Preview
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STOCK PURCHASE AGREEMENT
by and among
PERSANTE HEALTH CARE, INC.,
THE STOCKHOLDERS OF PERSANTE HEALTH CARE, INC.,
PERSANTE ACQUISITION CORP.,
and
THE REPRESENTATIVE NAMED THEREIN
Date of Signing and Closing: November 22, 2021
Party Abbreviation
Persante Acquisition Corp., a Delaware corporation Buyer
Persante Health Care, Inc., a Delaware corporation Company
Harren Equity Partners, LLC, a Delaware limited liability company Representative
Collectively, Harren Investors II, LP (“Harren II”), Harren Investors II-B, LP Sellers
(“Harren II-B”), Harren II Coinvest, LLC (“Harren II Coinvest”), Northstar
Mezzanine Partners V LP (“Northstar”), Abacus Finance Group, LLC (“Abacus”),
and Robert L. Lynch (“R. Lynch”).
Collectively, Persante Continuing Care, Inc., a New Jersey corporation, Persante Sleep Subsidiaries
Care, Inc., a Delaware corporation, and Home Sleep Diagnostics, Inc., a Delaware
corporation.
KeyBank National Association Escrow Agent
Brit Syndicates Limited R&W Insurer
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INDEX 1
TAB
I. Key Transaction Documents
Stock Purchase Agreement (the “Purchase Agreement”), by and among the Company, Sellers, Buyer,
and Representative ........................................................................................................................... 1
Exhibits to the Purchase Agreement .................................................................................................. 2
• Exhibit A - Definitions
• Exhibit B – Closing Payments
• Exhibit C – Net Working capital
• Exhibit D – Pro Rata Share
• Exhibit E – D&O Policy
Company Disclosure Letter to the Purchase Agreement...................................................................... 3
Escrow Agreement, by and among Buyer, Representative, and Escrow Agent..................................... 4
Flow of Funds.................................................................................................................................. 5
II. Pre-Closing Documents
Affidavits of Lost Stock Certificates, by each of the following persons .............................................. 6
• Northstar, dated October 25, 2021
• R. Lynch, dated October 15, 2021
Option Termination Agreements, by and between the Company and each of the following persons..... 7
• C. Nepa
• M. Ingelido
Unaudited Consolidated Balance Sheet and Pre-Closing Statement of the Company ........................... 8
III. Ancillary Transaction Documents
Stock Powers, to Buyer from each of the following Sellers................................................................ 9
• Harren II
• Harren II-B
• Harren II Coinvest
• Northstar
• Abacus
• R. Lynch
1
All documents are dated November 22, 2021 unless stated otherwise.
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General Releases (of the Company and its Subsidiaries), from each of the following Sellers............. 10
• Harren II
• Harren II-B
• Harren II Coinvest
• Northstar
• Abacus
• R. Lynch
Officer’s Certificate of the Company, certifying to the following..................................................... 11
• Authorizing Resolutions
Resignation Letters, from each of the following persons.................................................................. 12
• C. Nepa
• M. Ingelido
• T. Carver
Third Party Consents, dated November 8, 2021, from each of the following companies.................... 13
• Centurian Plaza, LLC
• Philips Medical Capital LLC
Good Standing Certificates, for each of the following companies..................................................... 14
• Company – Delaware
• Persante Continuing Care, Inc. – New Jersey
• Persante Sleep Care, Inc. – Delaware
• Persante Sleep Care, Inc. – New Jersey
• Home Sleep Diagnostics, Inc. - Delaware
• Home Sleep Diagnostics, Inc. – New Jersey
Section 897 Statement, by the Company ......................................................................................... 15
Termination Agreement (Stockholders Agreement), by and among the Company and Sellers ........... 16
Payoff Letter, by and among Abacus, the Company, Persante Continuing Care, Inc., Persante Sleep Care,
Inc., and Home Sleep Diagnostics, Inc............................................................................................ 17
DACA Termination, from Abacus .................................................................................................. 18
Landlord Waiver Terminations, from Abacus with respect to the following locations ....................... 19
• 130 Gaither Road, Suite 124
• 130 Gaither Road, Suite 136
• 1680 Route 23
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Termination and Release of Security Interest in Trademarks, from Abacus with respect to the following
companies...................................................................................................................................... 20
• The Company, filed December 3, 2021
• Persante Sleep Care, LLC, filed December 3, 2021
• Persante Sleep Care, Inc., filed December 3, 2021
Payoff Letter, from Northstar ......................................................................................................... 21
Side Letter, from Representative to Northstar ................................................................................. 22
UCC-3 Termination Statements...................................................................................................... 23
• Navitas Credit Corp. - #52587085, filed October 6, 2021
• Navitas Credit Corp. - #20171482386, filed October 6, 2021
• Navitas Credit Corp. - #20172180922, filed October 6, 2021
• Navitas Credit Corp. - #20180210399, filed October 8, 2021
• Abacus - #26347837, filed November 29, 2021
• Abacus - #20178206932, filed November 29, 2021
• Abacus - #20130878269X, filed November 29, 2021
• Abacus - #26347844, filed November 29, 2021
• Abacus - #26347851, filed November 29, 2021
• Abacus - #20131304410, filed November 29, 2021
• Abacus - #20131304394, filed November 29, 2021
• Abacus - #20131304451, filed November 29, 2021
D&O Tail Policy ............................................................................................................................ 24
Officer’s Certificate of Buyer, certifying to the following................................................................ 25
• Authorizing Resolutions
General Release (of the Sellers), from the Company, Persante Continuing Care, Inc., Persante Sleep
Care, Inc., and Home Sleep Diagnostics, Inc. .................................................................................. 26
Delaware Good Standing of Buyer.................................................................................................. 27
Representation & Warranty Insurance Confirmation of Coverage (including final draft Policy), by and
between Buyer and R&W Insurer ................................................................................................... 28
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EXECUTION VERSION
STOCK PURCHASE AGREEMENT
by and among
PERSANTE HEALTH CARE, INC.,
THE STOCKHOLDERS OF PERSANTE HEALTH CARE, INC. SET FORTH ON THE
SIGNATURE PAGES HERETO,
PERSANTE ACQUISITION CORP. ,
and
THE REPRESENTATIVE NAMED HEREIN
November 22, 2021
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TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF STOCK ..........................................................................1
Section 1A. Purchase and Sale of Purchased Shares; Cancellation of Options ....................1
Section 1B. Closing...............................................................................................................1
Section 1C. Closing Payments ..............................................................................................1
Section 1D. Purchase Price Adjustment................................................................................2
Section 1E. Withholding Rights............................................................................................6
ARTICLE 2 CLOSING DELIVERABLES ........................................................................................6
Section 2A. Closing Deliveries of Sellers and the Company................................................6
Section 2B. Closing Deliveries of the Buyer ........................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS REGARDING
THE SELLERS...............................................................................................................8
Section 3A. Organization and Power ....................................................................................8
Section 3B. Authorization; No Breach..................................................................................8
Section 3C. Ownership..........................................................................................................8
Section 3D. Legal Proceedings..............................................................................................8
Section 3E. Brokerage...........................................................................................................9
Section 3F. No Foreign Persons ...........................................................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY ........9
Section 4A. Organization and Corporate Power ...................................................................9
Section 4B. Company Capital Stock .....................................................................................9
Section 4C. Subsidiaries........................................................................................................9
Section 4D. Authorization; Enforceability; No Breach.......................................................10
Section 4E. Financial Statements; Undisclosed Liabilities.................................................10
Section 4F. Absence of Certain Developments ..................................................................11
Section 4G. Real Property; Personal Property ....................................................................12
Section 4H. Tax Matters......................................................................................................13
Section 4I. Company Material Contracts...........................................................................15
Section 4J. Intellectual Property ........................................................................................17
Section 4K. Legal Proceedings............................................................................................19
Section 4L. Brokerage.........................................................................................................19
Section 4M. Company Employee Benefit Plans ..................................................................19
Section 4N. Compliance with Applicable Laws..................................................................21
Section 4O. Environmental Matters ....................................................................................21
Section 4P. Employees .......................................................................................................22
Section 4Q. Permits .............................................................................................................23
Section 4R. Healthcare and Regulatory Matters .................................................................23
Section 4S. Affiliate Transactions ......................................................................................25
Section 4T. Insurance..........................................................................................................25
Section 4U. Customers and Suppliers .................................................................................25
Section 4V. Bank Accounts.................................................................................................26
Section 4W. PPP Loan .........................................................................................................26
Section 4X. Disclaimer........................................................................................................26
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................26
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Section 5A. Organization and Corporate Power .................................................................26
Section 5B. Authorization; No Breach................................................................................26
Section 5C. Legal Proceedings............................................................................................27
Section 5D. Financing .........................................................................................................27
Section 5E. Brokerage.........................................................................................................27
Section 5F. Solvency ..........................................................................................................27
Section 5G. Acquisition for Investment ..............................................................................27
Section 5H. Acknowledgment by the Buyer .......................................................................27
ARTICLE 6 DEFINITIONS .............................................................................................................28
Section 6A. Definitions .......................................................................................................28
Section 6B. Usage ...............................................................................................................28
ARTICLE 7 INDEMNIFICATION ..................................................................................................29
Section 7A. Survival............................................................................................................29
Section 7B. Indemnification by Sellers...............................................................................29
Section 7C. Indemnification by Buyer................................................................................30
Section 7D. Indemnification Limitations ............................................................................30
Section 7E. Exclusive Remedy ...........................................................................................31
Section 7F. Termination of Indemnification.......................................................................32
Section 7G. Procedures Relating to Indemnification ..........................................................32
Section 7H. Certain Additional Matters ..............................................................................33
Section 7I. Indemnity Escrow Release ..............................................................................34
Section 7J. Fraud................................................................................................................34
ARTICLE 8 ADDITIONAL AGREEMENTS .................................................................................34
Section 8A. Press Release and Announcements..................................................................34
Section 8B. Confidentiality .................................................................................................35
Section 8C. Director and Officer Liability and Indemnification ........................................35
Section 8D. Designation and Replacement of Representative ............................................35
Section 8E. Authority and Rights of Representative; Limitations on Liability ..................36
Section 8F. COBRA; Employee Matters............................................................................37
Section 8G. Expenses; Transfer Taxes................................................................................37
Section 8H. Distributions from the Escrow Accounts.........................................................37
Section 8I. Certain Access Provisions ...............................................................................37
Section 8J. Certain Tax Matters .........................................................................................37
Section 8K. Warranty Insurance Policy ..............................................................................39
Section 8L. Harren Non-Compete and Non-Solicit ............................................................40
ARTICLE 9 MISCELLANEOUS .....................................................................................................40
Section 9A. Amendment and Waiver..................................................................................40
Section 9B. Notices .............................................................................................................40
Section 9C. Assignment ......................................................................................................41
Section 9D. Severability......................................................................................................42
Section 9E. No Strict Construction .....................................................................................42
Section 9F. Captions ...........................................................................................................42
Section 9G. Complete Agreement.......................................................................................42
Section 9H. Company Disclosure Letter .............................................................................42
Section 9I. Counterparts.....................................................................................................43
Section 9J. Governing Law ................................................................................................43
Section 9K. Jurisdiction and Venue ....................................................................................43
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Section 9L. Waiver of Jury Trial ........................................................................................43
Section 9M. Payments under Agreement.............................................................................44
Section 9N. Third-Party Beneficiaries and Obligations ......................................................44
Section 9O. Specific Performance.......................................................................................44
Section 9P. Non-Recourse ..................................................................................................44
Section 9Q. Waiver of Conflicts; Attorney-Client Communications..................................45
LIST OF EXHIBITS
Exhibit A Definitions
Exhibit B Closing Payments
Exhibit C Net Working Capital
Exhibit D Pro Rata Share
Exhibit E D&O Policy
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of November
22, 2021, by and among Persante Health Care, Inc., a Delaware corporation (the “Company”), the
stockholders of the Company listed on the Sellers signature pages attached hereto (each a “Seller” and
collectively the “Sellers”), Persante Acquisition Corp., a Delaware corporation (“Buyer”), and Harren
Equity Partners, LLC, a Delaware limited liability company, solely in its capacity as representative as set
forth in this Agreement (the “Representative”). Unless otherwise defined herein, capitalized terms used
herein are defined in Exhibit A attached hereto.
WHEREAS, as of the date hereof, the Sellers collectively own 100% of the issued and
outstanding capital stock of the Company, which as of the date hereof consists of 100,030.30 shares of
common stock, $0.01 par value per share. All outstanding shares of the Company’s capital stock owned
by the Sellers are referred to collectively as the “Purchased Shares”.
WHEREAS, the parties hereto desire that, subject to the terms and conditions of this
Agreement, in exchange for the consideration set forth herein, the Buyer shall purchase from the Sellers all
of the Purchased Shares.
NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties and covenants herein contained, and intending to be legally bound, the parties hereto hereby
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
Section 1A. Purchase and Sale of Purchased Shares; Cancellation of Options.
(i) At the Closing, subject to the terms and conditions of this Agreement, the Buyer
shall purchase and accept from each Seller and each Seller shall sell, transfer and deliver to the Buyer, such
Seller’s Purchased Shares against payment of the Purchase Price by the Buyer in accordance with the terms
of this Agreement
(ii) Immediately Prior to the Closing, each option to purchase capital stock of the
Company that is outstanding immediately prior to the Closing shall be terminated and extinguished without
any present or future right to receive any portion of the Purchase Price or any other consideration, and
without any right to receive any capital stock of the Company upon the exercise thereof.
Section 1B. Closing. The closing of the Transactions (the “Closing”) shall take place
concurrently with the execution of this Agreement at the offices of Blank Rome LLP, One Logan Square,
130 North 18th Street, Philadelphia, PA 19103 (or at such other location as the parties hereto may agree or
via the electronic exchange of execution versions of the Transaction Documents and the signature pages
thereto via facsimile or via email by .pdf) on the date hereof. The date of the Closing is referred to herein
as the “Closing Date.” All of the actions to be taken and documents to be executed and delivered at the
Closing shall be deemed to be taken, executed and delivered simultaneously, and no such action, execution
or delivery shall be effective until all are complete, except as specifically provided herein.
Section 1C. Closing Payments. Subject to the terms and conditions hereof, at the Closing:
(i) The Buyer shall pay, or cause to be paid the following (in each case, as set forth
on Exhibit B):
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(A) on behalf of the Company and its Subsidiaries, to the intended
beneficiaries thereof), by wire transfer of immediately available funds, (1) amounts due and owing pursuant
to the Credit Facilities (as set forth in related payoff letters delivered to the Company and the Buyer at least
three (3) days prior to the date hereof), (2) the Company Expenses, and (3) any other liabilities included in
the computation of Estimated Closing Indebtedness which by the terms or pursuant to this Agreement are
required to be paid at or in connection with the Closing or which the Company shall otherwise direct the
Buyer to pay;
(B) by wire transfer of immediately available funds, (1) the Indemnity Escrow
Deposit Amount to the Escrow Agent for deposit into a separate escrow account (the “Indemnity Escrow
Account”) established pursuant to the terms of an escrow agreement (the “Escrow Agreement”) among the
Buyer, the Representative and the Escrow Agent, and (2) the Adjustment Escrow Deposit Amount to the
Escrow Agent for deposit into a separate escrow account (the “Adjustment Escrow Account”) established
pursuant to the terms of the Escrow Agreement. The Indemnity Escrow Funds and the Adjustment Escrow
Funds shall be maintained separately in the Indemnity Escrow Account and the Adjustment Escrow
Account, respectively (the fees and expenses of the Escrow Agent shall be paid fifty percent (50%) by the
Buyer, and fifty percent (50%) by the Sellers or the Representative on behalf of the Sellers);
(D) on behalf of the Sellers, an amount equal to Five Hundred Thousand
Dollars ($500,000) (the “Representative’s Expense Fund”) to the Representative, by wire transfer of
immediately available funds pursuant to written instructions delivered to the Buyer;
(E) the amount of the Closing Aggregate Purchased Shares Consideration to
the Sellers (as identified on Exhibit B which shall have been delivered to Buyer at least three (3) Business
Days prior to the date hereof), with each such Seller to receive the portion of the Closing Aggregate
Purchased Shares Consideration equal to the result of the Closing Per Share Purchase Price multiplied by
such Seller’s Purchased Shares, by wire transfer of immediately available funds.
(ii) At least three (3) Business Days prior to the date hereof, the Company and the
Sellers shall have prepared and delivered to the Buyer for its review, an unaudited consolidated balance
sheet of the Company and its Subsidiaries as of the Adjustment Calculation Time, and (b) a statement (the
“Pre-Closing Statement”) setting forth the Company’s calculation of Estimated Closing Net Working
Capital, Estimated Closing Cash, and Estimated Closing Indebtedness (and the Closing Purchase Price
resulting therefrom). Such balance sheet shall have been prepared on a consolidated basis for the Company
and its Subsidiaries in accordance with GAAP applied on a basis consistent with the methodologies,
practices, estimation techniques, assumptions and principles used in the preparation of the 2020 Balance
Sheet. The Pre-Closing Statement shall, with respect to the Estimated Closing Net Working Capital and
the Estimated Closing Cash, be derived from the Pre-Closing Balance Sheet, and shall, with respect to the
Closing Net Working Capital, the Closing Cash, and the Closing Indebtedness (and the Purchase Price
resulting therefrom), be prepared in accordance with the definitions in this Agreement.
Section 1D. Purchase Price Adjustment.
(i) Within sixty (60) days following the Closing Date, the Company shall, and the
Buyer shall cause the Company to, prepare and deliver to the Representative (a) an unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the Adjustment Calculation Time (the “Closing
Balance Sheet”), and (b) a statement (the “Closing Statement”) setting forth the Company’s calculation of
Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting
therefrom). The Closing Balance Sheet shall be prepared on a consolidated basis for the Company and its
Subsidiaries in accordance with GAAP applied on a basis consistent with the methodologies, practices,
estimation techniques, assumptions and principles used in the preparation of the 2020 Balance Sheet. The
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Closing Statement (including the calculations of Closing Net Working Capital, Closing Cash, and Closing
Indebtedness (and the Purchase Price resulting therefrom)) shall be prepared on a consolidated basis for the
Company and its Subsidiaries in accordance with GAAP applied on a basis consistent with the
methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the
2020 Balance Sheet and the definitions in this Agreement. During the thirty (30) days immediately
following the Representative’s receipt of the Closing Balance Sheet and the Closing Statement and any
period of dispute with respect thereto thereafter, the Buyer shall, and shall cause the Company and its
Subsidiaries to, (I) assist the Representative in the review of the Closing Balance Sheet and Closing
Statement and provide the Representative and its representatives with reasonable access during normal
business hours to the books, records (including work papers, schedules, memoranda and other documents),
supporting data, facilities and employees of the Company and its Subsidiaries for purposes of their review
of the Closing Balance Sheet and the Closing Statement, and (II) cooperate with the Representative and its
representatives in connection with such review, including providing on a reasonably timely basis all other
information necessary or useful in connection with the review of the Closing Balance Sheet and the Closing
Statement as is reasonably requested by the Representative or its representatives. The Closing Balance
Sheet, the Closing Statement and the resulting Closing Net Working Capital, Closing Cash, and Closing
Indebtedness (and the Purchase Price resulting therefrom) shall become final and binding thirty (30) days
following the Representative’s receipt thereof unless the Representative gives written notice of its
disagreement (a “Notice of Disagreement”) to Buyer prior to such date; provided that the Closing Balance
Sheet, the Closing Statement and the resulting Closing Net Working Capital, Closing Cash, and Closing
Indebtedness (and the Purchase Price resulting therefrom) shall become final and binding upon the
Representative’s delivery, prior to the expiration of the thirty (30)-day period, of written notice to Buyer of
its acceptance of the Closing Balance Sheet and the Closing Statement. Any Notice of Disagreement shall
specify in reasonable detail the nature and amount of any disagreement so asserted.
(ii) If a timely Notice of Disagreement is delivered by the Representative, then the
Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1D(ii)), and
the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price
resulting therefrom), shall become final and binding on the earlier of (a) the date any and all matters
specified in the Notice of Disagreement are finally resolved in writing by the Representative and Buyer and
(b) the date any and all matters specified in the Notice of Disagreement not resolved by the Representative
and Buyer are finally resolved in writing by the Arbiter. The Closing Balance Sheet and the Closing
Statement shall be revised to the extent necessary to reflect any resolution by the Representative and Buyer
and any final resolution made by the Arbiter in accordance with this Section 1D(ii). During the thirty (30)
days immediately following the delivery of a Notice of Disagreement or such longer period as the
Representative and Buyer may agree in writing, the Representative and Buyer shall seek in good faith to
resolve in writing any differences which they may have with respect to any matter specified in the Notice
of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the
Representative) be governed by Rule 408 of the Federal Rules of Evidence and any applicable similar state
rule. At the end of such thirty (30)-day period, the Representative and Buyer shall submit to Baker Tilly
US, LLP (the “Arbiter”) for review and resolution of any and all matters (but only such matters) which
remain in dispute and which were included in the Notice of Disagreement. If Baker Tilly US, LLP is not
willing or able to serve as the Arbiter, then the Representative and Buyer shall attempt to mutually agree
on who shall serve as the Arbiter, and if the Representative and Buyer cannot agree upon the Arbiter within
ten (10) Business Days after Baker Tilly US, LLP has given notice that it will not serve as Arbiter, then the
Representative and Buyer shall each select, within five (5) days after the end of such ten (10)-Business Day
period, a nationally recognized firm (other than a so-called “Big Four” accounting firm) with expertise in
resolving disputes of this nature and the firm selected by the Representative and the firm selected by Buyer
shall mutually and promptly (and in any event within five (5) days) select a third nationally recognized firm
(other than a so-called “Big Four” accounting firm) with expertise in resolving disputes of this nature to
serve as the Arbiter. Buyer and the Representative shall instruct the Arbiter to, and the Arbiter shall, make
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a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the
extent such amounts are in dispute) in accordance with the guidelines and procedures set forth in this
Agreement. Buyer and the Representative will cooperate with the Arbiter during the term of its
engagement. Buyer and the Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign
a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one
hand, or the Representative, on the other hand, or less than the smallest value for such item assigned by
Buyer, on the one hand, or the Representative, on the other hand. Buyer and the Representative shall also
instruct the Arbiter to, and the Arbiter shall, make its determination based solely on presentations by Buyer
and the Representative that are in accordance with the guidelines and procedures set forth in this Agreement
(i.e., not on the basis of an independent review). The Closing Balance Sheet, the Closing Statement and
the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price
resulting therefrom) shall become final and binding on the date the Arbiter delivers its final resolution in
writing to Buyer and the Representative (which final resolution shall be requested by Buyer and the
Representative to be delivered not more than forty-five (45) days following submission of such disputed
matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable.
The fees, costs and expenses of the Arbiter shall be allocated between the Buyer, on the one hand, and the
Representative (on behalf of the Sellers), on the other hand, based upon the percentage which the portion
of the contested amount not awarded to Buyer, on the one hand, and the Representative (on behalf of the
Sellers), on the other hand, bears to the amount actually contested by such Person, as determined by the
Arbiter. For example, if the Representative claims that the Purchase Price is $1,000 greater than the amount
determined by Buyer, and Buyer contests only $500 of the amount claimed by the Representative, and if
the Arbiter ultimately resolves the dispute by awarding the Representative (on behalf of the Sellers) $300
of the $500 contested, then the costs and expenses of the Arbiter will be allocated sixty percent (60%) (i.e.,
300 ÷ 500) to the Buyer and forty percent (40%) (i.e., 200 ÷ 500) to the Representative (on behalf of the
Sellers).
(iii) For purposes of determining the adjustment to the Purchase Price resulting from
the final determination of the amount of the Closing Net Working Capital:
(x) If: (a) the Estimated Closing Net Working Capital exceeds the Closing Net
Working Capital and both the Estimated Closing Net Working Capital and the Closing Net Working Capital
exceed the maximum amount of the Target Net Working Capital Collar, the amount by which the Estimated
Closing Net Working Capital exceeds the Closing Net Working Capital is referred to as the “Working
Capital Deficit”; (b) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital
and both the Estimated Closing Net Working Capital and the Closing Net Working Capital are less than the
minimum amount of the Target Net Working Capital Collar, the amount by which the Estimated Closing
Net Working Capital exceeds the Closing Net Working Capital is referred to as the Working Capital Deficit;
(c) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated
Closing Net Working Capital is within the Target Net Working Capital Collar but the Closing Net Working
Capital is less than the minimum amount of the Target Net Working Capital Collar, the amount by which
the minimum amount of the Target Net Working Capital Collar exceeds the Closing Net Working Capital
is referred to as the Working Capital Deficit; (d) the Estimated Closing Net Working Capital exceeds the
Closing Net Working Capital and the Estimated Closing Net Working Capital exceeds the maximum
amount of the Target Net Working Capital Collar but the Closing Net Working Capital is within the Target
Net Working Capital Collar, the amount by which the Estimated Closing Net Working Capital exceeds the
maximum amount of the Target Net Working Capital Collar is referred to as the Working Capital Deficit;
(e) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated
Closing Net Working Capital exceeds the maximum amount of the Target Net Working Capital Collar but
the Closing Net Working Capital is less than the minimum amount of the Target Net Working Capital
Collar, the amount by which the Estimated Closing Net Working Capital exceeds the maximum amount of
the Target Net Working Capital Collar plus the amount by which the Closing Net Working Capital is less
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than the minimum amount of the Target Net Working Capital Collar is referred to as the Working Capital
Deficit; and (f) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and
the Estimated Closing Net Working Capital and the Closing Net Working Capital are within the Target Net
Working Capital Collar, the Working Capital Deficit is $0.00.
(y) If: (a) the Closing Net Working Capital exceeds the Estimated Closing
Net Working Capital and both the Closing Net Working Capital and the Estimated Closing Net Working
Capital exceed the maximum amount of the Target Net Working Capital Collar, the amount by which the
Closing Net Working Capital exceeds the Estimated Closing Net Working Capital is referred to as the
“Working Capital Surplus”; (b) the Closing Net Working Capital exceeds the Estimated Closing Net
Working Capital and both the Closing Net Working Capital and the Estimated Closing Net Working Capital
are less than the minimum amount of the Target Net Working Capital Collar, the amount by which the
Closing Net Working Capital exceeds the Estimated Closing Net Working Capital is referred to as the
Working Capital Surplus; (c) the Closing Net Working Capital exceeds the Estimated Closing Net Working
Capital and the Closing Net Working Capital is within the Target Net Working Capital Collar but the
Estimated Closing Net Working Capital is less than the minimum amount of the Target Net Working
Capital Collar, the amount by which the minimum amount of the Target Net Working Capital Collar
exceeds the Estimated Closing Net Working Capital is referred to as the Working Capital Surplus; (d) the
Closing Net Working Capital exceeds the
Preview
FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 STOCK PURCHASE AGREEMENT by and among PERSANTE HEALTH CARE, INC., THE STOCKHOLDERS OF PERSANTE HEALTH CARE, INC., PERSANTE ACQUISITION CORP., and THE REPRESENTATIVE NAMED THEREIN Date of Signing and Closing: November 22, 2021 Party Abbreviation Persante Acquisition Corp., a Delaware corporation Buyer Persante Health Care, Inc., a Delaware corporation Company Harren Equity Partners, LLC, a Delaware limited liability company Representative Collectively, Harren Investors II, LP (“Harren II”), Harren Investors II-B, LP Sellers (“Harren II-B”), Harren II Coinvest, LLC (“Harren II Coinvest”), Northstar Mezzanine Partners V LP (“Northstar”), Abacus Finance Group, LLC (“Abacus”), and Robert L. Lynch (“R. Lynch”). Collectively, Persante Continuing Care, Inc., a New Jersey corporation, Persante Sleep Subsidiaries Care, Inc., a Delaware corporation, and Home Sleep Diagnostics, Inc., a Delaware corporation. KeyBank National Association Escrow Agent Brit Syndicates Limited R&W Insurer FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 INDEX 1 TAB I. Key Transaction Documents Stock Purchase Agreement (the “Purchase Agreement”), by and among the Company, Sellers, Buyer, and Representative ........................................................................................................................... 1 Exhibits to the Purchase Agreement .................................................................................................. 2 • Exhibit A - Definitions • Exhibit B – Closing Payments • Exhibit C – Net Working capital • Exhibit D – Pro Rata Share • Exhibit E – D&O Policy Company Disclosure Letter to the Purchase Agreement...................................................................... 3 Escrow Agreement, by and among Buyer, Representative, and Escrow Agent..................................... 4 Flow of Funds.................................................................................................................................. 5 II. Pre-Closing Documents Affidavits of Lost Stock Certificates, by each of the following persons .............................................. 6 • Northstar, dated October 25, 2021 • R. Lynch, dated October 15, 2021 Option Termination Agreements, by and between the Company and each of the following persons..... 7 • C. Nepa • M. Ingelido Unaudited Consolidated Balance Sheet and Pre-Closing Statement of the Company ........................... 8 III. Ancillary Transaction Documents Stock Powers, to Buyer from each of the following Sellers................................................................ 9 • Harren II • Harren II-B • Harren II Coinvest • Northstar • Abacus • R. Lynch 1 All documents are dated November 22, 2021 unless stated otherwise. 1 FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 General Releases (of the Company and its Subsidiaries), from each of the following Sellers............. 10 • Harren II • Harren II-B • Harren II Coinvest • Northstar • Abacus • R. Lynch Officer’s Certificate of the Company, certifying to the following..................................................... 11 • Authorizing Resolutions Resignation Letters, from each of the following persons.................................................................. 12 • C. Nepa • M. Ingelido • T. Carver Third Party Consents, dated November 8, 2021, from each of the following companies.................... 13 • Centurian Plaza, LLC • Philips Medical Capital LLC Good Standing Certificates, for each of the following companies..................................................... 14 • Company – Delaware • Persante Continuing Care, Inc. – New Jersey • Persante Sleep Care, Inc. – Delaware • Persante Sleep Care, Inc. – New Jersey • Home Sleep Diagnostics, Inc. - Delaware • Home Sleep Diagnostics, Inc. – New Jersey Section 897 Statement, by the Company ......................................................................................... 15 Termination Agreement (Stockholders Agreement), by and among the Company and Sellers ........... 16 Payoff Letter, by and among Abacus, the Company, Persante Continuing Care, Inc., Persante Sleep Care, Inc., and Home Sleep Diagnostics, Inc............................................................................................ 17 DACA Termination, from Abacus .................................................................................................. 18 Landlord Waiver Terminations, from Abacus with respect to the following locations ....................... 19 • 130 Gaither Road, Suite 124 • 130 Gaither Road, Suite 136 • 1680 Route 23 2 FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 Termination and Release of Security Interest in Trademarks, from Abacus with respect to the following companies...................................................................................................................................... 20 • The Company, filed December 3, 2021 • Persante Sleep Care, LLC, filed December 3, 2021 • Persante Sleep Care, Inc., filed December 3, 2021 Payoff Letter, from Northstar ......................................................................................................... 21 Side Letter, from Representative to Northstar ................................................................................. 22 UCC-3 Termination Statements...................................................................................................... 23 • Navitas Credit Corp. - #52587085, filed October 6, 2021 • Navitas Credit Corp. - #20171482386, filed October 6, 2021 • Navitas Credit Corp. - #20172180922, filed October 6, 2021 • Navitas Credit Corp. - #20180210399, filed October 8, 2021 • Abacus - #26347837, filed November 29, 2021 • Abacus - #20178206932, filed November 29, 2021 • Abacus - #20130878269X, filed November 29, 2021 • Abacus - #26347844, filed November 29, 2021 • Abacus - #26347851, filed November 29, 2021 • Abacus - #20131304410, filed November 29, 2021 • Abacus - #20131304394, filed November 29, 2021 • Abacus - #20131304451, filed November 29, 2021 D&O Tail Policy ............................................................................................................................ 24 Officer’s Certificate of Buyer, certifying to the following................................................................ 25 • Authorizing Resolutions General Release (of the Sellers), from the Company, Persante Continuing Care, Inc., Persante Sleep Care, Inc., and Home Sleep Diagnostics, Inc. .................................................................................. 26 Delaware Good Standing of Buyer.................................................................................................. 27 Representation & Warranty Insurance Confirmation of Coverage (including final draft Policy), by and between Buyer and R&W Insurer ................................................................................................... 28 3 FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 EXECUTION VERSION STOCK PURCHASE AGREEMENT by and among PERSANTE HEALTH CARE, INC., THE STOCKHOLDERS OF PERSANTE HEALTH CARE, INC. SET FORTH ON THE SIGNATURE PAGES HERETO, PERSANTE ACQUISITION CORP. , and THE REPRESENTATIVE NAMED HEREIN November 22, 2021 FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 TABLE OF CONTENTS Page ARTICLE 1 PURCHASE AND SALE OF STOCK ..........................................................................1 Section 1A. Purchase and Sale of Purchased Shares; Cancellation of Options ....................1 Section 1B. Closing...............................................................................................................1 Section 1C. Closing Payments ..............................................................................................1 Section 1D. Purchase Price Adjustment................................................................................2 Section 1E. Withholding Rights............................................................................................6 ARTICLE 2 CLOSING DELIVERABLES ........................................................................................6 Section 2A. Closing Deliveries of Sellers and the Company................................................6 Section 2B. Closing Deliveries of the Buyer ........................................................................7 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS REGARDING THE SELLERS...............................................................................................................8 Section 3A. Organization and Power ....................................................................................8 Section 3B. Authorization; No Breach..................................................................................8 Section 3C. Ownership..........................................................................................................8 Section 3D. Legal Proceedings..............................................................................................8 Section 3E. Brokerage...........................................................................................................9 Section 3F. No Foreign Persons ...........................................................................................9 ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY ........9 Section 4A. Organization and Corporate Power ...................................................................9 Section 4B. Company Capital Stock .....................................................................................9 Section 4C. Subsidiaries........................................................................................................9 Section 4D. Authorization; Enforceability; No Breach.......................................................10 Section 4E. Financial Statements; Undisclosed Liabilities.................................................10 Section 4F. Absence of Certain Developments ..................................................................11 Section 4G. Real Property; Personal Property ....................................................................12 Section 4H. Tax Matters......................................................................................................13 Section 4I. Company Material Contracts...........................................................................15 Section 4J. Intellectual Property ........................................................................................17 Section 4K. Legal Proceedings............................................................................................19 Section 4L. Brokerage.........................................................................................................19 Section 4M. Company Employee Benefit Plans ..................................................................19 Section 4N. Compliance with Applicable Laws..................................................................21 Section 4O. Environmental Matters ....................................................................................21 Section 4P. Employees .......................................................................................................22 Section 4Q. Permits .............................................................................................................23 Section 4R. Healthcare and Regulatory Matters .................................................................23 Section 4S. Affiliate Transactions ......................................................................................25 Section 4T. Insurance..........................................................................................................25 Section 4U. Customers and Suppliers .................................................................................25 Section 4V. Bank Accounts.................................................................................................26 Section 4W. PPP Loan .........................................................................................................26 Section 4X. Disclaimer........................................................................................................26 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................26 -ii- FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 Section 5A. Organization and Corporate Power .................................................................26 Section 5B. Authorization; No Breach................................................................................26 Section 5C. Legal Proceedings............................................................................................27 Section 5D. Financing .........................................................................................................27 Section 5E. Brokerage.........................................................................................................27 Section 5F. Solvency ..........................................................................................................27 Section 5G. Acquisition for Investment ..............................................................................27 Section 5H. Acknowledgment by the Buyer .......................................................................27 ARTICLE 6 DEFINITIONS .............................................................................................................28 Section 6A. Definitions .......................................................................................................28 Section 6B. Usage ...............................................................................................................28 ARTICLE 7 INDEMNIFICATION ..................................................................................................29 Section 7A. Survival............................................................................................................29 Section 7B. Indemnification by Sellers...............................................................................29 Section 7C. Indemnification by Buyer................................................................................30 Section 7D. Indemnification Limitations ............................................................................30 Section 7E. Exclusive Remedy ...........................................................................................31 Section 7F. Termination of Indemnification.......................................................................32 Section 7G. Procedures Relating to Indemnification ..........................................................32 Section 7H. Certain Additional Matters ..............................................................................33 Section 7I. Indemnity Escrow Release ..............................................................................34 Section 7J. Fraud................................................................................................................34 ARTICLE 8 ADDITIONAL AGREEMENTS .................................................................................34 Section 8A. Press Release and Announcements..................................................................34 Section 8B. Confidentiality .................................................................................................35 Section 8C. Director and Officer Liability and Indemnification ........................................35 Section 8D. Designation and Replacement of Representative ............................................35 Section 8E. Authority and Rights of Representative; Limitations on Liability ..................36 Section 8F. COBRA; Employee Matters............................................................................37 Section 8G. Expenses; Transfer Taxes................................................................................37 Section 8H. Distributions from the Escrow Accounts.........................................................37 Section 8I. Certain Access Provisions ...............................................................................37 Section 8J. Certain Tax Matters .........................................................................................37 Section 8K. Warranty Insurance Policy ..............................................................................39 Section 8L. Harren Non-Compete and Non-Solicit ............................................................40 ARTICLE 9 MISCELLANEOUS .....................................................................................................40 Section 9A. Amendment and Waiver..................................................................................40 Section 9B. Notices .............................................................................................................40 Section 9C. Assignment ......................................................................................................41 Section 9D. Severability......................................................................................................42 Section 9E. No Strict Construction .....................................................................................42 Section 9F. Captions ...........................................................................................................42 Section 9G. Complete Agreement.......................................................................................42 Section 9H. Company Disclosure Letter .............................................................................42 Section 9I. Counterparts.....................................................................................................43 Section 9J. Governing Law ................................................................................................43 Section 9K. Jurisdiction and Venue ....................................................................................43 iii FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 Section 9L. Waiver of Jury Trial ........................................................................................43 Section 9M. Payments under Agreement.............................................................................44 Section 9N. Third-Party Beneficiaries and Obligations ......................................................44 Section 9O. Specific Performance.......................................................................................44 Section 9P. Non-Recourse ..................................................................................................44 Section 9Q. Waiver of Conflicts; Attorney-Client Communications..................................45 LIST OF EXHIBITS Exhibit A Definitions Exhibit B Closing Payments Exhibit C Net Working Capital Exhibit D Pro Rata Share Exhibit E D&O Policy iv FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of November 22, 2021, by and among Persante Health Care, Inc., a Delaware corporation (the “Company”), the stockholders of the Company listed on the Sellers signature pages attached hereto (each a “Seller” and collectively the “Sellers”), Persante Acquisition Corp., a Delaware corporation (“Buyer”), and Harren Equity Partners, LLC, a Delaware limited liability company, solely in its capacity as representative as set forth in this Agreement (the “Representative”). Unless otherwise defined herein, capitalized terms used herein are defined in Exhibit A attached hereto. WHEREAS, as of the date hereof, the Sellers collectively own 100% of the issued and outstanding capital stock of the Company, which as of the date hereof consists of 100,030.30 shares of common stock, $0.01 par value per share. All outstanding shares of the Company’s capital stock owned by the Sellers are referred to collectively as the “Purchased Shares”. WHEREAS, the parties hereto desire that, subject to the terms and conditions of this Agreement, in exchange for the consideration set forth herein, the Buyer shall purchase from the Sellers all of the Purchased Shares. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties and covenants herein contained, and intending to be legally bound, the parties hereto hereby agree as follows: ARTICLE 1 PURCHASE AND SALE OF STOCK Section 1A. Purchase and Sale of Purchased Shares; Cancellation of Options. (i) At the Closing, subject to the terms and conditions of this Agreement, the Buyer shall purchase and accept from each Seller and each Seller shall sell, transfer and deliver to the Buyer, such Seller’s Purchased Shares against payment of the Purchase Price by the Buyer in accordance with the terms of this Agreement (ii) Immediately Prior to the Closing, each option to purchase capital stock of the Company that is outstanding immediately prior to the Closing shall be terminated and extinguished without any present or future right to receive any portion of the Purchase Price or any other consideration, and without any right to receive any capital stock of the Company upon the exercise thereof. Section 1B. Closing. The closing of the Transactions (the “Closing”) shall take place concurrently with the execution of this Agreement at the offices of Blank Rome LLP, One Logan Square, 130 North 18th Street, Philadelphia, PA 19103 (or at such other location as the parties hereto may agree or via the electronic exchange of execution versions of the Transaction Documents and the signature pages thereto via facsimile or via email by .pdf) on the date hereof. The date of the Closing is referred to herein as the “Closing Date.” All of the actions to be taken and documents to be executed and delivered at the Closing shall be deemed to be taken, executed and delivered simultaneously, and no such action, execution or delivery shall be effective until all are complete, except as specifically provided herein. Section 1C. Closing Payments. Subject to the terms and conditions hereof, at the Closing: (i) The Buyer shall pay, or cause to be paid the following (in each case, as set forth on Exhibit B): -1- FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 (A) on behalf of the Company and its Subsidiaries, to the intended beneficiaries thereof), by wire transfer of immediately available funds, (1) amounts due and owing pursuant to the Credit Facilities (as set forth in related payoff letters delivered to the Company and the Buyer at least three (3) days prior to the date hereof), (2) the Company Expenses, and (3) any other liabilities included in the computation of Estimated Closing Indebtedness which by the terms or pursuant to this Agreement are required to be paid at or in connection with the Closing or which the Company shall otherwise direct the Buyer to pay; (B) by wire transfer of immediately available funds, (1) the Indemnity Escrow Deposit Amount to the Escrow Agent for deposit into a separate escrow account (the “Indemnity Escrow Account”) established pursuant to the terms of an escrow agreement (the “Escrow Agreement”) among the Buyer, the Representative and the Escrow Agent, and (2) the Adjustment Escrow Deposit Amount to the Escrow Agent for deposit into a separate escrow account (the “Adjustment Escrow Account”) established pursuant to the terms of the Escrow Agreement. The Indemnity Escrow Funds and the Adjustment Escrow Funds shall be maintained separately in the Indemnity Escrow Account and the Adjustment Escrow Account, respectively (the fees and expenses of the Escrow Agent shall be paid fifty percent (50%) by the Buyer, and fifty percent (50%) by the Sellers or the Representative on behalf of the Sellers); (D) on behalf of the Sellers, an amount equal to Five Hundred Thousand Dollars ($500,000) (the “Representative’s Expense Fund”) to the Representative, by wire transfer of immediately available funds pursuant to written instructions delivered to the Buyer; (E) the amount of the Closing Aggregate Purchased Shares Consideration to the Sellers (as identified on Exhibit B which shall have been delivered to Buyer at least three (3) Business Days prior to the date hereof), with each such Seller to receive the portion of the Closing Aggregate Purchased Shares Consideration equal to the result of the Closing Per Share Purchase Price multiplied by such Seller’s Purchased Shares, by wire transfer of immediately available funds. (ii) At least three (3) Business Days prior to the date hereof, the Company and the Sellers shall have prepared and delivered to the Buyer for its review, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the Adjustment Calculation Time, and (b) a statement (the “Pre-Closing Statement”) setting forth the Company’s calculation of Estimated Closing Net Working Capital, Estimated Closing Cash, and Estimated Closing Indebtedness (and the Closing Purchase Price resulting therefrom). Such balance sheet shall have been prepared on a consolidated basis for the Company and its Subsidiaries in accordance with GAAP applied on a basis consistent with the methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the 2020 Balance Sheet. The Pre-Closing Statement shall, with respect to the Estimated Closing Net Working Capital and the Estimated Closing Cash, be derived from the Pre-Closing Balance Sheet, and shall, with respect to the Closing Net Working Capital, the Closing Cash, and the Closing Indebtedness (and the Purchase Price resulting therefrom), be prepared in accordance with the definitions in this Agreement. Section 1D. Purchase Price Adjustment. (i) Within sixty (60) days following the Closing Date, the Company shall, and the Buyer shall cause the Company to, prepare and deliver to the Representative (a) an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (b) a statement (the “Closing Statement”) setting forth the Company’s calculation of Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom). The Closing Balance Sheet shall be prepared on a consolidated basis for the Company and its Subsidiaries in accordance with GAAP applied on a basis consistent with the methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the 2020 Balance Sheet. The -2- FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 Closing Statement (including the calculations of Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom)) shall be prepared on a consolidated basis for the Company and its Subsidiaries in accordance with GAAP applied on a basis consistent with the methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the 2020 Balance Sheet and the definitions in this Agreement. During the thirty (30) days immediately following the Representative’s receipt of the Closing Balance Sheet and the Closing Statement and any period of dispute with respect thereto thereafter, the Buyer shall, and shall cause the Company and its Subsidiaries to, (I) assist the Representative in the review of the Closing Balance Sheet and Closing Statement and provide the Representative and its representatives with reasonable access during normal business hours to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of the Company and its Subsidiaries for purposes of their review of the Closing Balance Sheet and the Closing Statement, and (II) cooperate with the Representative and its representatives in connection with such review, including providing on a reasonably timely basis all other information necessary or useful in connection with the review of the Closing Balance Sheet and the Closing Statement as is reasonably requested by the Representative or its representatives. The Closing Balance Sheet, the Closing Statement and the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom) shall become final and binding thirty (30) days following the Representative’s receipt thereof unless the Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date; provided that the Closing Balance Sheet, the Closing Statement and the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom) shall become final and binding upon the Representative’s delivery, prior to the expiration of the thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet and the Closing Statement. Any Notice of Disagreement shall specify in reasonable detail the nature and amount of any disagreement so asserted. (ii) If a timely Notice of Disagreement is delivered by the Representative, then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1D(ii)), and the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom), shall become final and binding on the earlier of (a) the date any and all matters specified in the Notice of Disagreement are finally resolved in writing by the Representative and Buyer and (b) the date any and all matters specified in the Notice of Disagreement not resolved by the Representative and Buyer are finally resolved in writing by the Arbiter. The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Representative and Buyer and any final resolution made by the Arbiter in accordance with this Section 1D(ii). During the thirty (30) days immediately following the delivery of a Notice of Disagreement or such longer period as the Representative and Buyer may agree in writing, the Representative and Buyer shall seek in good faith to resolve in writing any differences which they may have with respect to any matter specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Representative) be governed by Rule 408 of the Federal Rules of Evidence and any applicable similar state rule. At the end of such thirty (30)-day period, the Representative and Buyer shall submit to Baker Tilly US, LLP (the “Arbiter”) for review and resolution of any and all matters (but only such matters) which remain in dispute and which were included in the Notice of Disagreement. If Baker Tilly US, LLP is not willing or able to serve as the Arbiter, then the Representative and Buyer shall attempt to mutually agree on who shall serve as the Arbiter, and if the Representative and Buyer cannot agree upon the Arbiter within ten (10) Business Days after Baker Tilly US, LLP has given notice that it will not serve as Arbiter, then the Representative and Buyer shall each select, within five (5) days after the end of such ten (10)-Business Day period, a nationally recognized firm (other than a so-called “Big Four” accounting firm) with expertise in resolving disputes of this nature and the firm selected by the Representative and the firm selected by Buyer shall mutually and promptly (and in any event within five (5) days) select a third nationally recognized firm (other than a so-called “Big Four” accounting firm) with expertise in resolving disputes of this nature to serve as the Arbiter. Buyer and the Representative shall instruct the Arbiter to, and the Arbiter shall, make -3- FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Representative, on the other hand. Buyer and the Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on presentations by Buyer and the Representative that are in accordance with the guidelines and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The Closing Balance Sheet, the Closing Statement and the resulting Closing Net Working Capital, Closing Cash, and Closing Indebtedness (and the Purchase Price resulting therefrom) shall become final and binding on the date the Arbiter delivers its final resolution in writing to Buyer and the Representative (which final resolution shall be requested by Buyer and the Representative to be delivered not more than forty-five (45) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable. The fees, costs and expenses of the Arbiter shall be allocated between the Buyer, on the one hand, and the Representative (on behalf of the Sellers), on the other hand, based upon the percentage which the portion of the contested amount not awarded to Buyer, on the one hand, and the Representative (on behalf of the Sellers), on the other hand, bears to the amount actually contested by such Person, as determined by the Arbiter. For example, if the Representative claims that the Purchase Price is $1,000 greater than the amount determined by Buyer, and Buyer contests only $500 of the amount claimed by the Representative, and if the Arbiter ultimately resolves the dispute by awarding the Representative (on behalf of the Sellers) $300 of the $500 contested, then the costs and expenses of the Arbiter will be allocated sixty percent (60%) (i.e., 300 ÷ 500) to the Buyer and forty percent (40%) (i.e., 200 ÷ 500) to the Representative (on behalf of the Sellers). (iii) For purposes of determining the adjustment to the Purchase Price resulting from the final determination of the amount of the Closing Net Working Capital: (x) If: (a) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and both the Estimated Closing Net Working Capital and the Closing Net Working Capital exceed the maximum amount of the Target Net Working Capital Collar, the amount by which the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital is referred to as the “Working Capital Deficit”; (b) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and both the Estimated Closing Net Working Capital and the Closing Net Working Capital are less than the minimum amount of the Target Net Working Capital Collar, the amount by which the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital is referred to as the Working Capital Deficit; (c) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated Closing Net Working Capital is within the Target Net Working Capital Collar but the Closing Net Working Capital is less than the minimum amount of the Target Net Working Capital Collar, the amount by which the minimum amount of the Target Net Working Capital Collar exceeds the Closing Net Working Capital is referred to as the Working Capital Deficit; (d) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated Closing Net Working Capital exceeds the maximum amount of the Target Net Working Capital Collar but the Closing Net Working Capital is within the Target Net Working Capital Collar, the amount by which the Estimated Closing Net Working Capital exceeds the maximum amount of the Target Net Working Capital Collar is referred to as the Working Capital Deficit; (e) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated Closing Net Working Capital exceeds the maximum amount of the Target Net Working Capital Collar but the Closing Net Working Capital is less than the minimum amount of the Target Net Working Capital Collar, the amount by which the Estimated Closing Net Working Capital exceeds the maximum amount of the Target Net Working Capital Collar plus the amount by which the Closing Net Working Capital is less -4- FILED: NEW YORK COUNTY CLERK 03/23/2023 05:28 PM INDEX NO. 651507/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2023 than the minimum amount of the Target Net Working Capital Collar is referred to as the Working Capital Deficit; and (f) the Estimated Closing Net Working Capital exceeds the Closing Net Working Capital and the Estimated Closing Net Working Capital and the Closing Net Working Capital are within the Target Net Working Capital Collar, the Working Capital Deficit is $0.00. (y) If: (a) the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital and both the Closing Net Working Capital and the Estimated Closing Net Working Capital exceed the maximum amount of the Target Net Working Capital Collar, the amount by which the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital is referred to as the “Working Capital Surplus”; (b) the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital and both the Closing Net Working Capital and the Estimated Closing Net Working Capital are less than the minimum amount of the Target Net Working Capital Collar, the amount by which the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital is referred to as the Working Capital Surplus; (c) the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital and the Closing Net Working Capital is within the Target Net Working Capital Collar but the Estimated Closing Net Working Capital is less than the minimum amount of the Target Net Working Capital Collar, the amount by which the minimum amount of the Target Net Working Capital Collar exceeds the Estimated Closing Net Working Capital is referred to as the Working Capital Surplus; (d) the Closing Net Working Capital exceeds the