Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement
On April 5, 2023, Clearday, Inc., a Delaware corporation (the "Company"),
entered into a Merger Agreement (the "Merger Agreement"), by and among Clearday,
Viveon Health Acquisition Corp., a Delaware corporation ("Viveon" or "Viveon
Health"), VHAC2 Merger Sub, Inc., a Delaware corporation ("Merger Sub"), Viveon
Health LLC, a Delaware limited liability Company, in the capacity as the
representative from and after the Effective Time (as defined in the Merger
Agreement) for the stockholders of Viveon (other than the Company Stockholders
(as defined in the Merger Agreement)) as of immediately prior to the Effective
Time (and their successors and assigns) in accordance with the terms and
conditions of the Merger Agreement, and Clearday SR LLC, a Delaware limited
liability company, in the capacity as the representative from and after the
Effective Time for the holders of Company Preferred Stock (as defined in the
Merger Agreement) as of immediately prior to the Effective Time (and their
successors and assigns) in accordance with the terms and conditions of the
Merger Agreement. Pursuant to the terms of the Merger Agreement, a business
combination between Viveon and Clearday will be effected through the merger of
Merger Sub with and into Clearday, with Clearday surviving the merger as a
wholly owned subsidiary of Viveon and Viveon will change its name to "Clearday
Holdings, Inc." (the "Merger"). The board of directors of Clearday has (i)
approved and declared advisable the Merger Agreement, the Merger and the other
transactions contemplated thereby and (ii) resolved to recommend approval of the
Merger Agreement, the Merger and related transactions by the stockholders of
Clearday. Capitalized terms used herein but not defined shall have the meanings
ascribed thereto in the Merger Agreement, which is attached hereto as Exhibit
2.1.
Consideration
Merger Consideration
The total consideration to be paid at Closing (the "Merger Consideration") by
Viveon to Clearday security holders (and holders who have the right to acquire
Clearday capital stock) will be an amount equal to $250 Million (plus the
aggregate exercise price for all Clearday options and warrants). The Merger
Consideration will be payable in shares of common stock, par value $0.0001 per
share, of Viveon ("Viveon Common Stock") valued at $10 per share.
Earnout Payments
In addition, the holders of Company Preferred Stock will have the contingent
right to earn up to 5,000,000 shares of Viveon Common Stock, in the aggregate
(the "Earnout Shares"), if at any time during the period beginning on the date
of the Closing (the "Closing Date") and ending on the fifth anniversary of the
Closing Date (the "Earnout Eligibility Period"), the Adjusted Net Income for any
Earnout Period is a positive number for the first time during the Earnout
Eligibility Period (the "Earnout Milestone").
If, following the Closing Date and prior to end of the Earnout Eligibility
Period, there is a Change of Control, then, immediately prior to such Change of
Control, all the Earnout Shares not yet earned shall be earned by the Company
Earnout Holders and shall be released from escrow and delivered to the Company
Earnout Holders, and the Company Earnout Holders shall be eligible to
participate in such Change of Control transaction with respect to such Earnout
Shares.
The Earnout Shares will be placed in escrow and will not be released from escrow
until they are earned as a result of the occurrence of the Earnout Milestone or
a Change of Control, if applicable. The Earnout Shares that are not earned on or
before the expiration of the Earnout Eligibility Period shall be automatically
forfeited and cancelled.
Treatment of Clearday Securities
Cancellation of Securities. Each share of Clearday capital stock, if any, that
is owned by Viveon, Merger Sub, Clearday, or any of their subsidiaries (as
treasury stock or otherwise) immediately prior to the effective time of the
Merger (the "Effective Time"), will automatically be cancelled and retired
without any conversion or consideration.
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Preferred Stock. At the Effective Time, each issued and outstanding share of
Clearday's Series F Cumulative Convertible Preferred Stock, par value $0.001 per
share ("Clearday Series F Preferred Stock") (other than any such shares of
Clearday capital stock cancelled as described above and any dissenting shares),
will be converted into the right to receive: (A) one (1) share of Parent New
Series F Preferred Stock plus (B) a number of Earnout Shares in accordance with,
and subject to the contingencies, set forth in the Merger Agreement.
Each issued and outstanding share of Clearday's Series A Convertible Preferred
Stock, par value $0.001 per share ("Clearday Series A Preferred Stock") (other
than any such shares of Clearday capital stock cancelled as described above and
any dissenting shares), will be converted into the right to receive: (A) one (1)
share of Parent New Series A Preferred Stock plus (B) a number of Earnout Shares
in accordance with, and subject to the contingencies, set forth in the Merger
Agreement.
Common Stock. At the Effective Time, each issued and outstanding share of
Clearday's common stock, par value $0.001 per share ("Clearday Common Stock")
(other than any such shares of Clearday capital stock cancelled as described
above and any dissenting shares) will be converted into the right to receive a
number of shares of Viveon Common Stock equal to the Conversion Ratio. The
"Conversion Ratio" as defined in the Merger Agreement means an amount equal to
(a)(i) the sum of $250 Million, plus the aggregate exercise or conversion price
of outstanding Clearday's stock options and warrants (excluding unvested options
and options or warrants with an exercise or conversion price of $5.00 or more),
divided by (ii) the number of fully diluted Clearday capital stock (including
Company Preferred Stock, warrants, stock options, convertible notes, and any
other convertible securities) (excluding unvested options and options or
warrants with an exercise or conversion price of $5.00 or more and assuming a
conversion price of Clearday subsidiary securities as provided in the Merger
Agreement); divided by (b) $10.00.
Merger Sub Securities. Each share of common stock, par value $0.0001 per share,
of Merger Sub issued and outstanding immediately prior to the Effective Time
will be converted into and become one newly issued share of common stock of the
surviving corporation.
Stock Options. At the Effective Time, each outstanding option to purchase shares
of Clearday Common Stock will be converted into an option to purchase, subject
to substantially the same terms and conditions as were applicable under such
options prior to the Effective Time, shares of Viveon Common Stock equal to the
number of shares subject to such option prior to the Effective Time multiplied
by the Conversion Ratio, at an exercise price per share of Viveon Common Stock
equal to the exercise price per share of Clearday Common Stock subject to such
option divided by the Conversion Ratio.
Warrants. Contingent on and effective as of immediately prior to the Effective
Time, each outstanding warrant to purchase shares of Clearday Preferred Stock or
Clearday Common Stock will be treated in accordance with the terms thereof.
Convertible Notes. Contingent on and effective as of immediately prior to the
Effective Time, Clearday's convertible notes outstanding as of immediately prior
to the Effective Time, will be treated in accordance with the terms of the
relevant agreements governing such convertible notes.
Subsidiary Capital Stock. At and as of the Effective Time, the Subsidiary
Capital Stock will remain in full force and effect with the right to acquire the
Company Common Stock with such adjustments noted in the terms of such Subsidiary
Capital Stock.
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Representations and Warranties
The Merger Agreement contains customary representations and warranties of the
parties thereto with respect to, among other things, (a) corporate existence and
power, (b) authorization to enter into the Merger Agreement and related
transactions; subsidiaries, (c) governmental authorization, (d)
non-contravention, (e) capitalization, (f) corporate records, (g) consents, (h)
financial statements, (i) internal accounting controls, (j) absence of certain
changes, (k) properties; title to assets, (l) litigation, (m) material
contracts, (n) licenses and permits, (o) compliance with laws, (p) intellectual
property, (q) privacy and data security, (r) employee matters and benefits, (s)
tax matters, (t) real property, (u) environmental laws, (v) finders' fees, (w)
directors and officers, (x) anti-money laundering laws, (y) insurance, (z)
related party transactions, and (aa) certain representations related to
securities law and activity. Viveon has additional representations and
warranties, including (a) issuance of shares, (b) trust fund, (c) listing, (d)
board approval, (e) SEC documents and financial statements, (f) certain business
practices, (g) expenses, indebtedness and other liabilities and (h) brokers and
other advisors.
Covenants
The Merger Agreement includes customary covenants of the parties with respect to
operation of their respective businesses prior to consummation of the Merger and
efforts to satisfy conditions to consummation of the Merger. The Merger
Agreement also contains additional covenants of the parties, including, among
others, access to information, cooperation in the preparation of the
Registration Statement and Proxy Statement (as each such terms are defined in
the Merger Agreement) required to be filed in connection with the Merger and to
obtain all requisite approvals of each party's respective stockholders. Viveon
and Clearday have each also agreed to include in the Proxy Statement the
recommendation of its respective board that its stockholders approve all of the
proposals to be presented at its respective special meeting. In addition, each
of Viveon and Clearday have agreed to use commercially reasonable efforts to
solicit and finalize definitive documentation for a committed equity in an
aggregate amount that, together with the funds in the Trust Account after giving
effect to potential redemptions from Viveon's public stockholders, together with
financing programs available to Clearday after the Closing, will provide to
Clearday working capital to meet its short term commercial development goals.
Viveon has also agreed to prepare a proxy statement to seek the approval of its
stockholders (the "Extension Proposal") to amend its organizational documents to
extend the period of time Viveon is afforded under its organizational documents
and IPO prospectus to consummate an initial business combination for an
additional three months, from June 30,2023 to September 30, 2023 (or such
earlier date as Viveon and Clearday may agree in writing).
Each party's representations, warranties and pre-Closing covenants will not
survive Closing and no party has any post-Closing indemnification obligations.
Viveon Equity Incentive Plan
Viveon has agreed to approve and adopt an equity incentive plan (the "Incentive
Plan") to be effective as of the Closing and in a form mutually acceptable to
Viveon and Clearday, subject to approval of the Incentive Plan by the Viveon
stockholders. The Incentive Plan will provide for an initial aggregate share
reserve equal to 8% of the number of shares of Viveon Common Stock issued and
outstanding at the Closing and an "evergreen" provision that is mutually
agreeable to Viveon and Clearday will provide for an automatic increase on the
first day of each fiscal year in the number of shares available for issuance
under the Incentive Plan as mutually determined by Viveon and Clearday.
Non-Solicitation Restrictions
Each of Viveon and Clearday has agreed that from the date of the Merger
Agreement to the Effective Time or, if earlier, the valid termination of the
Merger Agreement in accordance with its terms, it will not initiate any
negotiations with any party relating to an Alternative Transaction (as such term
is defined in the Merger Agreement) or enter into any agreement relating to such
a proposal, other than as expressly excluded from the definition of an
Alternative Transaction. Each of Viveon and Clearday has also agreed to be
responsible for any acts or omissions of any of its respective representatives
that, if they were the acts or omissions of Viveon and Clearday, as applicable,
would be deemed a breach of the party's obligations with respect to these
non-solicitation restrictions.
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Conditions to Closing
The consummation of the Merger is conditioned upon, among other things, (i) the
absence of any applicable law or order restraining, prohibiting or imposing any
condition on the consummation of the Merger and related transactions, (ii) the
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) receipt of any consent,
approval or authorization required by any Authority (as defined in the Merger
Agreement), (iv) Viveon having net tangible assets of at least $5,000,001 (as
determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act), unless
Viveon's amended and restated certificate of incorporation shall have been
amended to remove such requirement prior to or concurrently with the Closing,
(v) approval by Clearday's stockholders of the Merger and related transactions,
(vi) approval by Viveon's stockholders of the Merger and related transactions,
(vii) the conditional approval for listing by NYSE American (or an alternate
exchange) of the shares of Viveon Common Stock to be issued in connection with
the transactions contemplated by the Merger Agreement and satisfaction of
initial and continued listing requirements, and (viii) the Registration
Statement becoming effective in accordance with the provisions of the Securities
Act of 1933, as amended ("Securities Act").
Solely with respect to Viveon and Merger Sub, the consummation of the Merger is
conditioned upon, among other things, (i) Clearday having duly performed or
complied with all of its obligations under the Merger Agreement in all material
respects, (ii) the representations and warranties of Clearday, other than
certain fundamental representations as defined in the Merger Agreement, being
true and correct in all respects unless failure would not have or reasonably be
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Description
2.1* Merger Agreement dated as of April 5, 2023, by and among Viveon Health
Acquisition Corp., Clearday, Inc., VHAC2 Merger Sub, Inc., Viveon Health
LLC and Clearday SR LLC
10.1 Form of Parent Stockholder Support Agreement dated as of April 5,
2023, by and among Viveon Health Acquisition Corp., Clearday, Inc. and
certain stockholders of Viveon Health Acquisition Corp.
10.2 Form of Company Support Agreement dated as of April 5, 2023, by and
among Viveon Health Acquisition Corp., Clearday, Inc. and certain
stockholders of Clearday, Inc.
10.3 Form of Lock-Up Agreement, between the Holder (defined therein) and
Viveon Health Acquisition Corp.
10.4 Form of Amended and Restated Registration Rights Agreement, by and
among Clearday, Inc. (formerly known as Viveon Health Acquisition
Corp.), certain stockholders of Viveon Health Acquisition Corp. and
certain stockholders of Clearday, Inc.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
* Certain exhibits and schedules to this Exhibit have been omitted in accordance
with Regulation S-K Item 601(b)(2). Viveon agrees to furnish supplementally a
copy of all omitted exhibits and schedules to the Securities and Exchange
Commission upon its request.
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