prohibition of which would be prohibited
under applicable Law and shall not prohibit Stockholder or its Affiliates from making any publicly-available filings required by applicable
law, regulation or legal process.
(o) Fees
and Expenses. Except as otherwise specifically provided herein, the Merger Agreement or any other agreement contemplated by the Merger
Agreement to which a party hereto is a party, each party hereto shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
(p) No
Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Company or Parent any direct or indirect ownership
or incidence of ownership of or with respect to any Shares. All rights, ownership and economic benefits of and relating to the Shares
shall remain vested in and belong to such Stockholder, and neither the Company nor Parent has authority to manage, direct, superintend,
restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct
such Stockholder in the voting of any of the Shares, except as otherwise provided herein.
(q) Interpretation.
When reference is made in this Agreement to a Section or Appendix, such reference shall be to a Section of or Appendix to this
Agreement, unless otherwise indicated. The headings contained in this Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement. The language used in this Agreement shall be deemed to be the language chosen
by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. Whenever
the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural, and vice versa. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.
Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The word “or” is not exclusive. “Writing,”
“written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media)
in a visible form. References to any agreement or Contract are to that agreement or Contract as amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of
that Person. References to any statute are to that statute and to the rules and regulations promulgated thereunder, in each case
as amended, modified, re-enacted thereof, substituted, from time to time. References to “$” and “dollars” are
to the currency of the United States. All accounting terms used herein will be interpreted, and all accounting determinations hereunder
will be made, in accordance with GAAP unless otherwise expressly specified. References from or through any date shall mean, unless otherwise
specified, from and including or through and including, respectively. All references to “days” shall be to calendar days
unless otherwise indicated as a “Business Day.” Except as otherwise specifically indicated, for purposes of measuring the
beginning and ending of time periods in this Agreement (including for purposes of “Business Day” and for hours in a day or
Business Day), the time at which a thing, occurrence or event shall begin or end shall be deemed to occur in the Eastern time zone of
the United States. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the
drafting Party shall not be applied in the construction or interpretation of this Agreement.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, the undersigned have caused
this Agreement to be duly executed as of the date first above written.
| COMPANY: | |
| Jade Biosciences, Inc. | |
| | |
| | |
| | |
| By: | |
| Title: | |
| | |
| | |
| PARENT: | |
| Aerovate Therapeutics, Inc. | |
| | |
| | |
| | |
| By: | |
| Title: | |
| | |
| | |
| [STOCKHOLDER], | |
| in his/her capacity as the Stockholder: | |
| | |
| | |
| Signature: |
| |
| | |
| Address: | |
| | |
| | |
| | |
[Signature Page to Company
Support Agreement]
Appendix A
Name,
Address and Email
Address of Stockholder |
Shares
of Parent
Common Stock |
Parent
Options |
Parent
Restricted Stock Units |
| _________________________ |
_____________ |
__________ |
_____________________ |
Exhibit C
FORM OF LOCK-UP AGREEMENT
October 30, 2024
Aerovate Therapeutics, Inc.
930 Winter Street,
Suite M-500
Waltham, MA 02451
Ladies and Gentlemen:
The undersigned signatory of this lock-up agreement
(this “Lock-Up Agreement’’) understands that Aerovate Therapeutics, Inc., a Delaware corporation (“Parent”),
is entering into an Agreement and Plan of Merger, dated as of October 30, 2024 (as the same may be amended from time to time, the
“Merger Agreement’’) with Caribbean Merger Sub I, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent, Caribbean Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent, and
Jade Biosciences, Inc., a Delaware corporation (the “Company”). Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Merger Agreement.
As a condition and inducement to each of the
parties to enter into the Merger Agreement and to consummate the transactions contemplated thereby, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby irrevocably agrees that, subject to the exceptions
set forth herein, without the prior written consent of Parent, the undersigned will not, during the period commencing upon the Closing
and ending on the date that is 180 days after the Closing Date (the “Restricted Period”); provided, that if a registration
statement covering the shares of Company Common Stock and pre-funded Company Warrants issued and sold in connection with the Company
Pre-Closing Financing (other than any shares or pre-funded Company Warrants held by affiliates of the Company) has not been declared
effective by the SEC prior to the end of such 180-day period, then the Restricted Period shall end on such later date upon which such
registration statement is first declared effective:
(1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Parent Common Stock or any securities
convertible into or exercisable or exchangeable for shares of Parent Common Stock (including without limitation, shares of Parent Common
Stock or such other securities of Parent which may be deemed to be beneficially owned by the undersigned in accordance with the rules and
regulations of the SEC and securities of Parent which may be issued upon exercise or vesting, as applicable, of a stock option or warrant
or settlement of a restricted stock unit or restricted stock award and Parent Common Stock or such other securities to be issued to the
undersigned in connection with the Merger, in each case, that are currently or hereafter owned of record or beneficially (including holding
as a custodian)) by the undersigned, except as set forth below (collectively, the “Undersigned’s Shares”);
(2) enter
into any swap, short sale, hedge or other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Undersigned’s Shares regardless of whether any such transaction described in clause (1) above or this clause (2) is
to be settled by delivery of shares of Parent Common Stock or other securities, in cash or otherwise;
(3) make
any demand for, or exercise any right with respect to, the registration of any shares of Parent Common Stock or any security convertible
into or exercisable or exchangeable for shares of Parent Common Stock (other than such rights set forth in the Merger Agreement and that
certain registration rights agreement entered into by the Company and certain signatories therein in connection with the Concurrent Investment);
or
(4) except
for any support agreement entered into as of the date hereof by the undersigned with Parent and the Company, grant any proxies or powers
of attorney with respect to any Parent Common Stock, deposit any Parent Common Stock into a voting trust or enter into a voting agreement
or similar arrangement or commitment with respect to any Parent Common Stock; or
(5) publicly
disclose the intention to do any of the foregoing.
The restrictions and obligations contemplated
by this Lock-Up Agreement shall not apply to:
1. transfers
of the Undersigned’s Shares:
(a) (A) to
any person related to the undersigned (or to an ultimate beneficial owner of the undersigned) by blood or adoption who is an immediate
family member of the undersigned, or by marriage or domestic partnership (a “Family Member”), or to a trust formed
for the benefit of the undersigned or any of the undersigned’s Family Members, (B) to the undersigned’s estate, following
the death of the undersigned, by will, intestacy or other operation of Law, (C) as a bona fide gift or a charitable contribution,
as such term is described in Section 501(c)(3) of the Code, or otherwise to a trust or other entity for the direct or indirect
benefit of an immediate family member of a beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of the Undersigned’s
Shares (D) by operation of Law, such as pursuant to a qualified domestic order or in connection with a divorce settlement or (E) to
any partnership, corporation, limited liability company or other entity, in each case, all of which the beneficial ownership interests
of which are held by or otherwise under common control (via beneficial ownership, contract or otherwise) with the undersigned or a Family
Member of the undersigned;
(b) if
the undersigned is a corporation, partnership, limited liability company or other entity, (A) to another
corporation, partnership, limited liability company or other entity that is a direct or indirect affiliate (as defined under Rule 12b-2
of the Exchange Act) of the undersigned, including investment funds or other entities that controls or manages, is under common control
or management with, or is controlled or managed by, the undersigned (including, for the avoidance of doubt, where the undersigned is
a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership), (B) as
a distribution or dividend to equity holders, current or former partners, members, stockholders or managers (or to the estates of any
of the foregoing), as applicable, of the undersigned (including upon the liquidation and dissolution of the undersigned pursuant to a
plan of liquidation approved by the undersigned’s equity holders), (C) as a bona fide gift or a charitable contribution, as
such term is described in Section 501(c)(3) of the Code, or otherwise to a trust or other entity for the direct or indirect
benefit of an immediate family member of a beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of the Undersigned’s
Shares, (D) transfers or dispositions not involving a change in beneficial ownership or (E) with prior written consent of Parent
(as constituted following the Closing); or
(c) if
the undersigned is a trust, to any grantors or beneficiaries of the trust;
provided
that, in the case of any transfer or distribution pursuant to this clause (a), such transfer is not for value (other than
transfers pursuant to 1(A), 1(E) or 2(A)) and each donee, heir, beneficiary or other transferee or distributee shall sign and deliver
to Parent a lock-up agreement in the form of this Lock-Up Agreement with respect to the shares of Parent Common Stock or such other securities
that have been so transferred or distributed and if a filing pursuant to Section 16(a) of the Exchange Act is required, such
filing shall describe the nature of the transfer or distribution;
2. the
exercise of an option to purchase shares of Parent Common Stock (including a net or cashless exercise of an option to purchase shares
of Parent Common Stock ), and any related transfer of shares of Parent Common Stock to Parent for the purpose of paying the exercise
price of such options or for paying taxes (including estimated taxes) due as a result of the exercise of such options or for paying taxes
(including estimated taxes) due as a result of the exercise of such options; provided that, for the avoidance of doubt, the underlying
shares of Parent Common Stock shall continue to be subject to the restrictions on transfer set forth in this Lock-Up Agreement;
3. transfers
to Parent in connection with the net settlement of any other equity award that represents the right to receive in the future shares of
Parent Common Stock, settled in shares of Parent Common Stock, to pay any tax withholding obligations; provided that, for the
avoidance of doubt, the underlying shares of Parent Common Stock shall continue to be subject to the restrictions on transfer set forth
in this Lock-Up Agreement;
4. the
establishment of a trading plan pursuant to Rule 10b5-l under the Exchange Act for the transfer of shares of Parent Common Stock;
provided that such plan does not provide for any transfers of shares of Parent Common Stock during the Restricted Period;
5. the
disposition (including a forfeiture or repurchase) to Parent of any shares of restricted stock granted pursuant to the terms of any employee
benefit plan or restricted stock purchase agreement;
6. transfers,
distributions, sales or other transactions by the undersigned of shares of Parent Common Stock purchased by the undersigned on the open
market or in a public offering by Parent, in each case following the date of the Closing;
7. transfers
pursuant to a bona-fide third party tender offer, merger, consolidation or other similar transaction made to all holders of Parent’s
capital stock involving a change of control of Parent, provided that in the event that such tender offer, merger, consolidation
or other such transaction is not completed, the Undersigned’s Shares shall remain subject to the restrictions contained in this
Lock-Up Agreement;
8. transfers
pursuant to an order of a court or regulatory agency;
9. transfers
by the undersigned of shares of Parent Common Stock issued pursuant to the Merger Agreement in respect of shares of the Company, if any,
purchased from the Company on or about the Closing Date but prior to the Closing; or
10. transfers,
distributions, sales or other transactions with the prior written consent of Parent (as constituted following the Closing).
and provided, further, that, with respect
to each of (b), (c), and (d) above, no filing by any party (including any donor, donee, transferor, transferee, distributor or distributee)
under Section 16 of the Exchange Act or other public announcement shall be made voluntarily reporting a reduction in beneficial
ownership of shares of Parent Common Stock or any securities convertible into or exercisable or exchangeable for Parent Common Stock
in connection with such transfer or disposition during the Restricted Period (other than any exit filings) and if any filings under Section 16(a) of
the Exchange Act, or other public filing, report or announcement reporting a reduction in beneficial ownership of shares of Parent Common
Stock in connection with such transfer or distribution, shall be legally required during the Restricted Period, such filing, report or
announcement shall clearly indicate in the footnotes therein, in reasonable detail, a description of the circumstances of the transfer
and that the shares remain subject to the Lock-Up Agreement.
For purposes of this Lock-Up Agreement, “change
of control” shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction
or a series of related transactions to a person or group of affiliated persons, of the Parent’s voting securities if, after such
transfer, the Parent’s stockholders as of immediately prior to such transfer do not hold a majority of the outstanding voting securities
of the Parent (or the surviving entity).
Any attempted transfer in violation of this Lock-Up
Agreement will be of no effect and null and void, regardless of whether the purported transferee has any actual or constructive knowledge
of the transfer restrictions set forth in this Lock-Up Agreement, and will not be recorded on the share register of Parent. In furtherance
of the foregoing, the undersigned agrees that Parent and any duly appointed transfer agent for the registration or transfer of the securities
described herein are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or
breach of this Lock-Up Agreement. Parent may cause the legend set forth below, or a legend substantially equivalent thereto, to be placed
upon any certificate(s) or other documents, ledgers or instruments evidencing the undersigned’s ownership of Parent Common
Stock:
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO
AND MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH A LOCK-
UP AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE
OF THE COMPANY.
The undersigned hereby represents and warrants
that the undersigned has full power and authority to enter into this Lock-Up Agreement, and that upon request, the undersigned will execute
any additional documents reasonably necessary to ensure the validity or enforcement of this Lock-Up Agreement. All authority herein conferred
or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives
of the undersigned.
The undersigned understands that if the Merger
Agreement is terminated for any reason, the undersigned shall be released from all obligations under this Lock-Up Agreement. The undersigned
understands that Parent and the Company are proceeding with the transactions contemplated by the Merger Agreement in reliance upon this
Lock-Up Agreement.
Any and all remedies herein expressly conferred
upon Parent or the Company will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity,
and the exercise by Parent or the Company of any one remedy will not preclude the exercise of any other remedy. The undersigned agrees
that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur to Parent and/or
the Company in the event that any provision of this Lock-Up Agreement was not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that Parent and/or the Company shall be entitled to an injunction or injunctions to prevent
breaches of this Lock-Up Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to which Parent or the Company is entitled at Law or in equity,
and the undersigned waives any bond, surety or other security that might be required of Parent or the Company with respect thereto. Each
of the parties further agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on
the basis that any other party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for
any reason at law or in equity.
In the event that any holder of Parent’s
securities that are subject to a substantially similar agreement entered into by such holder, other than the undersigned, is permitted
by Parent to sell or otherwise transfer or dispose of shares of Parent Common Stock for value other than as permitted by this or a substantially
similar agreement entered into by such holder (whether in one or multiple releases or waivers), the same percentage of shares of Parent
Common Stock held by the undersigned on the date of such release or waiver as the percentage of the total number of outstanding shares
of Parent Common Stock held by such holder on the date of such release or waiver that are the subject of such release or waiver shall
be immediately and fully released on the same terms from any remaining restrictions set forth herein (the “Pro-Rata Release”);
provided, however, that such Pro-Rata Release shall not be applied unless and until permission has been granted by Parent
to an equity holder or equity holders to sell or otherwise transfer or dispose of all or a portion of such equity holders shares of Parent
Common Stock in an aggregate amount in excess of 1% of the number of shares of Parent Common Stock subject to a substantially similar
agreement. In the event of any Pro-Rata Release, the Company shall promptly (and in any event within two (2) business days of such
release) inform each relevant holder of Parent Common Stock or warrants of the terms of such Pro-Rata Release.
Upon the release of any of the Undersigned’s
Shares from this Lock-Up Agreement, Parent will facilitate the timely preparation and delivery of certificates or the establishment of
book-entry positions at Parent’s transfer agent representing the Undersigned’s Shares without the restrictive legend above
or the withdrawal of any stop transfer instructions.
This Lock-Up Agreement and any claim, controversy
or dispute arising under or related to this Lock-Up Agreement shall be governed by and construed in accordance with the Laws of the state
of Delaware, without regard to the conflict of Laws principles thereof. In any action or proceeding between any of the parties arising
out of or relating to this Lock-Up Agreement, each of the parties: (i) irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware or, to the extent such court does not have subject
matter jurisdiction, the Superior Court of the State of Delaware or the United States District Court for the District of Delaware, (ii) agrees
that all claims in respect of such action or proceeding shall be heard and determined exclusively in accordance with foregoing clause
(i) of this paragraph, (iii) waives any objection to laying venue in any such action or proceeding in such courts, (iv) waives
any objection that such courts are an inconvenient forum or do not have jurisdiction over any party and (v) irrevocably and unconditionally
waives the right to trial by jury. This Lock-Up Agreement constitutes the entire agreement between the parties to this Lock-Up Agreement
and supersedes all other prior agreements, arrangements and understandings, both written and oral, among the parties with respect to
the subject matter hereof.
This Lock-Up Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The exchange of
a fully executed Lock-Up Agreement (in counterparts or otherwise) by Parent, the Company and the undersigned by electronic transmission
in .pdf format shall be sufficient to bind such parties to the terms and conditions of this Lock-Up Agreement.
[SIGNATURE PAGE FOLLOWS]
The undersigned understands that this Lock-Up Agreement is irrevocable
and shall be binding upon the undersigned and the heirs, personal representatives, successors and assigns of the undersigned.
| | Very truly yours, |
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| | Signature (for entities): |
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| | By: |
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Name: |
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Title: |
[Signature Page to
Lock-Up Agreement]
| Accepted and Agreed | |
| By Aerovate Therapeutics, Inc.: | |
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| By: |
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Name: | |
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Title: | |
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| Accepted and Agreed | |
| by Jade Biosciences, Inc.: | |
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[Signature Page to Lock-Up Agreement]
Exhibit D
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE
AGREEMENT (this “Agreement”) is dated as of October 30, 2024, by and among Jade Biosciences, Inc., a
Delaware corporation (the “Company”), and each of the Persons listed on Exhibit A attached to this Agreement
(each, an “Investor” and together, the “Investors”).
WHEREAS,
the Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the U.S. Securities Act of 1933, as amended (the “Securities Act”);
WHEREAS,
the Company desires to sell to the Investors, and each Investor desires to purchase from the Company, severally and not jointly, upon
the terms and subject to the conditions stated in this Agreement, (A) shares (the “Initial Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), including Common Stock being issued pursuant to any
cancellation or conversion of Convertible Securities (as defined below) at a per share purchase price equal to the Share Price, and/or
(B) the pre-funded warrants to purchase shares of Common Stock (the “Pre-Funded Warrants”) substantially in the
form attached hereto as Exhibit B at a per warrant price equal to the Pre-Funded Warrant Price (as defined below);
WHEREAS,
contemporaneously with the sale of the Initial Shares and/or the Pre-Funded Warrants, the parties hereto will execute and deliver a Registration
Rights Agreement, in the form attached hereto as Exhibit C, pursuant to which the Company will agree to provide certain registration
rights in respect of the Shares (as defined below) under the Securities Act and applicable state securities laws; and
WHEREAS,
the Company is party to that certain Agreement and Plan of Merger by and among the Company, Aerovate Therapeutics, Inc., a Delaware
Corporation (“Parent”), Caribbean Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of the
Parent (“First Merger Sub”), and Caribbean Merger Sub II, LLC, a Delaware limited liability company and wholly-owned
subsidiary of the Parent (“Second Merger Sub”), dated on or about the date hereof (the “Merger Agreement”),
pursuant to which (i) First Merger Sub will merge with and into the Company, with the Company surviving and becoming a wholly-owned
subsidiary of Parent, and (ii) the Company will merge with and into Second Merger Sub, with Second Merger Sub being the surviving
entity and a wholly-owned subsidiary of Parent (together, the “Merger”).
NOW
THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the Company
and each Investor, severally and not jointly, agree as follows:
11. Definitions.
As used in this Agreement, the following terms shall have the following respective meanings:
“Additional Securities” has
the meaning set forth in Section 8.15 hereof.
“Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled
by or is under common control with such Person.
“Aggregate Purchase
Amount” has the meaning set forth in Section 2.2 hereof.
“Agreement”
has the meaning set forth in the recitals hereof.
“Amended and Restated
Bylaws” means the bylaws of the Company, as currently in effect and as in effect on the Closing Date.
“Amended and Restated
Certificate of Incorporation” means the Certificate of Incorporation of the Company, as currently in effect and as in effect
on the Closing Date.
“Beneficial Ownership
Limitation” has the meaning set forth in Section 2.1 hereof.
“Benefit Plan”
or “Benefit Plans” means employee benefit plans as defined in Section 3(3) of ERISA and all other employee
benefit practices or arrangements, including, without limitation, any such practices or arrangements providing severance pay, sick leave,
vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options
or other stock-based compensation, hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements,
maintained by the Company or to which the Company or any of its Subsidiaries is obligated to contribute for employees or former employees
of the Company and its Subsidiaries.
“Board of Directors”
means the board of directors of the Company.
“Business Day”
means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other governmental action to close.
“Closing”
has the meaning set forth in Section 2.2 hereof.
“Closing Date”
has the meaning set forth in Section 2.2 hereof.
“Code”
means the U.S. Internal Revenue Code of 1986, as amended.
“Commitment Amount”
has the meaning set forth in Section 2.1 hereof.
“Common Stock”
has the meaning set forth in the recitals hereof.
“Company”
has the meaning set forth in the recitals hereof.
“Company Presentation”
means that certain Investor Presentation, dated October 2024, as provided to the Investors prior to the date hereof and filed by
Parent on Form 8-K on or around the date hereof.
“Confidential Data”
has the meaning set forth in Section 3.28 hereof.
“Contribution”
has the meaning set forth in Section 2.2 hereof.
“Convertible Security”
means a convertible note issued by the Company or any of its Subsidiaries.
“Disclosure Document”
has the meaning set forth in Section 5.3 hereof.
“Disclosure Time”
has the meaning set forth in Section 5.3 hereof.
“Drug Regulatory
Agency” means the U.S. Food and Drug Administration (“FDA”) or other foreign, state, local or comparable
governmental authority responsible for regulation of the research, development, testing, manufacturing, processing, storage, labeling,
sale, marketing, advertising, distribution and importation or exportation of drug or biological products and drug or biological product
candidates.
“Environmental
Laws” has the meaning set forth in Section 3.15 hereof.
“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder.
“Financial Statements”
has the meaning set forth in Section 3.8(b) hereof.
“GAAP”
has the meaning set forth in Section 3.8(b) hereof.
“GDPR”
has the meaning set forth in Section 3.29 hereof.
“Governmental Authorizations”
has the meaning set forth in Section 3.11 hereof.
“Health Care Laws”
has the meaning set forth in Section 3.19 hereof.
“HIPAA”
has the meaning set forth in Section 3.28 hereof.
“Indemnified Persons”
has the meaning set forth in Section 5.10(a).
“Initial Shares”
has the meaning set forth in the recitals hereof.
“Intellectual Property”
has the meaning set forth in Section 3.12 hereof.
“Investor”
and “Investors” have the meanings set forth in the recitals hereof.
“Investor Majority”
means, (i) prior to the Closing, the Investors committed to purchase at least a majority of the Securities (provided that such majority
shall include each Investor that committed an Aggregate Purchase Amount of no less than $27.5 million (including the Aggregate Purchase
Amount of such Investor’s affiliates and related funds)) and (ii) following the Closing, the Investors who hold at least a
majority of the Securities (including any Pre-Funded Warrant Shares) still held by the Investors.
“IT Systems”
has the meaning set forth in Section 3.28 hereof.
“Material Adverse
Effect” means any change, event, circumstance, development, condition, occurrence or effect that, individually or in the aggregate,
(a) was, is, or would reasonably be expected to be, materially adverse to the business, financial condition, properties, assets,
liabilities, stockholders’ equity or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) materially
delays or materially impairs the ability of the Company to timely comply, or prevents the Company from complying, with its obligations
under this Agreement, the other Transaction Agreements, or with respect to the Closing, or would reasonably be expected to do so; provided,
however, that none of the following will be deemed in themselves, either alone or in combination, to constitute, and that none of the
following will be taken into account in determining whether there has been or will be, a Material Adverse Effect under subclause (a) of
this definition:
(i) any
change generally affecting the economy, financial markets or political, economic or regulatory conditions in the United States or any
other geographic region in which the Company conducts business, provided that the Company is not disproportionately affected thereby;
(ii) general
financial, credit or capital market conditions, including interest rates or exchange rates, or any changes therein, provided that the
Company is not disproportionately affected thereby;
(iii) any
change that generally affects industries in which the Company and its Subsidiaries conduct business, provided that the Company is not
disproportionately affected thereby;
(iv) earthquakes,
hurricanes, tsunamis, tornadoes, floods, mudslides, fires or other natural disasters, weather conditions, global pandemics, including
the COVID-19 pandemic and related strains, epidemic or similar health emergency, and other force majeure events in the United States
or any other location, provided that the Company is not disproportionately affected thereby;
(v) national
or international political or social conditions (or changes in such conditions), whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist attack, provided that the Company is not disproportionately affected
thereby;
(vi) material
changes in laws after the date of this Agreement; and
(vii) in
and of itself, any material failure by the Company to meet any published or internally prepared estimates of drug development timelines
(it being understood that the facts and circumstances giving rise to such failure may be deemed to constitute, and may be taken into
account in determining whether there has been, a Material Adverse Effect to the extent that such facts and circumstances are not otherwise
described in clauses (i)-(v) of this definition).
“Nasdaq”
means the Nasdaq Stock Market LLC.
“National Exchange”
means (i) on and prior to the Closing Date, the Nasdaq Global Market, and (ii) following the Closing Date, any of the following
markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question, together with any successor thereto:
the NYSE American, The New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market and the Nasdaq Capital Market.
“Parent”
has the meaning set forth in the recitals hereof.
“Person”
means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or any other entity or organization.
“Personal Data”
has the meaning set forth in Section 3.28 hereof.
“Placement Agent”
means each of Jefferies LLC, TD Securities (USA) LLC, Stifel, Nicolaus & Company, Incorporated and Wedbush & Co.,
LLC.
“Pre-Funded Warrant
Price” means an amount equal to (i) the Share Price minus (ii) $0.001.
“Pre-Funded Warrant
Shares” has the meaning set forth in Section 2.1 hereof.
“Pre-Funded Warrants”
has the meaning set forth in the recitals hereof.
“Privacy
Laws” has the meaning set forth in Section 3.29 hereof.
“Privacy
Statements” has the meaning set forth in Section 3.29 hereof.
“Process”
or “Processing” has the meaning set forth in Section 3.29 hereof.
“Registration Rights
Agreement” has the meaning set forth in Section 6.1(j) hereof.
“Regulatory Agencies”
has the meaning set forth in Section 3.18 hereof.
“Rule 144”
means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such rule.
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities”
has the meaning set forth in Section 2.1 hereof.
“Securities Act”
has the meaning set forth in the recitals hereof.
“Share Price”
means an amount equal to (i) the Company Equity Value (as defined in the Merger Agreement), (ii) divided by the number of Company
Outstanding Shares (as defined in the Merger Agreement but excluding the Securities being issued hereunder) as of immediately prior to
the closing of offering of the Securities hereunder; provided, that Company Outstanding Shares shall exclude (i) any Company Options
(as defined in the Merger Agreement), Company Warrants (as defined in the Merger Agreement) and any other equity awards issued under
the Company Stock Plans (as defined in the Merger Agreement), including any shares of Company Common Stock issuable upon the exercise
of such Company Options, Company Warrants or other equity awards, issued to directors, employees, consultants or other service providers
following the date hereof but prior to the Closing and (ii) any shares of Company Common Stock underlying Company Notes (as defined
in the Merger Agreement) that are to be contributed as consideration pursuant to Section 2.2 of this Agreement.
“Shares”
means the Initial Shares and the Pre-Funded Warrant Shares.
“Short Sales”
include, without limitation, (i) all “short sales” as defined in Rule 200 promulgated under Regulation SHO under
the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements (including on a total return basis), and (ii) sales and other transactions through non-U.S. broker dealers
or non-U.S. regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock),
in each case, solely to the extent it has the same economic effect as a “short sale” (as defined in Rule 200 promulgated
under Regulation SHO under the Exchange Act).
“Subsidiaries”
has the meaning set forth in Section 3.1 hereof.
“Tax”
or “Taxes” means any and all federal, state, local, foreign and other taxes, levies, fees, imposts, duties and charges
of whatever kind (including any interest, penalties or additions to the tax imposed in connection therewith or with respect thereto),
whether or not imposed on the Company, including, without limitation, taxes imposed on, or measured by, income, franchise, profits or
gross receipts, and also ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding,
employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and customs duties.
“Tax Returns”
means returns, reports, information statements and other documentation (including any additional or supporting material) filed or maintained,
or required to be filed or maintained, in connection with the calculation, determination, assessment or collection of any Tax and shall
include any amended returns required as a result of examination adjustments made by the Internal Revenue Service or other Tax authority.
“Transaction Agreements”
means this Agreement, the Merger Agreement, the Pre-Funded Warrants, the Registration Rights Agreement and any other documents or agreements
explicitly contemplated hereunder or thereunder.
“Transfer Agent”
means, with respect to the Common Stock, Computershare Trust Company, N.A., or such other financial institution that provides transfer
agent services as the Company may engage from time to time.
“Transfer Taxes”
means all real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, intangible
property transfer, personal property transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes (together
with any interest, penalty, or addition thereto) incurred in connection with the transactions contemplated by this Agreement.
“Wire”
has the meaning set forth in Section 2.2 hereof.
12. Purchase
and Sale of Securities.
(a) Purchase
and Sale. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Investors,
severally and not jointly, agree to purchase, the number of Initial Shares equal to (rounded down to the nearest whole Initial Share)
(i) the aggregate commitment amount set forth under the heading “Commitment Amount” and opposite such Investor’s
name on the Exhibit A (the “Commitment Amount”) divided by (ii) the Share Price; provided,
however, for any Investor that has provided notice to the Company at least ten (10) Business Days prior to the Closing that
such Investor would beneficially own (when aggregated with all Securities then beneficially owned by the Investor and its affiliates
(as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder)) in excess of the
Beneficial Ownership Limitation, or as such Investor may otherwise choose, in lieu of purchasing Initial Shares such Investor may elect
to purchase Pre-Funded Warrants to purchase a number of shares of Common Stock issuable upon exercise of the Pre-Funded Warrants (the
“Pre-Funded Warrant Shares”) equal to (rounded down to the nearest whole Pre-Funded Warrant Share) (i) the Commitment
Amount (or any remainder thereof) divided by (ii) the Pre-Funded Warrant Price in lieu of Initial Shares in such manner to result
in the same Aggregate Purchase Amount being paid by such Investor in the aggregate (including upon exercise of such Pre-Funded Warrants).
The “Beneficial Ownership Limitation” shall initially be set at the discretion of each Investor to a percentage designated
by such Investor on its signature page hereto between 0% and 9.9999% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of the Initial Shares and Pre-Funded Warrants on the Closing Date (collectively, the “Securities”);
provided that such percentage shall be set at 9.9999% for any Investor that does not make such designation on its signature page hereto.
Notwithstanding the foregoing, by written notice to the Company, any Investor may reset the Beneficial Ownership Limitation percentage
to a higher or lower percentage, not to exceed 9.9999%; provided that any increase will not be effective until the sixty-first
(61st) day after such written notice is delivered to the Company. Upon such a change by an Investor of the Beneficial Ownership Limitation,
the Beneficial Ownership Limitation may not be further amended by such Investor without first providing the minimum notice required by
this Section 2.1. Notwithstanding anything to the contrary set forth in this Agreement, for any Investor that has provided
notice to the Company that this sentence shall apply to it, (i) the Investor shall not be required to purchase Pre-Funded Warrants
and (ii) the Company shall not issue or sell, and the Investor shall not purchase or acquire, any Initial Shares which, when aggregated
with all shares of Common Stock then beneficially owned by the Investor and its affiliates (as calculated pursuant to Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor of more than 9.99%
of the outstanding shares of Common Stock immediately after giving effect to the Closing and the consummation of the transactions contemplated
hereby, and the number of Initial Shares and the Aggregate Purchase Amount for such Investor shall be reduced accordingly.
(b) Closing.
Subject to the satisfaction or waiver of the conditions set forth in Section 5.13, the closing of the purchase and sale
of the Securities (the “Closing” and the date on which the Closing occurs, the “Closing Date”)
shall occur remotely via the exchange of documents and signatures immediately prior to the First Effective Time (as defined in the Merger
Agreement), or at such other time as agreed to by the Company and the Investor Majority. Not less than three (3) Business Days prior
to the anticipated Closing Date, the Company shall provide written notice to the Investors (the “Closing Notice”)
of the anticipated Closing Date and the wire instructions for delivery of the Aggregate Purchase Amount. At the Closing, the Securities
shall be issued and registered in the name of such Investor, or in such nominee name(s) as designated by such Investor, representing
the number of Securities to be purchased by such Investor at such Closing as set forth in Exhibit A, in each case against
payment to the Company of the purchase price therefor (the “Aggregate Purchase Amount”) in full, either by (x) wire
transfer to the Company of immediately available funds (a “Wire”), at or prior to the Closing, in accordance with
wire instructions provided by the Company in the Closing Notice; (y) the cancellation of Convertible Securities or other debt of
the Company or its Subsidiaries (including any outstanding principal, premium, interest or any other amounts due thereon) set forth under
the heading “Convertible Securities Amount” and opposite such Investor’s name in Exhibit A (any such cancellation,
a “Contribution”); or (z) a combination of such methods. On the Closing Date, the Company will (A) cause
the Transfer Agent to issue the Initial Shares in book-entry form, free and clear of all restrictive and other legends (except as expressly
provided in Section 4.10 hereof) and the Company shall provide evidence of such issuance from the Company’s Transfer
Agent as soon as reasonably practical following the Closing Date to each Investor and (B) deliver t