Item 1.01 Entry into a Business Combination Agreement.
Business Combination Agreement
The Business Combination Agreement
The Business Combination Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur:
(i) at the closing of the transactions contemplated by the Business Combination Agreement (the "Closing"), upon the terms and subject to the conditions of the Business Combination Agreement, in accordance with applicable provisions of the Delaware General Corporation Law ("DGCL") and the Delaware Limited Liability Corporation Act ("DLLCA"), Merger Sub I will merge with and into Spectral MD, with Spectral MD surviving as a wholly owned subsidiary of the Company (the "First Merger"), and immediately following the First Merger, Spectral MD will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of the Company (the "Second Merger", and together with the First Merger, the "Mergers");
(ii) at the Closing, the Company will be renamed to a name substantially similar
to
(iii) as a result of the Mergers, among other things, all shares of capital stock of Spectral MD outstanding, other than with respect to Spectral MD options or restricted stock unit awards, as of immediately prior to the effective time of the Mergers, will be canceled and automatically converted into the right to receive shares of common stock of New Spectral MD ("New Spectral MD Common Stock") as set forth on the Payment Spreadsheet (as defined in the Business Combination Agreement);
(iii) as a result of the Mergers, each Spectral MD option outstanding as of immediately prior to the effective time of the Mergers will be converted into the right to receive a New Spectral MD option, subject to certain exceptions and conditions as set forth in the Business Combination Agreement; and
(iv) as a result of the Mergers, each Spectral MD restricted stock unit award outstanding as of immediately prior to the effective time of the Mergers will be converted into the right to receive a New Spectral MD restricted stock unit award, subject to certain exceptions and conditions as set forth in the Business Combination Agreement.
The board of directors of Spectral MD has unanimously (i) approved and declared advisable the Business Combination Agreement, the Mergers and the other transactions contemplated thereby and (ii) resolved to recommend to the stockholders of Spectral MD their approval of the Business Combination Agreement, the ancillary agreements and related matters.
Conditions to Closing
The Business Combination Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Mergers and related agreements and transactions by the stockholders of Spectral MD and the stockholders of the Company, (ii) effectiveness of the proxy statement/registration statement on Form S-4 to be filed by the Company in connection with the Mergers, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) the absence of any law or order enjoining or prohibiting the Mergers, (v) receipt of approval for listing on the Nasdaq Capital Market (or another mutually agreed stock exchange) of the shares of New Spectral MD Common Stock to be issued in connection with the Mergers and (vi) the bringdown of representations, warranties and covenants of the other party, subject to certain materiality qualifiers.
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In addition, the obligation of Spectral MD to consummate the Mergers is subject to the fulfillment of other closing conditions, including, but not limited to, the delivery by the Company of (i) an officer's certificate delivered pursuant to the terms of the Business Combination Agreement, (ii) duly executed letters of resignation from the directors and officers of the Company and (iii) no Parent Material Adverse Effect (as defined in the Business Combination Agreement) having occurred since the date of the Business Combination Agreement. The obligation of the Company to consummate the Mergers is subject to the fulfillment of other closing conditions, including, but not limited to, (i) the delivery by Spectral MD of an officer's certificate delivered pursuant to the terms of the Business Combination Agreement, (ii) the effective cancellation of the admission of Spectral MD common stock to the Alternative Investment Market and (iii) no Company Material Adverse Effect (as defined in the Business Combination Agreement) having occurred since the date of the Business Combination Agreement.
Covenants
The Business Combination Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties not to initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Spectral MD to prepare and deliver to the Company certain unaudited consolidated financial statements of Spectral MD, (iv) the Company and Spectral MD to prepare and the Company to file a proxy statement/registration statement on Form S-4 and the parties to take certain other actions to obtain the requisite approval of the stockholders of the Company and Spectral MD, respectively, with respect to certain proposals regarding the Mergers and (v) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.
Representations and Warranties
The Business Combination Agreement contains customary representations and warranties by the Company, Merger Sub I, Merger Sub II and Spectral MD. The representations and warranties of the respective parties to the Business Combination Agreement generally will not survive the Closing.
Termination
The Business Combination Agreement may be terminated under certain customary and
limited circumstances prior to the Closing, including, but not limited to, (i)
by the mutual written consent of the Company and Spectral MD; (ii) by the
Company, subject to certain exceptions, if any of the representations or
warranties of Spectral MD are not true and correct or if Spectral MD fails to
perform any of its respective covenants or agreements under the Business
Combination Agreement (including an obligation to consummate the Closing), in
each case, such that certain conditions to the obligations of the Company could
not be satisfied and the breach of such representations or warranties or failure
to perform such covenants or agreements is not cured or cannot be cured within
the earlier of (a) thirty (30) days after written notice thereof, and (b)
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Certain Related Agreements
Amended and Restated Registration Rights & Lock-Up Agreement
The Business Combination Agreement contemplates that, at the Closing, New
Spectral MD,
Additionally, the Registration Rights Agreement contains certain restrictions on transfer with respect to (i) shares of New Spectral MD Common Stock and any other equity securities convertible into or exercisable or exchangeable for shares of New Spectral MD Common Stock immediately following the Closing (other than any shares purchased in the public market). Such restrictions begin at the Closing and end on the date that is 180 days after Closing.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Registration Rights Agreement filed as Exhibit 10.1 hereto and incorporated by reference herein.
Sponsor Letter Agreement
On
The Sponsor has agreed to surrender and forfeit to the Company the Private
Placement Warrants (as defined in the Sponsor Letter Agreement). In addition,
the Sponsor and the Company, two days prior to the Closing, will notify Spectral
MD if the accrued and unpaid Parent Expenses (as defined in the Sponsor Letter
Agreement) that are then outstanding are expected to exceed
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description
2.1 Business Combination Agreement, dated as ofApril 11, 2023 , by and amongRosecliff Acquisition Corp I ,Ghost Merger Sub I Inc. ,Ghost Merger Sub II LLC and Spectral MD Holdings, Ltd. 10.1 Form of Amended and Restated Registration Rights Agreement, by and amongSpectral MD, Inc. ,Rosecliff Acquisition Sponsor I LLC , Target Holders, Director Holders and Investor Stockholders 10.2 Sponsor Letter Agreement, dated as ofApril 11, 2023 , by and amongRosecliff Acquisition I Sponsor LLC , Spectral MD Holdings, Ltd. andRosecliff Acquisition Corp I 10.3 Stockholder Support Agreement, dated as ofApril 11, 2023 , by and among Spectral MD Holdings, Ltd.,Rosecliff Acquisition Corp I andKey Company Stockholders 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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