VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
The
Board of Directors fixed the close of business on September 24, 2019 as the record date for the determination of the common and
preferred stockholders entitled to notice of the action by written consent.
At
the record date, the Company had 800,000,000 shares of common stock authorized with a stated par value of $0.001, of which approximately
388,553,890 (not including 10 million shares held in treasury) million shares of common stock were issued and outstanding, excluding
warrants, options and shares estimated for the conversion of notes and 100 million shares of authorized preferred stock, no par
value, of which 1,000 shares of Series A Preferred Stock is issued and outstanding. The holders of shares of common stock are
entitled to one vote per share on matters to be voted upon by stockholders. The holder of the Series A Preferred Stock is
entitled to a vote equal to 51% of all matters brought before the common stockholders, and therefore, have majority voting control.
All
of the holders of the Series A Preferred Stock of the Company, as of the record date, have consented to the proposed Actions.
These stockholders have consented to the Merger, the Reverse Stock Split, the Name Change, the Incentive Plan, and the Bylaws.
This consent was sufficient, without any further action, to provide the necessary stockholder approval of the action.
BOARD
OF DIRECTORS’ RECOMMENDATION
AND
STOCKHOLDER APPROVAL
In
accordance with Delaware General Corporation Law (“DGCL”), on August 7, 2019, our Board of Directors voted to authorize
and seek approval of our stockholders of the Merger, the Reverse Stock Split, the Name Change, the Incentive Plan, the Bylaws
and the Ratification of Appointment of Directors. In the absence of a meeting, the affirmative consent of holders of a majority
of the vote represented by our outstanding shares of Series A Stock was required to approve the Merger, the Reverse Stock Split,
the Name Change, the Incentive Plan, the Bylaws and the Ratification of Appointment of Directors. Because holders of all
shares of Series A Stock signed a written consent in favor of the Merger, the Reverse Stock Split, the Name Change, the Incentive
Plan, the Bylaws and the Ratification of Appointment of Directors, adopt the Merger, amend the Certificate of Incorporation to
effect the Reverse Stock Split and Name Change, to adopt the Incentive Plan and to adopt the Amended and Restated Bylaws. The
Merger, the Reverse Stock Split, the Name Change, the Incentive Plan, the Bylaws and the Ratification of Appointment of Directors
cannot be effectuated until twenty (20) days after the mailing of this Information Statement. The Reverse Stock Split and the
Name Change Amendment will be effective upon the filing of an amendment to the Certificate of Incorporation with the Secretary
of State of the State of Delaware, which is expected to occur as soon as reasonably practicable on or after the 20th day following
the mailing of this Information Statement to stockholders.
The
information contained in this Information Statement constitutes the only notice we will be providing stockholders.
FORWARD-LOOKING
STATEMENTS
This
Information Statement, including information incorporated by reference into this Information Statement, includes forward-looking
statements regarding, among other things, iGambit’s and Clinigence’s plans, strategies and prospects, both business
and financial. Although iGambit and Clinigence believe that their plans, intentions and expectations reflected in or suggested
by these forward-looking statements are reasonable, neither iGambit nor Clinigence can assure you that either will achieve or
realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and
assumptions including, without limitation, the factors described under “Risk Factors” from time to time in iGambit’s
filings with the SEC. All statements other than statements of historical fact are statements that could be deemed forward-looking
statements. Many of the forward-looking statements contained in this presentation may be identified by the use of forward-looking
words such as “believe”, “expect”, “anticipate”, “should”, “planned”,
“will”, “may”, “intend”, “estimated”, “aim”, “on track”,
“target”, “opportunity”, “tentative”, “positioning”, “designed”, “create”,
“predict”, “project”, “seek”, “would”, “could”, “continue”,
“ongoing”, “upside”, “increases” and “potential”, among others. Important factors
that could cause actual results to differ materially from the forward-looking statements we make in this presentation are set
forth in other reports or documents that we file from time to time with the SEC.
You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Information
Statement. All forward-looking statements included herein attributable to any of iGambit, Clinigence or any person acting on either
party’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
All
forward-looking statements in this Information Statement are current only as of the date on which the statements were made. iGambit
and Clinigence do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances
after the date on which any statement is made or to reflect the occurrence of unanticipated events.
QUESTIONS
AND ANSWERS REGARDING THE ACTIONS
The
following questions and answers are intended to briefly address commonly asked questions as they pertain to the Actions. These
questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the
“Summary” beginning on page 1 and the more detailed information contained elsewhere in this Information Statement,
the annexes to this Information Statement and the documents referred to or incorporated by reference in this Information Statement,
each of which you should read carefully.
Q. What
is the proposed transaction and what effects will it have on the Company?
A.
On August 8, 2019, iGambit, Inc., a Delaware corporation (“iGambit”) entered into an Agreement and Plan of Merger
(the “Merger Agreement”) by and among Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”),
iGambit, iGambit’s wholly owned subsidiary, HealthDatix, Inc., a Delaware corporation (“Merger Sub”), and John
Salerno, an individual and holder of iGambit shares constituting a majority of the votes eligible to be cast by all of the stockholders
of iGambit (the “Signing Stockholder”).
The
proposed transaction is the Merger of the Merger Sub with Clinigence pursuant to the Merger Agreement. Once the closing conditions
under the Merger Agreement have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement,
Merger Sub, a wholly owned subsidiary of iGambit, will merge with and into Clinigence. Clinigence will be the surviving corporation
of the Merger and a wholly owned subsidiary of iGambit and the separate corporate existence of Merger Sub will cease. iGambit
shall change its name to Clinigence Holdings, Inc.
Q. What
will iGambit Stockholders retain in the Merger?
A.
Subject to the terms of the Merger Agreement, at the Effective Time of the Merger, Clinigence stockholders will receive a number
of newly issued shares of iGambit common stock determined using the exchange ratio described below in exchange for their shares
of Clinigence stock.
Following
the Merger, stockholders of Clinigence will become the majority owners of iGambit.
At
the Effective Time, all outstanding shares of Clinigence common stock will be converted solely into the right to receive a number
of shares of iGambit common stock such that the holders of outstanding equity of Clinigence immediately prior to the Effective
Time will own approximately 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Effective
Time, and holders of outstanding equity of iGambit immediately prior to the Effective Time will own approximately 15%, on a fully-diluted
basis, of the outstanding equity of iGambit immediately following the Effective Time, which ratio we refer to herein as the
“Exchange Ratio.”
Q.
When do you expect the Merger to be completed?
A: Pursuant
to the terms of the Merger Agreement and a subsequent amendment, the Merger must be consummated by the outside date of November
30, 2019 which may be further extended by the parties, and the Merger will become effective at such time as a certificate
of merger is duly filed with the Secretary of State of Delaware, unless a later date is specified therein.
Q: What
happens if the Merger is not completed?
A: If
the Merger is not completed for any reason, iGambit will remain an independent public company, its common stock will continue
to be listed and traded on OTC Pink Marketplace and registered under the Exchange Act and iGambit will continue to file periodic
reports with the SEC.
Q: Is
the Merger subject to the fulfillment of certain conditions?
A: Yes.
Before the Merger can be completed iGambit and Clinigence must fulfill or, if permissible, waive several closing conditions.
If these conditions are not satisfied or waived, the Merger will not be completed. See “The Merger Agreement —
Closing Conditions of the Merger” beginning on page 20.
Q: What
happens to Options and Warrants if the Merger is completed?
A:
At the Effective Time, each Option and Warrant, whether vested or unvested, that is outstanding immediately before the Effective
Time will remain outstanding immediately following the Effective Time.
Q: Why
is iGambit effecting the Reverse Stock Split?
A.
The Reverse Stock Split of iGambit’s issued and outstanding common stock will be effected by a ratio of not less than
one-for-one hundred and not more than one-for-five hundred, with the exact ratio to be set at a whole number within this range
as determined by iGambit’s Board of Directors in its sole discretion.
iGambit’s
Board of Directors believes that the Reverse Stock Split is in the best interest of iGambit. A Reverse Stock Split typically will
initially result in an increase in the price per share of iGambit’s common stock. The Board believes that an increased stock
price may encourage investor interest and improve the marketability and liquidity of iGambit’s common stock. In addition,
iGambit may in the future seek a listing on a national exchange, for which a higher stock price than the current price will be
required. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors
have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual
brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the
processing of trades in low-priced stocks economically unattractive to brokers and investors. iGambit’s Board of Directors
believes that the anticipated higher market price resulting from a Reverse Stock Split may reduce, to some extent, the negative
effects on the liquidity and marketability of the common stock inherent in some of the policies and practices of institutional
investors and brokerage firms described above. Additionally, because brokers’ commissions on low-priced stocks generally
represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share
of iGambit’s common stock can result in individual stockholders paying transaction costs representing a higher percentage
of their total share value than would be the case if the share price were substantially higher.
Prior
to the Effective Time, iGambit will effect the Reverse Stock Split.
Q: What
happens to Options and Warrants if the Reverse Stock Split is completed?
A:
At the Effective Time, proportionate adjustments will be made to the per share exercise price and the number of shares issuable
upon the exercise of all outstanding options and warrants entitling the holders thereof to purchase shares of the Common Stock,
which will result in approximately the same aggregate price being required to be paid for such options and warrants upon exercise
of such options warrants immediately preceding the reverse stock split.
Q: Why
is iGambit changing the name of iGambit after the effective date of the Merger to “Clinigence Holdings, Inc.”?
A:
Further to the Merger Agreement, the name of iGambit will become “Clinigence Holdings, Inc.” after the Effective Date
of the Merger. An amendment to the Company’s Certificate of Incorporation is required to effect the Name Change. The
board of directors believes that changing the name of the combined company to Clinigence Holdings, Inc. better reflects the future
direction and focus of the combined company.
Q: Did
the Board approve and recommend the Merger?
A:
Yes. In its review the Board consulted with its management, legal and financial advisors, and reviewed a significant amount of
information and considered a number of factors, including, among others, the following factors: (i) the information Clinigence
provided regarding its technology, products and services, management experience and potential competitive position; (ii) the financial,
operational, businesses and strategic objectives of Clinigence; (iii) the willingness of Clinigence to lend funds to iGambit prior
to the Merger to pay off iGambit’s short term convertible debt and to be used for working capital; (iv) the current target
markets proposed by Clinigence; (v) the consideration to be received by iGambit’s stockholders for the Merger; (vi) the
terms, conditions and obligations of the Merger Agreement; (vii) possible alternative strategies and prospects for iGambit as
an independent company and (viii) the financial condition and future prospects for iGambit.
Specifically,
the iGambit Board considered that iGambit has not been able to adequately fund its HealthDatix subsidiary and achieve sustaining
revenue. This merger with Clinigence presented the opportunity to achieve revenue through synergistic products and common target
market customers. The iGambit Board also considered that Clinigence's management has extensive experience in the health technology
and related industry.
The
iGambit Board further considered that Clinigence’s management has extensive experience in the successful growth and expansion
of healthcare related companies in the public arena, most significantly, Clinigence’s Chairman, Dr. Warren Hosseinion’s
success with Apollo Medical Holdings (NASDAQ: AMEH).
Q:
What happens if a third party makes an offer to acquire the Company before the Merger is completed?
A:
If a third party makes an unsolicited, written bona fide Acquisition Proposal to the Company prior to Closing, the Company may,
negotiate and discuss such proposal with the third party under certain circumstances specified in the Merger Agreement. If the
Board determines in good faith, after consultation with the Company’s outside legal counsel and financial advisors,
that such Acquisition Proposal constitutes, or would reasonably be expected to lead to or result in, a Superior Proposal and the
Company notifies Clinigence, and complies with certain additional requirements in the Merger Agreement, including, if requested
by Clinigence, negotiating with Clinigence during a period of ten (10) business days, so that Clinigence has the opportunity
to submit a matching or topping proposal, and Clinigence does not submit a matching or topping proposal during such ten (10) business
day period, then the Company may terminate the Merger Agreement. In which case the Company must (i) pay Clinigence $400,000, (ii)
reimburse Clinigence all out of pocket expenses incurred by Clinigence in connection with the transactions contemplated herein,
and (iii) repay the balance and accrued interest outstanding on the promissory note in favor of Clinigence, the total sum amount
of which shall be due and payable immediately upon such termination.
Q: Should
I send in my Company Common Stock certificates now?
A:
No. Please do NOT return your Company Common Stock certificate(s) to the Company. As of the effective
date of the Reverse Stock Split, each certificate representing shares of iGambit common stock before the Reverse Stock Split would
be deemed, for all corporate purposes, to evidence ownership of the reduced number of shares of iGambit’s common stock resulting
from the Reverse Stock Split.
iGambit’s
transfer agent will be available to effect the exchange of stock certificates. After the Effective Date, stockholders and holders
of securities exercisable for iGambit’s common stock will be notified of the effectiveness of the Reverse Stock Split. Persons
who hold their shares in brokerage accounts or “street name” will not be required to take any further actions to effect
the exchange of their shares. No new certificates will be issued to a stockholder until such stockholder has surrendered any outstanding
certificates to the transfer agent. Until surrendered, each certificate representing shares before the Reverse Stock Split will
continue to be valid and will represent the adjusted number of shares based on the ratio of the Reverse Stock Split. Stockholders
should not destroy any stock certificate and should not submit any certificates until after the Reverse Stock Split has become
effective.
Q: Will
I owe taxes as a result of the Reverse Stock Split?
A: No
gain or loss should be recognized by a stockholder upon his or her exchange of pre-Reverse Stock Split shares for post-Reverse
Stock Split shares. The aggregate tax basis of the post-Reverse Stock Split shares received (including any fraction of a new share
deemed to have been received) will be the same as the stockholder’s aggregate tax basis in the pre-Reverse Stock Split
shares exchanged therefor. The stockholder’s holding period for the post- Reverse Stock Split shares will include the
period during which the stockholder held the pre-Reverse Stock Split shares surrendered in the Reverse Stock Split.
Q: Why
is iGambit adopting the Incentive Plan?
A:
The purpose of the Incentive Plan is to increase our ability to attract and retain talented employees, consultants and directors
and thereby enhance our growth and profitability. Under the 2019 Stock Incentive Plan, options to purchase common stock, including
incentive stock options, restricted stock awards and other equity-based compensation, may be awarded to directors, officers, employees,
consultants or other agents. Stockholder approval of the Incentive Plan is required for purposes of compliance with certain exclusions
from the Internal Revenue Code of 1986, as amended (the “Code
Prior
to the execution of the Effective Time, iGambit will adopt the Incentive Plan.
Q: Why
is iGambit adopting the Bylaws?
A:
The Bylaws were drafted to address a number of DGCL and general corporate governance related developments since the original Bylaws
were adopted over nineteen years ago. The adoption of the Bylaws will result in greater flexibility in permitting management to
complete and carry out certain corporate actions with Board approval and without the need to seek stockholder approval, where
such approval is not required by the DGCL, the Company’s Certificate of Incorporation or other applicable state and Federal
securities laws. An advantage to the adoption of the Bylaws is that time and expense associated with seeking stockholder approval
by a public reporting company that results from the need to prepare and file a proxy statement prior to carrying out certain corporate
actions can be avoided.
Q: Why
am I not being asked to vote on the Actions?
A:
In accordance with Delaware General Corporation Law on August 7, 2019, our Board of Directors, believing it to be in the best
interests of the Company and its stockholder approved the Actions, subject to shareholder approval. On September 24, 2019 Mr.
John Salerno, the sole holder of Series A Preferred Shares and thus holder of the majority of our outstanding voting power,
believing it to be in the best interests of the Company and its stockholders, approved the Actions.
Q: Why
did I receive this Information Statement?
A:
Applicable laws and securities regulations require us to provide you with notice of the Written Consent that was delivered by
the Majority Stockholders, as well as other information regarding the Actions, even though your vote or consent is neither required
nor requested to adopt or authorize the Actions.
Q: Do
I have appraisal rights?
A: Neither
the Delaware General Corporate Law nor our Certificate of Incorporation or Bylaws provide our Stockholders with appraisal
rights in connection with the Actions discussed in this Information Statement.
Q: Who
is paying for the Information Statement?
A: The
Company will pay for the delivery of this Information Statement.
Q: What
is householding and how does it affect me?
A: The
SEC permits companies to send a single set of certain disclosure documents to stockholders who share the same address and
have the same last name, unless contrary instructions have been received, but only if the applicable company provides advance
notice and follows certain procedures. In such cases, each stockholder continues to receive a separate set of disclosure documents.
This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing
and postage costs as well as natural resources.
If
you received a householded mailing and you would like to have additional copies of this Information Statement mailed to you, or
you would like to opt out of this practice for future mailings, please submit your request to the Company by phone at (631) 670-6777
or by email to info@igambit.com or by mail to iGambit, Inc., 1050 W. Jericho Tpke. Ste.A, Smithtown, NY 117877. We will promptly
send additional copies of this Information Statement upon receipt of such request.
Q: Where
can I find more information about the Company?
A: We
file periodic reports and other information with the SEC. You may read and copy this information at the SEC’s public
reference facilities. Please call the SEC at (800) SEC-0330 for information about these facilities. This information
is also available on the website maintained by the SEC at www.sec.gov.
Q: Who
can help answer my other questions?
A: If
you have more questions about the Merger, please contact us at (631) 670-6777 or info@igambit.com. If your broker holds
your shares, you should call your broker for additional information.
ACTION
1 THE MERGER
In
accordance with Delaware General Corporation Law on August 7, 2019, our Board of Directors believing it to be in the best interests
of the Company and its stockholders, approved the Merger, and on September 24, 2019 Mr. John Salerno, the sole holder of Series
A Preferred Shares and thus holder of the majority of our outstanding voting power, believing it to be in the best interests of
the Company and its stockholders, approved the Merger. A copy of the form of the Merger Agreement is attached as Annex A to this
Information Statement.
Parties
Involved in the Merger
iGambit,
Inc.
iGambit,
through its wholly owned subsidiary HealthDatix™ Inc., a Florida corporation, (“HealthDatix FL”) is a medical
technology company that provides end to end Software-as-a-Service (“SaaS”) solutions, services and products via our
HealthDatix Platform that manages, reports, and analyzes critical data, enabling healthcare and commercial organizations to deliver
positive member outcomes.
Clinigence
Holdings, Inc.
Clinigence
is a leading healthcare information technology company providing an advanced, cloud-based platform that enables healthcare organizations
to provide value-based care and population health management. The Clinigence platform aggregates clinical and claims data across
multiple settings, information systems and sources to create a holistic view of each patient and provider and virtually unlimited
insights into patient populations.
Clinigence
is the culmination of the combination of Clinigence, LLC and QualMetrix, Inc., two pioneering healthcare information technology
companies.
Clinigence,
LLC, founded in 2010 and based in Atlanta, Georgia, is a pioneer in clinical quality reporting. Its solution integrates clinical
and claims data across multiple electronic health record (“EHR”) systems to allow its customers to improve the quality
of care of its patients, improve care coordination and to reduce cost.
QualMetrix,
Inc., founded in 2013 and based in Miramar, Florida, is a population health analytics company that provides turnkey solutions
that enable connected intelligence across the care continuum by transforming massive amounts of clinical and claims data into
actionable insights.
Clinigence’s
platform is currently in use by 14 Accountable Care Organizations (“ACOs”), 7 Managed Services Organizations (“MSOs”),
5 health plans, 35 hospitals, and over 8,000 individual providers, and hosting more than 9 million patient records.
Merger
Sub
Merger
Sub is a wholly owned subsidiary of iGambit, Inc. formed solely for the purpose of effecting a merger or acquisition. Merger Sub
was incorporated under the laws of Delaware in October 17, 2013 original under the name Securecare Corp. and renamed HealthDatix,
Inc. in 2017. Merger Sub is separate and distinct from our wholly owned subsidiary HealthDatix, Inc., a Florida corporation (“HealthDatix
FL”).
Effect
of the Merger
Under
the terms of the Merger Agreement, upon completion of the Merger, Merger Sub will merge with and into Clinigence. Clinigence will
be the surviving corporation in the Merger and will become a wholly owned subsidiary of iGambit. Subject to the terms of the Merger
Agreement, at the effective time of the Merger, Clinigence stockholders will receive a number of newly issued shares of iGambit’s
common stock determined using the Exchange Ratio described below in exchange for their shares of Clinigence stock. Following the
Merger, stockholders of Clinigence will become the majority owners of iGambit, and will own approximately 85%, on a fully-diluted
basis, of the outstanding equity of iGambit immediately following the Effective Time and holders of outstanding equity of iGambit
immediately prior to the Effective Time will own approximately 15%, on a fully-diluted basis, of the outstanding equity of iGambit
immediately following the Effective Time, which ratio we refer to herein as the “Exchange Ratio.”
Effective
Time
The
time at which the Merger will become effective, which we refer to as the “Effective Time” of the Merger, will occur
upon the filing of a certificate of merger with the Secretary of State of Delaware.
Merger
Consideration
At
the Effective Time, all outstanding shares of Clinigence common stock will be converted solely into the right to receive a number
of shares of iGambit’s common stock such that the holders of outstanding equity of Clinigence immediately prior to the Effective
Time will own approximately 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Effective
Time and holders of outstanding equity of iGambit immediately prior to the Effective Time will own approximately 15%, on a fully-diluted
basis, of the outstanding equity of iGambit immediately following the Effective Time.
Effect
on iGambit if the Merger is Not Completed
If
the Merger is not completed for any other reason, iGambit will remain an independent public company, its common stock will continue
to be listed and traded on OTC Pink Marketplace and registered under the Exchange Act and iGambit will continue to file periodic
reports with the SEC.
If
the Merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of
your shares of iGambit’s common stock. If the Merger is not completed, iGambit’s board of directors will continue
to evaluate and review iGambit’s business operations, properties, dividend policy and capitalization, among other things,
make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder value.
If the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to iGambit
will be offered or that iGambit’s business, prospects or results of operation will not be adversely impacted.
Background
of the Merger
After
the acquisition of our HealthDatix FL subsidiary, we encountered several setbacks in
customer contracts not ramping up quick enough, and difficulty with getting our BioDatix
health band technology completed in a timely manner with our Asian manufacturing partners.
Although we made substantial strides with our backend platform and wearable medical technology,
as well as built a good distribution pipeline, the Board of iGambit recognized that revenue
will still take considerable time to gain significant traction and funding on-going operations
was going to be increasingly more difficult.
The
Board of iGambit undertook a strategic review of alternatives to improve revenues and to enhance shareholder value which contemplated
a number of alternatives.
The
Board determined that one alternative was to merge with a healthcare technology company with revenue and the potential to expand
the product offerings and shareholder value.
In
connection with these activities, in May 2018, one of iGambit’s advisors introduced iGambit to their Chronic Care Management
(CCM) partner company interested in merging with a public entity. During an initial conference call with the CCM company, the
CCM’s financial consultant (the “Consultant”) participated in the call. Certain synergies were identified, and
it was determined that discussions should continue. On May 16, 2018, iGambit signed a consulting agreement with a twelve (12)
month term with Consultant to assist the Company in advising of potential merger partners and developing corporate partnering
relationships, provide introductions to professional analysts and money managers and assist the Company in financing arrangement,
among other services.
On
May 29, 2018, the Consultant, the principal of the CCM company, and a financial analyst came to iGambit’s office to meet
with iGambit’s Chief Executive Officer (“CEO”), Executive Vice President and General Counsel, and an advisor
to the Board. Preliminary discussions began regarding the structure of a potential merger with the CCM company. Between May 29,
2018 and June 14, 2018, several additional meetings and conference calls were held outlining a potential deal. On June 14, 2018,
iGambit and the CCM entered a Letter of Intent (LOI) to merge. One of the terms of the LOI, was that the CCM would secure a minimum
of $2,000,000 in equity financing for the merged companies. Upon signing of the LOI mutual due diligence commenced and the Consultant
began the financing efforts. Several funding resources were identified. Funding was delayed because the funding resources were
waiting for a certain potential customer contract to be signed. The contract was signed in September 2018, and on September 7,
2018, an Amended LOI was executed in anticipation of funding being secured. Unfortunately, the funding was further delayed, as
the contract did not guarantee sufficient enough sustaining recurring revenue in the near term, and pursuant to the contract revenue
would not start ramping up until close to 2020. Acknowledging that the CCM financing and merger was taking too long, and appeared
unlikely to close in a timely manner, iGambit began aggressively seeking out other options.
In
September 2018, iGambit began discussions with a small group of independent investors. After several meetings in Florida with
our HealthDatix subsidiary management team, this group became interested in investing in iGambit. In November 2018 they were in
the process of another financial transaction that was expected to close in the ensuing sixty (60) to ninety (90) days. In December
2018, this group informed us that they want to invest some of the proceeds of this transaction into iGambit. On December 3, 2018,
they signed a term sheet to invest a minimum $1,000,000 to a maximum of $3,000,000 into iGambit. Unfortunately, the closing of
their other financing transaction has been continually delayed.
Simultaneously,
in December 2018, one of iGambit’s stockholders, introduced iGambit to a third-party administrator (TPA) of healthcare services
who was looking to possibly merge with a public company. On December 28, 2018, a member of our HealthDatix management, along with
the stockholder, and a potential investor met with the TPA’s CEO. Discussions began regarding how the two companies could
work together and type of transaction that could take place. Between December, through April 23, 2019, several meetings, conference
calls and discussions of potential terms of a transaction occurred. Although discussions continued, the TPA was never able to
come up with a definitive offer.
On
April 26, 2019, Dr. Warren Hosseinion, Chairman of Clinigence Holdings, Inc. reached out to Elisa Luqman, Chief Financial Officer
(“CFO”) and General Counsel of iGambit, via email, asking if iGambit would be interested in a potential merger. After
looking up Dr. Hosseinion’s background, particularly his position at Apollo Medical Holdings (NASDAQ: AMEH) as well as Clinigence’s
service offerings, and informing the CEO John Salerno and Board Advisor John Waters, Ms. Luqman responded to Dr. Hosseinion that
iGambit was indeed interested.
On
April 26, 2019, Dr. Hosseinion contacted Elisa Luqman via phone to introduce himself formally and his plans regarding Clinigence.
This preliminary discussion included high-level potential synergies and future strategies. Between April 26, 2019 and May 14,
2019, Dr. Hosseinion and Elisa Luqman continued email and telephone correspondence outlining the general terms of a potential
merger.
At
that time, Clinigence Holdings, Inc. had been incorporated and combined Clinigence, LLC and QualMetrix, Inc. (“QMX”),
with Clinigence, LLC being a wholly owned subsidiary of Clinigence Holdings, Inc. By mid-May, Clinigence had raised approximately
$4,000,000 in funding for the QMX combination, and was actively seeking a merger partner in the public arena. Clinigence was attracted
to our HealthDatix subsidiary.
On
May 15, 2019, Dr. Warren Hosseinion and Mitchell Creem from Clinigence, and Elisa Luqman, John Salerno, and John Waters from iGambit,
held a conference call to discuss the synergies between the companies, Clinigence’s future plans, the general terms of a
potential merger and next steps.
Accordingly,
the iGambit Board determined to pursue continued discussions with Clinigence.
From
May 15, 2019 through May 31, 2019, iGambit and Clinigence had frequent conference calls and email exchanges discussing the possibility
of pursuing a strategic transaction whereby the two companies would merge. One of the key topics of discussion was iGambit’s
need to pay its short-term convertible debt and need of short-term working capital until a merger could be completed. It was agreed
that Clinigence would advance funds to iGambit, but first needed to perform due diligence.
Additionally,
the Exchange Ratios ranging from 60:40 to 90:10 in favor of Clinigence were discussed and evaluated. Ultimately, these negotiations
resulted in agreement of an exchange ratio which would provide the stockholders of Clinigence with 85%, on a fully-diluted basis,
of the outstanding shares of iGambit common stock following the Merger. This number also took into consideration certain factors;
including, but not limited to, (1) Clinigence paying iGambit’s short term convertible debt; (2) Clinigence assuming iGambit’s
remaining liabilities; (3) iGambit having nominal revenue; (4) Clinigence having revenue and the necessary working capital to
support the consolidated company post-merger; and (5) Clinigence’s management’s team ability to raise additional funding
post-merger.
On
June 1, 2019, Clinigence and iGambit entered into a Non-Binding Indication of Interest (IOI), pursuant to which the parties would
engage in two (2) weeks of aggressive mutual due diligence. Upon the successful completion and mutual satisfaction of due diligence,
the parties would enter in a Letter of Intent (LOI) to merge and Clinigence would advance iGambit $393,092.28, in the form of
a Promissory Note, $293,092.28 of which would be used solely to pay off iGambit’s short-term convertible debt, $100,000
to be used by iGambit as working capital.
On
June 12, 2019, Elisa Luqman from iGambit, Jerry Robinson, Mary-Jo Robinson and Kathleen Shepherd (the “HealthDatix Management
Team”) met with Clinigence’s management team, consisting of Dr. Warren Hosseinion (Chairman), Mihir Shah (CFO), Dr.
Larry Schimmel (CMO and the co-founder of QualMetrix), Chuck Kandzierski (COO/CIO) at HealthDatix’s headquarters in St.
Petersburg, FL for the review of each company’s technology and capabilities.
After
successful completion of the mutual due diligence, on June 24, 2019 iGambit, Inc. entered into a Letter of Intent (the “LOI”)
with Clinigence Holdings, Inc. pursuant to which Clinigence loaned iGambit $393,092.28. On June 25, 2019 all of iGambit’s
outstanding short-term convertible notes totaling $293,092.28 were retired and iGambit received $100,000 from Clinigence to be
used as working capital. On June 26, 2019 a Form 8-K was filed by iGambit with the Securities and Exchange Commission to announce
that the LOI had been executed.
On
June 27, 2019, Elisa Luqman, John Salerno, and John Waters held conference calls with an investment banking firm for recommendations
on determining the reverse stock split range for iGambit.
On
July 10, 2019, Elisa Luqman and the HealthDatix Management Team met with Kobi Margolin (CEO and founder of Clinigence) and the
Clinigence senior management team at Clinigence’s headquarters in Atlanta, GA, to continue the review of each company’s
technology and capabilities.
On
July 15, 2019, legal counsel to Clinigence presented a draft of the Merger Agreement to iGambit. On July 16, 2019, iGambit’s
outside counsel provided initial markup and notes on the draft and it was circulated to the Board and advisor for review.
On
July 17, 2019 Elisa Luqman, John Salerno, John Waters and Dr. Warren Hosseinion held conference calls with two additional investment
banking firms for recommendations on determining the reverse stock split range for iGambit.
On
July 25, 2019, the Board and advisor met to review and discuss the draft. On August 1, 2019, a revised marked version was sent
to iGambit’s outside legal counsel for review. On August 2, 2019, a marked-up version was submitted back to Clinigence’s
legal counsel. Simultaneously, during the Merger Agreement draft review process Clinigence’s auditors worked aggressively
to complete the Clinigence two-year audits and 2019 first quarter review, and to provide the necessary Clinigence financial pro
formas to be included in this Information Statement.
On
August 5, 2019, the parties respective legal counsel had a conference call to discuss the revisions to the draft of the Merger
Agreement. On the same day Mr. Hosseinion and Ms. Luqman also had a conference call to discuss the revisions to the draft of the
Merger Agreement. Key issues addressed included (1) the fiduciary out language and particularly the related termination fee, (2)
the sufficiency of the Reverse Stock Split range, (3) the review of the iGambit disclosure schedules, and in particular the schedule
of liabilities, and (4) the willingness of iGambit and HealthDatix management to accept stock as partial payment against deferred
compensation.
From
August 6 through August 7, 2019, respective legal counsel to the parties provided each other comments and revised versions of
the draft of the Merger Agreement. On August 7, 2019, a draft of the Merger Agreement in substantially final form was circulated
to the Board and advisor for review.
On
August 7, 2019, the Board met to discuss the acceptance of the Merger Agreement. The Board reviewed the substantially final version
of the proposed Merger Agreement including the material terms, conditions and provisions of the draft Merger Agreement and the
structure of the proposed transaction. Following the discussion, the Board approved the Merger Agreement and adopted the resolution
to approve the Merger as it was in the best interest of iGambit and its stockholders.
On
August 8, 2019 iGambit entered into the Merger Agreement with Clinigence and Merger Sub. Also, on August 8, 2019, a Form 8-K was
filed by iGambit with the Securities and Exchange Commission to announce that the Merger Agreement had been executed.
On
September 24, 2019, Mr. John Salerno, the sole holder of Series A Preferred Shares and thus holder of the majority of our outstanding
voting power, believing it to be in the best interests of the Company and its stockholders, approved the Merger.
Reasons
for the Merger; Recommendation of iGambit’s Board of Directors
In
its review the Board consulted with its management, legal and financial advisors, and reviewed a significant amount of information
and considered a number of factors, including, among others, the following factors: (i) the information Clinigence provided regarding
its technology, products and services, management experience and potential competitive position; (ii) the financial, operational,
businesses and strategic objectives of Clinigence; (iii) the willingness of Clinigence to lend funds to iGambit prior to the Merger
to pay off iGambit’s short term convertible debt and working capital; (iv) the current target markets proposed by Clinigence;
(v) the consideration to be received by iGambit’s stockholders for the Merger; (vi) the terms, conditions and obligations
of the Merger Agreement; (vii) possible alternative strategies and prospects for iGambit as an independent company and (viii)
the financial condition and future prospects for iGambit.
Specifically,
the iGambit Board considered that iGambit has not been able to adequately fund its HealthDatix subsidiary and achieve sustaining
revenue, and this merger with Clinigence presented that opportunity through synergistic products and the same target market customers.
The iGambit Board also considered that Clinigence's management has extensive experience in the health technology and related industry.
Clinigence’s
founders have established relationships with leading healthcare companies, including, but not limited to Accountable Care Organizations
(ACOs), Managed Services Organizations (MSOs), health plans, health systems, and physician practices. They have commercialized
products in the space which the iGambit Board thought could be leveraged from a partnering perspective.
The
iGambit Board further considered that Clinigence’s management has extensive experience in the successful growth and expansion
of healthcare related companies in the public arena, most significantly, Clinigence’s Chairman, Dr. Warren Hosseinion’s
success with Apollo Medical Holdings (NASDAQ: AMEH).
In
addition, the Board considered the following challenges faced by iGambit as an independent company:
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iGambit
has not been successful in generating significant revenues from its current subsidiary
operations both in its attempt to license its Annual Wellness Visit/Health Risk Assessment
subscription service and launch its medical wearable, for which it accumulated significant
debt;
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the
lack of revenues and debt has impacted iGambit and caused iGambit to seek additional
financing options which resulted in further dilution of iGambit stock and greatly impacted
its ability to continue operations;
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the
lack of funds necessary for further iGambit research and development in its medical wearable
has impacted iGambit;
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iGambit
also has difficulties in raising capital in the public markets due to its financial position;
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alternative
acquisition and merger opportunities pursued during the past twelve (12) to eighteen
(18) months have not come to fruition or been financially viable; and
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the
Company has nominal cash and the only opportunity to raise additional cash is through
unattractive convertible notes that convert at a significant discount to the stock price
and cause further dilution of the stockholders and induces a decrease in the trading
share price.
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Having
no other viable alternative, and having exhausted all opportunities presented over the previous eighteen months, the Board unanimously
(i) determined that the Merger Agreement, the Merger and the transactions contemplated by the Merger Agreement are acceptable
and in the best interest of iGambit’s stockholders, (ii) approved the Merger Agreement, the Merger and the transactions
contemplated by the Merger Agreement, and (iii) recommended that iGambit’s stockholders vote to adopt and approve the Merger
Agreement and the Merger.
Factors
Relating to the Specific Terms of iGambit’s Merger Agreement with Clinigence:
The
Merger will result in iGambit stockholders being diluted based on the Exchange Ratio, to approximately 15%, on a fully-diluted
basis, of the outstanding equity of iGambit immediately following the Effective Time. The Board agreed that based on the current
financial status of iGambit and the potential for future increased value in the shares resulting from Clinigence’s projected
performance, that the Merger was a viable solution at the agreed upon Exchange Ratio.
The
Merger provides for the $418,092.28 bridge loan to iGambit. Clinigence loaned iGambit $393,092.28 upon signing of the Letter of
Intent for the Merger in the form of a promissory note until the Effective Date, on August 6, 2019, Clinigence loaned iGambit
an additional $25,000 in the form of a promissory note until the Effective Date, and on September 12, 2019, Clinigence loaned
iGambit an additional $25,000 in the form of a promissory note until the Effective Date.
iGambit
engaged in extensive negotiation regarding the Exchange Ratio with Clinigence.
In
the course of reaching the determinations and decisions and making the recommendation described above, iGambit’s Board of
Directors, in consultation with iGambit’s senior management and outside advisors and outside legal counsel considered the
risks and potentially negative factors relating to the Merger Agreement, the Merger and the other transactions contemplated thereby,
including the following material factors:
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the
fact that the Merger would result in a change in control of iGambit with Clinigence stockholders
holding 85%, on a fully-diluted basis, of the outstanding shares of iGambit common stock
following the Merger and the right to appoint the new Board of Directors;
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the
risk that the potential benefits of the Merger and Clinigence’s business plans
will not be realized or will not be realized within the expected time period;
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the
risk that the Merger may result in iGambit assuming unknown liabilities;
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the
risks associated with Clinigence’s projected revenue not being realized or not
within the expected time period and therefore not having the ability to successfully
implementing its business plan;
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the
risks and contingencies relating to the announcement and pendency of the Merger and the
risks and costs to iGambit if the closing of the Merger is not timely or if it does not
close at all, may have an effect on the trading price of iGambit common shares; and
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the
risk that the requirement as a provision of the Merger Agreement that iGambit conducts
its business only in the ordinary course prior to the completion of the Merger, may delay
or prevent iGambit from undertaking certain business opportunities that might arise pending
completion of the Merger.
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The
Board believes that, overall, the potential benefits to the iGambit Stockholders of the Merger Agreement and the Transactions
contemplated thereby outweigh the risks and uncertainties.
THE
MERGER AGREEMENT
The
following is a brief summary of the material provisions of the Merger Agreement, a copy of which is attached as Annex A to this
Information Statement and is incorporated by reference into this summary. This summary may not contain all of the information
about the Merger Agreement that is important to iGambit stockholders, and iGambit stockholders are encouraged to read the Merger
Agreement carefully in its entirety. The legal rights and obligations of the parties are governed by the specific language of
the Merger Agreement and not this summary.
The
Merger
On
August 8, 2019, iGambit, Inc. entered into an Agreement and Plan of Merger by and among iGambit, Clinigence, Merger Sub, and the
Signing Stockholder.
The
Merger Agreement provides for the Merger of Merger Sub with and into Clinigence. As a result of the Merger, Merger Sub will cease
to exist, and Clinigence will continue as the surviving corporation in the Merger. After the Merger, the surviving corporation
will be a direct wholly owned subsidiary of iGambit, and the former Clinigence stockholders will have a direct equity ownership
and controlling interest in iGambit.
When
the Merger Becomes Effective
Pursuant
to the terms of the Merger Agreement, the Merger must be consummated by the outside date of November 30, 2019, which may be further
extended by the parties, and the Merger will become effective at such time as a certificate of merger is duly filed with the Secretary
of State of Delaware, unless a later date is specified therein.
Consideration
to be Received Pursuant to the Merger
Each
share of Clinigence Common Stock shall be converted solely into the right to receive a number of shares of iGambit Common Stock
equal to the exchange ratio (the “Merger Consideration”).
At
the Effective Time, all outstanding shares of Clinigence common stock will be converted solely into the right to receive a number
of shares of iGambit common stock such that the holders of outstanding equity of Clinigence immediately prior to the Effective
Time, will own approximately 85%, on a fully-diluted basis, of the outstanding equity, on a fully-diluted basis, of iGambit immediately
following the Effective Time and holders of outstanding equity of iGambit immediately prior to the Effective Time, will own approximately
15%, on a fully-diluted basis, of the outstanding equity, on a fully-diluted basis, of iGambit immediately following the Effective
Time.
Fractional
Shares
No
fractional shares of iGambit common stock will be issued by virtue of the Merger and any Clinigence stockholder entitled under
the Merger Agreement to receive a fractional share of iGambit common stock will be rounded up to the next whole share.
Representations
and Warranties
The
Merger Agreement contains customary representations and warranties of iGambit and Merger Sub, including representations and warranties
relating to, among other things:
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Absence
of Undisclosed Liabilities
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Compliance
with Laws; Government Approval
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Transactions
with Affiliates
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Certain
Securities Laws
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The
Merger Agreement also contains customary representations and warranties of Clinigence, including representations and warranties
relating to, among other things:
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Absence
of Undisclosed Liabilities
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Compliance
with Laws; Government Approval
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Transactions
with Affiliates
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Certain
Securities Laws
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Additional
Agreements
The
Merger Agreement contains certain other agreements of the parties including, among other things, that:
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Until
the Effective Time or the earlier termination of the Merger Agreement in accordance with
its terms, John Salerno (the “Signing Stockholder”) shall vote the shares
of iGambit stock owned by him (or provide his written consent) in favor of the approval
of the Merger Agreement and the Merger and against the approval of any proposal made
in opposition to, or in competition with, the Merger Agreement or the Merger, including
any Acquisition Transaction;
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Promptly
following the Closing, iGambit shall enter into an agreement with the Signing Stockholder
granting him customary observer rights with respect to the iGambit Board;
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iGambit
and Clinigence will promptly notify one another of the occurrence or non-occurrence of
any event that, individually or in the aggregate, would make the timely satisfaction
of certain conditions of the Merger Agreement (set forth below in “Merger Agreement
— Conditions of the Merger”) impossible or unlikely;
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iGambit
will enter into a three (3) year employment agreement with Elisa Luqman; and
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The
management team of the Company’s subsidiary HealthDatix, Inc., consisting of Jerry
Robinson, Mary-Jo Robinson, Kathleen Shepherd and Marios Arnaoutoglou-Andreou will each
have a minimum of a two (2) year employment term with HealthDatix, Inc., which employment
term will become effective upon the closing of the Merger.
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Certain
Fees and Expenses
At
or prior to closing of the Merger, each of iGambit and Clinigence shall pay their respective fees and expenses incurred in connection
with the Merger.
Closing
Conditions of the Merger
iGambit
and Clinigence’s respective obligations to complete the Merger are subject to the satisfaction or waiver of various conditions,
including the following:
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No
Restraints. The absence of any federal, state, local or foreign statute, law, ordinance,
rule, regulation, order, judgment, decree or legal requirement, or any injunction by
any United States or state court or United States governmental body prohibiting, restraining
or enjoining the completion of the Merger;
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Stockholder
Approval. iGambit stockholders having approved the merger proposal; and
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Charter
Amendment. iGambit stockholders having approved the amendments to iGambit’s
Certificate of Incorporation to effect the Reverse Stock Split and the Name Change.
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Conditions
to Clinigence’s Obligations
Clinigence’s
obligations to complete the Merger are also subject to various conditions, including the following:
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iGambit’s
representations and warranties in the Merger Agreement being true and correct to the
extent set forth in the Merger Agreement;
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material
compliance by iGambit with the covenants and obligations as to the extent set forth in
the Merger Agreement, including, but not limited to:
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Redeem
at par value or cancel for no consideration all issued and outstanding shares of iGambit
Series A Preferred Stock; provided, however, that iGambit shall not redeem or cancel
the iGambit Series A Preferred Stock more than two (2) Business Days prior to the Closing
Date without the prior consent of Clinigence;
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Repay
or convert in full any outstanding promissory notes issued by iGambit, other than the
promissory note in favor of Clinigence;
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Complete
a reverse stock split, including providing an Information Statement to its securityholders
with respect thereto at least 20 days prior to such stock split becoming effective;
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Adopt,
and submit to its stockholders for approval, an equity incentive plan in form and substance
satisfactory to Clinigence;
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Amend
its Certificate of Incorporation to change its name to Clinigence Holdings, Inc., eliminate
its Series A Preferred Stock as authorized shares and, if necessary to complete the Merger,
increase the number of authorized shares of iGambit Common Stock; and
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iGambit
shall have provided required notice to FINRA of the transactions set forth in Section
4.1 of the Merger Agreement, the Reverse Stock Split and Name Change, and obtained all
required FINRA approvals related to the Merger.
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the
absence of any material adverse effect on iGambit;
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receipt
of all required government approvals;
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the
absence of any federal, state, local or foreign statute, law, ordinance, rule, regulation,
order, judgment, decree or legal requirement, or any injunction by any United States
or state court or United States governmental body prohibiting, restraining or enjoining
the completion of the Merger;
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iGambit
has obtained all required third party consents;
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iGambit
has delivered all closing documents as set forth in the Merger Agreement;
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iGambit
shall be OTCQB qualified and its securities shall be DTC eligible; and
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iGambit
and Clinigence shall have prepared a draft current report on Form 8-K with respect to
the Merger in a form reasonably satisfactory to Clinigence, which will be filed with
the SEC immediately following the Effective Time.
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Conditions
to iGambit’s Obligations
iGambit’s
obligations to complete the Merger are also subject to various conditions, including the following:
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Clinigence’s
representations and warranties in the Merger Agreement being true and correct to the
extent set forth in the Merger Agreement;
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material
compliance by Clinigence with the covenants and obligations as to the extent set forth
in the Merger Agreement;
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the
absence of any material adverse effect on Clinigence;
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receipt
of all required government approvals;
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the
absence of any federal, state, local or foreign statute, law, ordinance, rule, regulation,
order, judgment, decree or legal requirement, or any injunction by any United States
or state court or United States governmental body prohibiting, restraining or enjoining
the completion of the Merger;
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Clinigence
has obtained all required third party consents;
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Clinigence
has delivered all closing documents as set forth in the Merger Agreement;
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iGambit
and Clinigence shall have prepared a draft current report on Form 8-K with respect to
the Merger in a form reasonably satisfactory to Clinigence, which will be filed with
the SEC immediately following the Effective Time; and
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Clinigence
shall have completed two years of audited financial statements., and one quarter of reviewed
financial statements.
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Termination
The
Merger Agreement may be terminated at any time, but not later than the closing, as follows:
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by
mutual written consent of iGambit and Clinigence;
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by
either iGambit or Clinigence if the transactions contemplated by the Merger Agreement
are not consummated on or before November 30, 2019, provided that the right to terminate
will not be available to any party whose failure to fulfill any material obligation was
the cause of or resulted in the failure of the transactions contemplated by the Merger
Agreement to be consummated by such date;
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by
either iGambit or Clinigence if the other party has breached any of its covenants, agreements
or representations and warranties (and has not cured its breach within 30 days of the
giving of notice of such breach);
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by
either iGambit or Clinigence if the other party discloses any facts, circumstances or
matters not disclosed in any Schedules delivered on or prior to the Signing Date that,
individually or in the aggregate, could reasonably be expected to result in a Clinigence
Material Adverse Effect; or
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by
iGambit, if iGambit receives an unsolicited Acquisition Transaction proposal that its
Board of Directors (the “Board”) concludes in good faith, after consultation
with outside counsel and its financial advisors, constitutes (or could be reasonably
expected to constitute) a Superior Proposal (as defined in the Merger Agreement) after
giving effect to all of terms of the Merger Agreement, after iGambit has provide Clinigence
for a period of (10) days the opportunity to submit an amended written proposal or to
make a new written proposal to the Board (the “Fiduciary Out”).
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In
the event that the Merger Agreement is terminated by iGambit, pursuant to the Fiduciary Out, iGambit shall (i) pay Clinigence
$400,000, (ii) reimburse Clinigence all out of pocket expenses incurred by Clinigence in connection with the transactions contemplated
herein, and (iii) repay the balance and accrued interest outstanding on promissory note in favor of Clinigence, the total sum
amount of which shall be due and payable immediately upon such termination.
Expenses
Whether
or not the Merger is consummated, all fees and expenses incurred in connection with the Merger including all legal, accounting,
financial, advisory, consulting and all other fees and expenses of third parties incurred by a party in connection with the Merger,
shall be the obligation of the respective party incurring such fees and expenses.
Effect
of Termination
In
the event of termination of the Merger Agreement prior to the Effective Time in accordance with the terms of the Merger Agreement,
the Merger Agreement will become void, and there shall be no liability or further obligation on the part of iGambit and Clinigence
other than:
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the
parties’ mutual obligations which survive termination, under the terms of the Merger
Agreement; and
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any
liability that has already accrued as of the effective date of such termination.
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Interest
of iGambit’s Directors and Officers in the Merger
Our
executive officers and members of our Board have interests in the merger action that are different from, or in addition to, the
interests of our stockholders generally. The members of our Board were aware of these differing interests and considered them,
among other matters, in evaluating and negotiating the transaction agreements and in recommending to the majority voting shareholder
that he vote in favor of the Actions. These interests include, among other things:
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Elisa
Luqman will enter a three (3) year employment agreement with iGambit, which employment
agreement will become effective upon the closing of the Merger;
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Elisa
Luqman and certain other related parties may agree to cancel certain Deferred Compensation
and Related Party Indebtedness, in exchange for Company shares;
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the
management team of the Company’s subsidiary HealthDatix, Inc., consisting of Jerry
Robinson, Mary-Jo Robinson, Kathleen Shepherd and Marios Arnaoutoglou-Andreou will each
have a minimum of a two (2) year employment term with HealthDatix, Inc., which employment
term will become effective upon the closing of the Merger;
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John
Waters, advisor to the iGambit Board, may take on the position as a member of the Board
of Directors after the Effective Time; and
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John
Salerno will enteran agreement for customary observer rights with respect to the iGambit
Board.
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No
Appraisal Rights.
Under
Delaware General Corporation Law, the Stockholders are not entitled to appraisal rights with respect to the Merger, and the Company
will not independently provide Stockholders with any such right.
No
Dissenters’ Rights
Under
Delaware General Corporation Law, the Stockholders are not entitled to dissenters’ rights with respect to the Merger, and
the Company will not independently provide Stockholders with any such right.
THE
VOTING AGREEMENT
The
voting agreement generally requires John Salerno to vote the shares of iGambit stock owned by him (or provide his written consent)
in favor of the approval of the Merger Agreement and the Merger and against the approval of any proposal made in opposition to,
or in competition with, the Merger Agreement or the Merger, including any Acquisition Transaction; unless the Merger Agreement
is terminated pursuant to the Fiduciary Out. Also, during the period commencing on the Signing Date and ending at the Effective
Time or the earlier termination of the Merger Agreement, Mr. Salerno is not to transfer, sell, exchange, pledge or otherwise dispose
of or encumber any of the shares of iGambit owned by him. Mr. Salerno is the sole holder of Series A Preferred Shares and thus
holds the majority of iGambit’s outstanding voting power.
INFORMATION
WITH RESPECT TO CLINIGENCE
Overview
Clinigence
is a leading healthcare information technology company providing an advanced, cloud-based platform that enables healthcare organizations
to provide value-based care and population health management. The Clinigence platform aggregates clinical and claims data across
multiple settings, information systems and sources to create a holistic view of each patient and provider and virtually unlimited
insights into patient populations.
Clinigence
is the culmination of the combination of Clinigence, LLC and QualMetrix, Inc. (“QualMetrix”), two advanced healthcare
information technology companies, with Clinigence, LLC being a wholly owned subsidiary of Clinigence Holdings, Inc.
Clinigence,
LLC, founded in 2010 and based in Atlanta, Georgia, is a pioneer in clinical quality reporting. Its solution integrates clinical
and claims data across multiple electronic health record (EHR) systems to allow its customers to improve the quality of care of
its patients, improve care coordination and to reduce cost. Started by a core team that had worked together in previous start-ups.
The team has a long track record of health IT innovation and entrepreneurial success, collectively generating more than $1billion
in stockholder value.
Clinigence,
LLC believes it provides unique clinical business intelligence software-as-a-service (SaaS), and has a patent application pending.
Clinigence, LLC empowers new value-based care delivery and payment models by liberating patient data and translating them into
value metrics.
The
Clinigence, LLC solution cost-effectively integrates clinical and financial data across all EHR systems and care settings and
delivers comprehensive patient views and real-time, dynamic and predictive population reports critical to success in value-based
payment.
While
EHR adoption has skyrocketed over the past few years, clinical data remain locked in silos, highly variable and fragmented by
transaction. Current information technology (IT) is designed to maximize transaction-based billing and is inadequate for population
based reporting. Payers have access to cost and utilization data through claims and providers have access to EHR data, but neither
stakeholder has been successful in putting the two together – the key to maximizing the value of care.
Clinigence,
LLC has developed technology that efficiently integrates data from any source, normalizes and aggregates it by patient and classifies
patients into any population defined by clinicians. To date, Clinigence, LLC has applied this technology to EHR and claims data.
Clinigence, LLC has helped more than 1,000 practices, including some 15 accountable care organizations (ACOs) report and improve
quality to maximize quality based payment. Clinigence, LLC is also helping its ACO customers reduce cost and improve care coordination.
Clinigence,
LLC enables clinicians to identify patients in need of services, such as annual wellness visits and chronic care management, and
proactively manage them to improve quality and maximize billings. Clinigence, LLC enables healthcare organizations to measure
and improve quality and reduce the cost of care. The technology works seamlessly across networks of practices with disparate and
diverse systems.
Clinigence,
LLC has a pending patent application for its technology (U.S. Patent Application No. 15/882,688). Clinigence, LLC believes its
technology is unique in two critical ways: (1) it efficiently integrates data from any EHR and claims sources; and (2) it enables
clinicians to target any patient population and measure any clinical key performance indicator (KPI) in real time with no dependence
on EHR vendors, IT or informatics staff.
Clinigence’s
platform is currently in use by 14 Accountable Care Organizations (ACOs), 7 Managed Services Organizations (MSOs), 5 health plans,
35 hospitals, and over 8,000 individual providers, and hosting more than 9 million patient records.
QualMetrix,
founded in 2013 and based in Miramar, Florida, is a population health analytics company that provides turnkey SaaS solutions that
enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights.
The
company’s solutions help healthcare organizations improve the quality and cost effectiveness of care, enhance population
health management and optimize provider networks. QualMetrix enables risk-bearing healthcare organizations achieve their objectives
on the path to value-based care.
QualMetrix’s
platform automatically extracts and delivers targeted data insights from its cloud-based analytics engine directly to the workflows
and technologies of its customers. This enhances end-user workflows with actionable analytics, seamlessly delivers data from disparate
sources to the point of engagement, automates the delivery of data to ensure on-time access, and reduces dependency on non-essential
applications from the end-user’s workflow. All of this allows the healthcare organization to enable population health management,
manage cost and utilization, improve quality, identify gaps in care, risk stratify and target patients, increase collaboration
among providers and to optimize network provider performance.
Clinigence,
LLC and QualMetrix, Inc. have each developed what they consider leading technology in the provider and payer analytics markets
respectively. As the healthcare industry continues to shift risk from payers to providers, the integration of these respective
capabilities into a single platform has the potential to surpass the competition and create a leading solution for the value-based
healthcare analytics market.
Population
Health starts with a comprehensive view of each individual patient. Under the fee-for-service (FFS) model, payers bore all the
risk. Payers’ attempts to control the cost of care over the past few decades have been stymied by their limited view of
their members and their limited control over medical decisions. Under the same model providers had little knowledge of the cost
of care and minimal (if not inverse) interest in reducing the total cost of care. Value-based Healthcare aims to transform this
perverse paradigm.
Under
Value-based Healthcare models, providers and payers share the risk for the total cost of care. The sharing of risk is creating
an emerging market opportunity that is forecasted to accelerate in the coming years. Under Value-based Healthcare, providers must
quickly develop the capacity to manage the total cost of care. At the same time, payers can no longer afford to be left out of
the complete clinical picture of their members. On both sides, this trend creates nothing less than a struggle for survival. On
the one hand, providers are engaging in “middle-man cutting” arrangements, such as provider-sponsored health plans
and direct-to-employer contracts. On the other hand, payers are attempting to shift risk by forging shared- and full-risk contracts
with providers.
Over
the past eight years, Clinigence, LLC has developed technology and expertise that it believes uniquely helps providers manage
the quality and clinical outcomes of care. Clinigence, LLC believes that a key differentiator of its technology is the ability
to aggregate data from multiple diverse sources into comprehensive patient-centric records. At the same time, QualMetrix, Inc.
has developed market-leading technology and expertise in the analysis of the total cost of care based on administrative (claims)
data.
Clinigence’s
platform is currently in use by 14 ACOs, 7 MSOs, 5 health plans, 35 hospitals, and over 8,000 individual providers, and hosting
more than 9 million patient records.
Principal
Stockholders of Clinigence
Name
and Address of Beneficial Owner
|
|
Shares
Beneficially
Owned
|
|
Percent
of
Outstanding
|
Principal
Stockholders:
|
|
|
|
|
|
|
|
|
Avenue
4 Special Situations FU (Series 3)
|
|
|
2,140,000
|
(1)
|
|
|
12.58
|
%
|
Michal
International Investment
|
|
|
1,317,991
|
|
|
|
7.75
|
%
|
|
|
|
|
|
|
|
|
|
Directors
and Named Executive Officers:
|
|
|
|
|
|
|
|
|
Martin
Breslin, Director
|
|
|
3,080,381
|
|
|
|
18.11
|
%
|
Jacob
Margolin, Chief Executive Officer and Director
|
|
|
1,403,426
|
|
|
|
8.35
|
%
|
David
Meiri, Director
|
|
|
1,044,423
|
|
|
|
6.14
|
%
|
Dr.
Warren Hosseinion, Chairman, Director
|
|
|
915,000
|
(2)
|
|
|
5.38
|
%
|
Dr.
Lawrence Schimmel, Chief Medical Officer
|
|
|
337,627
|
|
|
|
1.98
|
%
|
Charles
Kandzierski, Chief Technology Officer
|
|
|
165,394
|
|
|
|
.97
|
%
|
Mihir
Shah, Chief Financial Officer
|
|
|
302,000
|
(3)
|
|
|
1.78
|
%
|
Mark
R. Fawcett, Director
|
|
|
40,000
|
(4)
|
|
|
.24
|
%
|
All
directors and executive officers as a group
|
|
|
10,746,242
|
|
|
|
93.17
|
%
|
(1)
Avenue 4 Special Situations FU (Series 3) also owns warrants to purchase 856,000 shares of Clinigence Common Stock.
(2)
675,000 shares are restricted shares subject to vesting on the closing of the Merger on or before December 31, 2019. Dr. Warren
Hosseinion also owns warrants to purchase 96,000 shares of Clinigence Common Stock.
(3)
270,000 shares are restricted shares subject to vesting on the closing of the Merger on or before December 31, 2019. Mihir
Shah also owns warrants to purchase 12,800 shares of Clinigence Common Stock.
(4)
Mark R. Fawcett also owns warrants to purchase 16,000 shares of Clinigence Common Stock.
Assets
and Liabilities of Clinigence
As
indicated below in Clinigence’s financial statements, as of June 30, 2019 Clinigence had total assets of $6,566,581 of which
$1,612,588 is current assets which consist primarily of $827,692 in cash and cash equivalents, $282,953 in accounts receivable,
$393,093 note to related party, $108,850 in other current assets, and, $4,953,993 of non-current assets which consist primarily
of property, plant and equipment assets of $91,283, intangible assets of $1,606,789, $3,185,473 in goodwill and other non-current
assets of $70,448. Clinigence had $1,734,911 in total liabilities consisting of $1,175,641 in accounts payable and accrued expenses,
$195,882 in deferred revenue, $16,200 in a note payable to related party, $58,599 in notes payable and $288,589 in convertible
notes payable.
CLINIGENCE
HOLDINGS, INC.
CONDENSED
CONSOLIDATED
PRO-FORMA
STATEMENT OF OPERATIONS FOR THE
YEARS
ENDED DECEMBER 31, 2018 AND 2017
(UNAUDITED)
On
March 1, 2019, the Company entered into a Contribution Agreement by and among Clinigence Holdings, Inc. (“Clinigence”),
QualMetrix, Inc. (“QMX”), and the Members of Clinigence, LLC ( the “Contribution Agreement”) whereby Clinigence
Holdings, Inc. (the “Company”) acquired all of the assets and operations and assumed all of the liabilities of QualMetrix,
Inc. The Company acquired substantially all of the assets of QMX to further its SAAS-based offerings to its customers and expand
into new markets. The goodwill is derived largely from the expected growth of the Company, as well as synergies and economies
of scale expected from combining the operations of QMX with the Company. Pursuant to the Contribution Agreement, all of the outstanding
Series A and Series B Preferred Stock and Common Stock of QualMetrix, Inc. totaling 34,726,659 shares were exchanged for 5,021,951
common shares of Clinigence Holdings, Inc. All outstanding shares of QualMetrix, Inc. immediately preceding its dissolution were
treated as one class. On the date of the transaction, the shares of common stock issued to QualMetrix, Inc. had an estimated fair
value of $0.83 per share.
The
following table represents the fair value of the consideration paid allocated to the assets and liabilities acquired in applying
the acquisition method for the completion of the QualMetrix, Inc. business combination:
Consideration:
|
|
Amount
|
Issuance
of 5,021,950 shares of common stock
|
|
$
|
4,168,219
|
|
Net
liabilities assumed
|
|
|
790,703
|
|
Total
consideration
|
|
$
|
4,958,922
|
|
|
|
|
|
|
Assets
Acquired:
|
|
|
|
|
Current
assets
|
|
$
|
112,992
|
|
Property,
equipment, and other non-current assets
|
|
|
6,457
|
|
Identifiable
intangible assets
|
|
|
1,654,000
|
|
Goodwill
|
|
|
3,183,473
|
|
Total
assets acquired
|
|
$
|
4,958,922
|
|
The
Company did not incur material acquisition costs associated with the Contribution Agreement.
In
addition to the acquisition of QualMetrix, Inc., as part of the Contribution Agreement, 15,978,062 issued and outstanding member
units of Clinigence, LLC were exchanged for 7,533,000 shares of common stock of Clinigence Holdings, Inc. All outstanding preferred
member units, common member units, and incentive units of Clinigence, LLC immediately preceding the exchange were treated as one
class.
Upon
closing the Contribution Agreement, the convertible debt of Clinigence, LLC that is not repaid in full at Closing and holders
of such Debt elect to convert such debt and any holders of warrants issued by Clinigence, LLC elect to exercise such warrants,
Clinigence shall, to the extent permissible under applicable federal and state securities laws as reasonably determined by Clinigence,
issue Clinigence Shares to the holders of such warrants and such debt in satisfaction thereof. As of June 30, 2019, previously
outstanding convertible notes with an aggregate principal balance of approximately $600,000 were settled for cash payments of
$200,000 and the conversion of aggregate principal of $400,000 into 638,718 shares of common stock.
The
following unaudited pro forma condensed combined financial statements are presented to illustrate the effects of the acquisition
of QualMetrix, Inc. on Clinigence Holdings, Inc. historical results of operations:
•
|
|
Unaudited
condensed statements of operations for the year ended December 31, 2018
|
Clinigence
Holdings, Inc.
Condensed
Consolidated
Pro-Forma
Statement of Operations
For
the Year Ended December 31, 2018
(Unaudited)
|
|
|
Clinigence
|
|
QualMetrix
|
|
Pro
Forma Adjustments
|
|
Notes
|
|
Pro
Forma Combined
|
REVENUES
|
|
$
|
1,366,996
|
|
|
$
|
859,411
|
|
|
$
|
(91,205
|
)
|
|
|
(1)
|
|
|
$
|
2,135,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
Hosting Costs
|
|
|
185,521
|
|
|
|
145,701
|
|
|
|
(91,205
|
)
|
|
|
(1)
|
|
|
|
240,017
|
|
Direct
Labor Costs
|
|
|
189,003
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
189,003
|
|
Third
Party License Fees
|
|
|
133,116
|
|
|
|
111,074
|
|
|
|
|
|
|
|
|
|
|
|
244,190
|
|
TOTAL
COST OF SALES
|
|
|
507,640
|
|
|
|
256,775
|
|
|
|
|
|
|
|
|
|
|
|
673,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
859,356
|
|
|
|
602,636
|
|
|
|
—
|
|
|
|
|
|
|
|
1,461,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
545,223
|
|
|
|
327,481
|
|
|
|
|
|
|
|
|
|
|
|
872,704
|
|
Sales
and Marketing
|
|
|
208,924
|
|
|
|
153,872
|
|
|
|
|
|
|
|
|
|
|
|
362,796
|
|
General
and administrative
|
|
|
945,607
|
|
|
|
349,324
|
|
|
|
|
|
|
|
|
|
|
|
1,294,931
|
|
Depreciation
& Amortization
|
|
|
—
|
|
|
|
9,700
|
|
|
|
141,631
|
|
|
|
(2)
|
|
|
|
151,331
|
|
TOTAL
OPERATING EXPENSES
|
|
|
1,699,754
|
|
|
|
840,377
|
|
|
|
141,631
|
|
|
|
|
|
|
|
2,681,762
|
|
LOSS
FROM OPERATIONS
|
|
|
(840,398
|
)
|
|
|
(237,741
|
)
|
|
|
(141,631
|
)
|
|
|
|
|
|
|
(1,219,770
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME AND (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(109,799
|
)
|
|
|
(10,785
|
)
|
|
|
|
|
|
|
|
|
|
|
(120,584
|
)
|
Interest
income
|
|
|
68
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
68
|
|
Other
income
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
TOTAL
OTHER EXPENSE, NET
|
|
|
(109,731
|
)
|
|
|
(10,785
|
)
|
|
|
|
|
|
|
|
|
|
|
(120,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE PROVISION FOR INCOME TAXES
|
|
|
(950,129
|
)
|
|
|
(248,526
|
)
|
|
|
(141,631
|
)
|
|
|
|
|
|
|
(1,340,286
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(950,129
|
)
|
|
|
(248,526
|
)
|
|
|
(141,631
|
)
|
|
|
|
|
|
|
(1,340,286
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reflects
the elimination of intercompany licensing revenue and cost of goods sold exchanged between QualMetrix, Inc. and Clinigence,
LLC prior to the acquisition.
|
Reflects
the amortization of identifiable intangible assets acquired from QualMetrix, Inc. consisting of customer relationships and
developed technology.
|
The
historical condensed consolidated financial information of Clinigence Holdings, Inc. has been adjusted in the Unaudited Pro Forma
Financial Information to give effect to pro forma events that are (1) directly attributable to the Acquisition, (2) factually
supportable and (3) with respect to the consolidated statement of operations, expected to have a continuing impact on the combined
results of Clinigence Holdings, Inc. and the Acquisition. The following unaudited pro forma condensed combined consolidated statements
of operations (Unaudited Pro Forma Statements of Operations) have been prepared assuming the Acquisition had been completed on
January 1, 2018, the first day of Clinigence Holdings, Inc.’s fiscal year. The Unaudited Pro Forma Financial Information
has been adjusted with respect to certain aspects of the Acquisitions to reflect the consummation of the Acquisition.
The
Unaudited Pro Forma Financial Information was prepared in accordance with the regulations of the United States Securities and
Exchange Commission (SEC), and is not necessarily indicative of the financial position or results of operations that would have
occurred if the Acquisition had been completed on the dates indicated, nor is it indicative of the consolidated future operating
results or financial position of the Consolidated Company. Assumptions and estimates underlying the pro forma adjustments are
described in the accompanying notes, which should be read in connection with the Unaudited Pro Forma Financial Information. In
accordance with Article 11 of Regulation S-X, a pro forma balance sheet is not required as the Acquisition has already been reflected
in Clinigence Holdings, Inc.’s unaudited condensed consolidated balance sheet for the six months ended June 30, 2019.
The
Unaudited Pro Forma Financial Information does not reflect events that may occur after the Acquisition, including, but not limited
to, the anticipated realization of any ongoing savings from operating synergies. It also does not give effect to the costs necessary
to achieve these savings and synergies.
A
copy of the Clinigence LLC and QualMetrix Audited Financials for the Fiscal Years Ended December 31, 2017 and December 31, 2018
are attached as Annex A-1 and Annex A-2 to this Information Statement.
CLINIGENCE
HOLDINGS, INC.
CONDENSED
CONSOLIDATED
EXECUTIVE
COMPENSATION OF IGAMBITT MANAGEMENT
Current
Officers Name & Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
($)
|
Option
Awards
($)
|
Non-equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation ($)
|
Total
($)
|
John
Salerno CEO, Chairman & Director
|
2018
|
0
|
0
|
0
|
40,001
|
0
|
0
|
17,648
(1)
|
57,649
|
2017
|
2,885
|
0
|
0
|
152,889
|
0
|
0
|
27,725
(2)
|
180,615
|
2016
|
37,846
|
0
|
0
|
0
|
0
|
0
|
27,454
(3)
|
65,300
|
Elisa
Luqman
CFO,
EVP, GC Director
|
2018
|
(1)124,039
|
0
|
8,000
|
0
|
0
|
0
|
0
|
132,039
|
2017
|
(1)115,385
|
0
|
0
|
152,889
|
0
|
0
|
0
|
268,272
|
2016
|
60,459
|
0
|
0
|
0
|
0
|
0
|
0
|
60,459
|
|
(1)
|
Includes
prior years deferred salary.
|
ACTION
2 THE REVERSE STOCK SPLIT
APPROVAL
OF THE GRANTING OF DISCRETIONARY AUTHORITY TO THE BOARD TO ADOPT AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION, TO EFFECT A
REVERSE STOCK SPLIT AT A RATIO RANGING FROM 1 FOR 100 TO UP TO 1 FOR [ 500], SUCH RATIO TO BE DETERMINED BY THE BOARD.
In
accordance with Delaware General Corporation Law, on August 7, 2019, our Board of Directors, believing it to be in the best interests
of the Company and its stockholders, approved a resolution to adopt an amendment to the Certificate of Incorporation to effect
a reverse stock split of the Common Stock at a ratio ranging from 1 for 100 to up to 1 for 500, such ratio to be determined by
the Board (the “Reverse Stock Split”), subject to stockholder approval. On September 24, 2019 , Mr. John Salerno,
the sole holder of Series A Preferred Shares and thus holder of the majority of our outstanding voting power, believing it to
be in the best interests of the Company and its stockholders, approved the Reverse Stock Split. A copy of the form of Amendment
to the Certificate of Incorporation is attached as Annex B to this Information Statement.
PLEASE
NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM
THE TREATMENT OF FRACTIONAL SHARES, AS EXPLAINED BELOW UNDER THE CAPTION “FRACTIONAL SHARES.”
PLEASE
NOTE THAT THE REVERSE STOCK SPLIT WILL HAVE THE EFFECT OF SUBSTANTIALLY INCREASING THE NUMBER OF SHARES THE COMPANY WILL BE ABLE
TO ISSUE TO NEW OR EXISTING STOCKHOLDERS BECAUSE THE NUMBER OF AUTHORIZED SHARES WILL REMAIN THE SAME WHILE THE NUMBER OF SHARES
ISSUED AND OUTSTANDING WILL BE REDUCED.
Prior
to the execution of the Effective Time, iGambit will effect the Reverse Stock Split.
Reasons
for Reverse Stock Split
The
Board believes it is in the best interests of the Company and its Stockholders to have the authority, in their discretion, to
implement the Reverse Stock Split, as it is likely to increase the market price for the Common Stock as fewer shares will be outstanding.
The Common Stock is presently quoted on the OTC Pink Marketplace Current Information Marketplace under the symbol “IGMB”.
The Board believes that an increased stock price may encourage investor interest and improve the marketability and liquidity of
iGambit’s common stock. We may, over the coming months, apply to have the Common Stock listed on NASDAQ. The main goal of
the increase in market price is to help enable the Company to move closer to meeting the $4 minimum bid price requirement of NASDAQ.
Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have
internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual
brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the
processing of trades in low-priced stocks economically unattractive to brokers and investors. The Board of Directors believes
that the anticipated higher market price resulting from a Reverse Stock Split may reduce, to some extent, the negative effects
on the liquidity and marketability of the Common Stock inherent in some of the policies and practices of institutional investors
and brokerage firms described above. Additionally, because brokers’ commissions on low-priced stocks generally represent
a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of iGambit’s
common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share
value than would be the case if the share price were substantially higher.
Implementation and Effects of the Reverse Stock Split on Common Stock
After
the effective date of the Reverse Stock Split, each stockholder will own fewer shares of iGambit’s common stock. However,
the Reverse Stock Split will affect all of iGambit’s Common Stock stockholders uniformly and will not affect any stockholder’s
percentage ownership interest in us, except to the extent that the Reverse Stock Split results in any of iGambit’s stockholders
receiving additional shares as a result of or owning a fractional shares of Common Stock that is rounded up, each as described
below. The number of stockholders of record will not be affected by the Reverse Stock Split. Proportionate voting rights and other
rights and preferences of the holders of iGambit’s common stock will not be affected by the Reverse Stock Split other than
as a result of and rounding up of fractional shares.
Reverse
Stock Split would have the following effects:
|
•
|
the
number of shares of the Common Stock owned by each Stockholder will automatically be
reduced proportionately based on the reverse stock split ratio determined by the Board;
|
|
•
|
the
number of shares of the Common Stock issued and outstanding will be reduced proportionately;
and
|
|
•
|
proportionate
adjustments will be made to the per share exercise price and the number of shares issuable
upon the exercise of all outstanding options and warrants entitling the holders thereof
to purchase shares of the Common Stock, which will result in approximately the same aggregate
price being required to be paid for such options and warrants upon exercise of such options
warrants immediately preceding the reverse stock split.
|
The
table set forth below illustrates the Company’s hypothetical capitalization subsequent to reverse stock splits in varying
ratios with the ratio of 1-for 500 being the maximum ratio which may be effectuated by the Board pursuant to the Written Consent.
This
hypothetical model is based on the total number of shares issued and outstanding as of the Record Date and gives effect to the
Reverse Stock Split, as well as shares of our Common Stock issued and outstanding and issuable upon the exercise of warrants.
Hypothetical
Reverse Stock Split Ratio
|
|
Shares
of Common Stock issued and outstanding following Reverse Stock Split
|
|
Shares
of Common Stock issued and outstanding and issuable upon the exercise of options and warrants
|
|
Shares
of Common Stock available for future issuance following Reverse Stock Split
|
1
to 100
|
|
|
|
3,885,539
|
|
|
|
36,250
|
|
|
796,078,211
|
1
to 500
|
|
|
|
777,108
|
|
|
|
7,250
|
|
|
799,215,642
|
Potential
Risks of the Reverse Stock Split
There
can be no assurance that the bid price of iGambit’s common stock will continue at a level in proportion to the reduction
in the number of outstanding shares resulting from the Reverse Stock Split. Further, we cannot give any assurances that the Reverse
Stock Split will encourage investor interest and improve the marketability and liquidity of iGambit’s common stock.
Additionally,
the liquidity of iGambit’s common stock could be adversely affected by the reduced number of shares outstanding after the
Reverse Stock Split. Although the Board of Directors believes that a higher stock price may help generate investor interest, there
can be no assurance that the Reverse Stock Split will result in a per-share price that will attract institutional investors or
investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds.
As a result, any decreased liquidity that may result from having fewer shares outstanding may not be offset by increased investor
interest in iGambit’s common stock.
Potential
for Significant Dilution of Equity Interest
The
Reverse Stock Split will not affect the rights of Stockholders or any Stockholder’s proportionate equity interest in the
Company, subject to the treatment of fractional shares. At this time, the Company has no plans to issue such additional shares
of its capital stock, other than (i) as required for the Merger, (2) as required for additional financings and (ii) as compensation
and incentives to employees and directors under the Company’s Incentive Plan and other arrangements that may be undertaken.
Fractional
Shares
No
fractional shares of iGambit’s common stock will be issued as a result of the proposed Reverse Stock Split. In lieu of issuing
fractional shares, we will round fractions up to the nearest whole share.
Implementation
and Exchange of Stock Certificates
As
of the effective date of the Reverse Stock Split, each certificate representing shares of iGambit common stock before the Reverse
Stock Split would be deemed, for all corporate purposes, to evidence ownership of the reduced number of shares of iGambit’s
common stock resulting from the Reverse Stock Split.
iGambit’s
transfer agent will be available to effect the exchange of stock certificates. After the Effective Date, stockholders and holders
of securities exercisable for iGambit’s common stock will be notified of the effectiveness of the Reverse Stock Split. Persons
who hold their shares in brokerage accounts or “street name” will not be required to take any further actions to effect
the exchange of their shares. No new certificates will be issued to a stockholder until such stockholder has surrendered any outstanding
certificates to the transfer agent. Until surrendered, each certificate representing shares before the Reverse Stock Split will
continue to be valid and will represent the adjusted number of shares based on the ratio of the Reverse Stock Split. Stockholders
should not destroy any stock certificate and should not submit any certificates until after the Reverse Stock Split has become
effective.
Authorized
Shares
As
of the Record Date, there were 800,000,000 shares of authorized Common Stock and 100,000,000 shares of authorized preferred stock.
As of the Record Date, there were 388,553,890 (not including 10 million shares held in treasury), shares of Common Stock issued
and outstanding and 1,000 Series A Preferred issued and outstanding.
As
of the Record Date, we have 1,625,000 shares of our Common Stock reserved for issuance pursuant to warrants and 2,000,000 shares
of our Common Stock reserved for issuance pursuant to options. As a result of the Reverse Stock Split, the number of shares remaining
available for future issuance under the Company’s authorized pool of Common Stock would increase. In addition, the Company
will continue to have 100,000,000 authorized but unissued shares of preferred stock.
These
authorized but unissued shares of common and preferred stock would be available for issuance from time to time for corporate purposes
such as raising additional capital, acquisitions of businesses or assets and sales of stock or securities convertible into Common
Stock. The Company believes that the availability of the authorized but unissued shares will provide it with the flexibility to
meet business needs as they arise, to take advantage of favorable opportunities and to respond to a changing corporate environment.
If the Company issues additional shares, the ownership interests of holders of the Common Stock may be diluted. Also, if the Company
issues shares of its preferred stock, the issued shares may have rights, preferences and privileges senior to those of its Common
Stock.
CUSIP
Number
As
a result of the Reverse Stock Split and Name Change, the Common Stock will receive a new CUSIP number, which is the number used
to identify the Company’s equity securities, and stock certificates with the older CUSIP number will need to be exchanged
for stock certificates with the new CUSIP number. Our Common Stock will continue to be quoted on the OTC Markets, subject to compliance
with OTC Marketplace listing standards.
No
Appraisal Rights.
Under
Delaware General Corporation Law, the Stockholders are not entitled to appraisal rights with respect to the Reverse Stock Split,
and the Company will not independently provide Stockholders with any such right.
No
Dissenters’ Rights
Under
Delaware General Corporation Law, the Stockholders are not entitled to dissenters’ rights with respect to the Reverse Stock
Split, and the Company will not independently provide Stockholders with any such right.
Material
U.S. Federal Income Tax Considerations
TO
ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE U.S. INTERNAL REVENUE SERVICE, WE INFORM YOU THAT ANY FEDERAL TAX ADVICE CONTAINED
IN THIS INFORMATION STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR PURPOSES OF (I) AVOIDING PENALTIES
UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (II) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION
OR TAX-RELATED MATTER ADDRESSED HEREIN. YOU ARE ENCOURAGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE FOR YOURSELF THE TAX EFFECTS
OF THE REVERSE STOCK SPLIT, IF ANY, INCLUDING SUCH TAX EFFECTS UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
The
following discussion sets forth the anticipated material U.S. federal income tax consequences that management believes will apply
to iGambit and iGambit’s stockholders who are U.S. holders at the effective time of the Reverse Stock Split, if any. This
discussion does not address the tax consequences of transactions effectuated prior to or after the Reverse Stock Split, including,
without limitation, the tax consequences of the exercise of options, warrants or similar rights to purchase stock. Furthermore,
no foreign, state or local tax considerations are addressed herein. For this purpose, a U.S. holder is a stockholder that is:
(a) a citizen or resident of the United States, (b) a domestic corporation, (c) an estate whose income is subject to U.S. federal
income tax regardless of its source, or (d) a trust if a U.S. court can exercise primary supervision over the trust’s administration
and one or more U.S. persons are authorized to control all substantial decisions of the trust.
The
following discussion is not binding on the Internal Revenue Service. The following discussion is based upon the Internal Revenue
Code, laws, regulations, rulings and decisions in effect as of the date of this Information Statement, all of which are subject
to change, possibly with retroactive effect. Holders of shares of the Common Stock are strongly urged to consult their tax advisors
as to the specific tax consequences to them of the Reverse Stock Split, including the applicability and effect of federal, state,
local and foreign income and other tax laws in their particular circumstances.
No
gain or loss should be recognized by a stockholder upon his or her exchange of pre-Reverse Stock Split shares for post-Reverse
Stock Split shares. The aggregate tax basis of the post-Reverse Stock Split shares received (including any fraction of a new share
deemed to have been received) will be the same as the stockholder’s aggregate tax basis in the pre-Reverse Stock Split shares
exchanged therefor. The stockholder’s holding period for the post-Reverse Stock Split shares will include the period during
which the stockholder held the pre-Reverse Stock Split shares surrendered in the Reverse Stock Split.
iGambit
should not recognize any gain or loss as a result of the Reverse Stock Split.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES TO THE COMPANY.
ACTION
3 THE NAME CHANGE
In
accordance with Delaware General Corporation Law, on August 7, 2019, our Board of Directors, believing it to be in the best interests
of the Company and its stockholders, approved a resolution to adopt an amendment to the Certificate of Incorporation to change
the name of iGambit, Inc. to “Clinigence Holdings, Inc.” (the “Name Change”), subject to stockholder approval.
On September 24, 2019, Mr. John Salerno, the sole holder of Series A Preferred Shares and thus holder of the majority of your
outstanding voting power, believing it to be in the best interests of the Company and its stockholders, approved the Name Change.
A copy of the form of Amendment to the Certificate of Incorporation is attached as Annex B to this Information Statement.
Reasons
for Name Change,
The
board of directors believes that changing the name of the combined company to Clinigence Holdings, Inc. better reflects the future
direction and focus of the combined company. After the effective date of the Merger, iGambit, Inc. will become “Clinigence
Holdings, Inc.” An amendment to iGambit’s Certificate of Incorporation is required to effect the Name Change.
No
Dissenters’ Rights
Under
Delaware General Corporation Law, the Stockholders are not entitled to dissenters’ rights with respect to the Name Change,
and the Company will not independently provide Stockholders with any such right.
ACTION
4 THE INCENTIVE PLAN
In
accordance with Delaware General Corporation Law, on August 7, 2019, our Board of Directors, believing it to be in the best interests
of the Company and its stockholders, approved a resolution to adopt the2019 Incentive Plan (the “Incentive Plan”),
subject to stockholder approval. On September 24, 2019, Mr. John Salerno, the sole holder of Series A Preferred Shares and thus
holder of the majority of our outstanding voting power, believing it to be in the best interests of the Company and its stockholders,
approved the Incentive Plan. A copy of the form of Incentive Plan is attached as Annex C to this Information Statement.
Prior
to the execution of the Effective Time, iGambit will effect the Incentive Plan.
Purpose
of the Plan
The
purpose of the Incentive Plan is to promote the interests of iGambit, Inc., a Delaware corporation (the “Company”),
and its stockholders by providing eligible employees, directors and consultants with additional incentives to remain with the
Company and its subsidiaries, to increase their efforts to make the Company more successful, to reward such persons by providing
an opportunity to acquire shares of Common Stock on favorable terms and to attract and retain the best available personnel to
participate in the ongoing business operations of the Company.
The
Incentive Plan permits the grant of Incentive Stock Options, Non-statutory Stock Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Performance Units and Performance Shares awards to directors, officers, employees and consultants.
The
following is a summary of the principal features of the Incentive Plan. This summary is qualified in its entirety by reference
to the complete text of the Incentive Plan, which is attached hereto as Annex C. Stockholders are urged to read the actual text
of the Incentive Plan in its entirety.
The
board of directors believes that the Incentive Plan is necessary for the Company to attract, retain and motivate its employees,
directors and consultants through the grant of stock options, stock appreciation rights, restricted stock and restricted stock
units. We believe the Incentive Plan is best designed to provide the proper incentives for our employees, directors and consultants,
and ensures our ability to make performance-based awards and meets the requirements of applicable law.
Administration
The
Incentive Plan generally will be administered by our board of directors, which may delegate administration of the Incentive Plan
to the compensation committee of our Board of Directors or such or such committee or individuals as appointed by the Board. The
administrator of the Incentive Plan will have full authority to establish rules and regulations for the proper administration
of the Incentive Plan, to select the employees, directors and consultants to whom awards are granted, and to set the date of grant,
the type of award and the other terms and conditions of the awards, consistent with the terms of the Incentive Plan. The administrator
of the Incentive Plan may modify outstanding awards as provided in the Incentive Plan.
Eligibility
Persons
eligible to participate in the Incentive Plan include all our employees, directors and consultants.
Awards
The
Incentive Plan provides for the grant of: (i) incentive stock options; (ii) nonqualified stock options; (iii) stock appreciation
rights; (iv) restricted stock; (v) restricted stock units; and (vi) performance units and performance shares awards to eligible
individuals. The terms of the awards will be set forth in an award agreement, consistent with the terms of the Incentive Plan.
No stock option will be exercisable later than ten years after the date it is granted. The Incentive Plan administrator is authorized
to grant awards intended to qualify as “performance-based compensation” under the Internal Revenue Code of 1986, as
amended.
Stock
Options
The
Incentive Plan administrator may grant incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986,
as amended, and nonqualified stock options. Options shall be exercisable for such prices, shall expire at such times, and shall
have such other terms and conditions as the Incentive Plan administrator may determine at the time of grant and as set forth in
the award agreement; however, the exercise price must be at least equal to 100% of the fair market value at the date of grant,
and in the instance of incentive stock options granted to an employee who is a 10% stockholder, the exercise price must be at
least equal to 110% of the fair market value at the date of grant. The option price is payable in cash or other consideration
acceptable to the Company.
Stock
Appreciation Rights
The
Incentive Plan administrator may grant stock appreciation rights with such terms and conditions as the administrator may determine
at the time of grant and as set forth in the award agreement. The grant price of a stock appreciation right shall be determined
by the administrator and shall be specified in the award agreement; however, the grant price must be at least equal to 100% of
the fair market value of a share on the date of grant. Stock appreciation rights may be exercised upon such terms and conditions
as are imposed by the Incentive Plan administrator and as set forth in the stock appreciation right award agreement.
Restricted
Stock
Restricted
stock may be granted in such amounts and subject to the terms and conditions as determined by the Incentive Plan administrator
at the time of grant and as set forth in the award agreement. The administrator may impose performance goals for restricted stock.
The administrator may authorize the payment of dividends on the restricted stock during the restricted period.
Performance
Shares
The
Incentive Plan administrator may grant other types of equity-based or equity-related awards not otherwise described by the terms
of the Incentive Plan, in such amounts and subject to such terms and conditions, as the administrator shall determine. Such awards
may be based upon attainment of performance goals established by the administrator and may involve the transfer of actual shares
to participants, or payment in cash or otherwise of amounts based on the value of shares.
No
Dissenters’ Rights
Under
Delaware General Corporation Law, the Stockholders are not entitled to dissenters’ rights with respect to the Incentive
Plan, and the Company will not independently provide Stockholders with any such right.
ACTION
5 THE BYLAWS
In
accordance with Delaware General Corporation Law, on August 7, 2019, our Board of Directors, believing it to be in the best interests
of the Company and its stockholders, approved a resolution to adopt the Amended and Restated Bylaws (the “Bylaws”),
subject to stockholder approval. On September 24, 2019, Mr. John Salerno, the sole holder of Series A Preferred Shares and thus
holder of the majority of your outstanding voting power, believing it to be in the best interests of the Company and its stockholders,
approved the Bylaws. A copy of the form of Bylaws is attached as Annex D to this Information Statement. A copy of the Original
By-Laws can be found as Exhibit 3.2 to the Company’s current From 10-12G dated December 31, 2009 on the SEC’s website.
Prior
to the execution of the Effective Time, iGambit will effect the Bylaws.
The
following is a brief overview of the principal differences between the Original Bylaws and the Amended and Restated Bylaws:
|
•
|
“Article
I Offices” is now “Article I Corporate Offices” and has been amended
to include references to amendments to the certificate of incorporation and certificate
of designations.
|
|
•
|
“Article
II Meetings of Stockholders” has been amended as follows:
|
|
a.
|
amended
to remove the rights of a stockholder owning a majority of the entire capital stock of
the corporations issued and outstanding and entitled to vote to call a special meeting
of stockholders;
|
|
b.
|
amended
to add detailed “Advance Notice Procedures”, including reference to applicable
DGCL and SEC rules, and in particular outlining the requirements and procedures for a
stockholder to bring business to a meeting of stockholders as well as nomination of a
director;
|
|
c.
|
amended
to add sub-section “Proxies” outlining proxy authorization, as well as revocability
of a proxy as defined under the DGCL; and
|
|
d.
|
amended
to add sub-section “Inspectors of Elections” outlining appointment of inspectors
for election of directors.
|
|
•
|
“Article
II Directors” has been amended and restated as follows:
|
|
a.
|
amended
to change the number of directors from minimum of one and no more than seven, to a minimum
of one and maximum to be determined by resolution of the board of directors from time
to time;
|
|
b.
|
amended
to include forms of electronic communications for form of notice and corporate minutes,
and telephonic and video conferencing for attendance of meetings; and
|
|
c.
|
Subsection
“Committees” is now Article IV.
|
|
•
|
“Article
IV Notices” has been amended to “Article IV Committees.”
|
|
•
|
“Article
V Officers” has been amended to remove the subsection “Indemnification”
which is now “Article VIII Dividends”, subsections “Fiscal Year”
and “Seal” which are now subsections of “Article IX General Matters.”
|
|
•
|
“Article
VI Certificates of Stock” has been amended to “Article VI Stock” and
amended to include subsection Dividends.
|
|
•
|
“Article
VII Manner of Giving Notices” has been amended to include a sub-section outlining
electronic transmission of notices.
|
|
•
|
“Article
VIII General Provisions” is amended to “Article VIII Indemnification”
and amended to include the following subsections:
|
|
a.
|
Indemnification
of Directors and Officers in Third Party Proceedings
|
|
b.
|
Indemnification
of Directors and Officers in Actions By or in the Right of the Corporation
|
|
d.
|
Indemnification
of Others; Advance Payment to Other
|
|
e.
|
Advance
Payment of Expenses
|
|
f.
|
Limitation
on Indemnification
|
|
h.
|
Non-Exclusivity
of Rights
|
|
k.
|
Effect
of Repeal Or Modification
|
|
•
|
“Article
IX Amendments” is amended to “Article IX General Matters” and amended
to include the following subsections:
|
|
a.
|
Execution
of Corporate Contracts and Instruments
|
|
d.
|
Construction;
Definitions
|
|
•
|
The
Bylaws have been amended to include “Article X Amendments.”
|
The
Amended and Restated Bylaws make no material changes to our existing Bylaws, other than incorporating the amendments described
above and matters permitted under DGCL.
A
copy of the Bylaws is attached to this Information Statement as Annex D and is incorporated by reference into this Information
Statement. The summary above is qualified in its entirety by reference to the full text of the Bylaws contained in
Annex D.
Reasons
for the Amendment and Restatement of the Bylaws
The
Board believes that the Bylaws are beneficial for the Company and that it is therefore in the best interests of the Company and
our stockholders to adopt the Bylaws.
The
Bylaws were drafted to address a number of DGCL and general corporate governance related developments since the Original Bylaws
were adopted over nineteen years ago.
The
adoption of the Bylaws will result in greater flexibility in permitting management to complete and carry out certain corporate
actions with Board approval and without the need to seek stockholder approval, where such approval is not required by the DGCL,
the Company’s Certificate of Incorporation or other applicable state and federal securities laws. An advantage to the adoption
of the Bylaws is that time and expense associated with seeking stockholder approval by a public reporting company that results
from the need to prepare and file a proxy statement prior to carrying out certain corporate actions can be avoided.
Effect
of the Amendment and Restatement
The
Bylaws will not affect the Company or its operations except as described above. Our common stock is currently registered
under Section 12(g) of the Exchange Act, and we are currently subject to the reporting requirements of the Exchange Act and the
rules and regulations promulgated thereunder. In addition, our common stock currently trades on the OTC Pink Marketplace under
the symbol “IGMB.” Following the adoption of the Bylaws, our common stock will continue to trade on the OTC Pink Marketplace
and we will continue to be subject to the reporting requirements under the Exchange Act and the rules and regulations promulgated
thereunder.
Effective
Date
The
effective date of the Bylaws will be the 20th calendar day after the date this Information Statement is first mailed to our stockholders.
No
Dissenters’ Rights
Under
Delaware General Corporation Law, the Stockholders are not entitled to dissenters’ rights with respect to the Bylaws, and
the Company will not independently provide Stockholders with any such right.
ACTION
6 THE Ratification of Appointment of Directors
In
accordance with Delaware General Corporation Law, on August 7, 2019, our Board of Directors, believing it to be in the best interests
of the Company and its stockholders, approved upon the close of the Merger, Dr. Warren Hosseinion, Jacob Margolin, Dr. Lawrence
Schimmel, Martin Breslin, Mitchell Creem, Mark Fawcett, David Meiri, John Waters and Elisa Luqman be appointed as members of the
Board of Directors (the “Ratification of Appointment of the New Board”), subject to stockholder approval. On September
24, 2019 , Mr. John Salerno, the sole holder of Series A Preferred Shares and thus holder of the majority of our outstanding voting
power, believing it to be in the best interests of the Company and its stockholders, approved the Ratification of Appointment
of the New Board.
The
following are descriptions of the background and experience of the new directors, including their principal occupations during
the past five years and the name and principal business in which such occupations were carried on.
Warren
Hosseinion, M.D., Chairman of the Board and Director. Dr. Hosseinion is a director and Chairman of the Board of Clinigence
Holdings, Inc. since April 2019. Dr. Hosseinion has been a member of the Board of Directors of Apollo Medical Holdings, Inc. since
July 2008, the Chief Executive Officer of Apollo Medical Holdings, Inc. from July 2008 to December 2017, and the Co-Chief Executive
Officer of Apollo Medical Holdings, Inc. from December 2017 to March 2019. In 2001, Dr. Hosseinion co-founded ApolloMed Hospitalists.
Dr. Hosseinion received his B.S. in Biology from the University of San Francisco, his M.S. in physiology and biophysics from the
Georgetown University Graduate School of Arts and Sciences, his medical degree from the Georgetown University School of Medicine,
and his residency in internal medicine from the Los Angeles County-University of Southern California Medical Center.
Jacob
“Kobi” Margolin, Chief Executive Officer and Director. Mr. Margolin is the Chief Executive Officer and
a director of Clinigence Holdings, Inc. Mr. Margolin is a successful serial entrepreneur with over 25 years’ experience
in HIT, and is the Co-Founder of Clinigence, LLC. In the mid-1990’s, Mr. Margolin co-founded a pioneering Medical Imaging
technology company and led its marketing, global business development and North American operations through a $50 million acquisition
by Carestream Health (2004). In 2005, he joined Accelerad – a Georgia Tech Advanced Technology Development Center (ATDC)
incubator company acquired in 2014 by Nuance Communications (NASDAQ: NUAN). In 2008, he started a consulting firm helping Israeli
medical technologies enter the US market. In 2010, Mr. Margolin founded Clinigence, LLC with the vision that big data and business
intelligence technologies would become crucial to the healthcare industry. Mr. Margolin holds an MS degree in medical physics
(magna cum laude) and BS degrees in Mathematics and Physics (magna cum laude) from Tel-Aviv University in Israel. He is a board
member of the American-Israeli Chamber of Commerce and a member of the Technology Association of Georgia (TAG) and HIMSS.
Lawrence
Schimmel, M.D., Chief Medical Officer and Director. Dr. Schimmel is a director of Clinigence Holdings, Inc. and the
Chief Medical Officer of Clinigence Holdings, Inc. since April 2019. In 2013 he co-founded and served as Chief Medical Officer
of QualMetrix, Inc., a healthcare analytics company headquartered in South Florida, until QualMetrix merger with Clinigience LLC.
Dr. Schimmel is also the founding Chairman of Professional Bank headquartered in South Florida from 2018 to present. Previously,
Dr. Schimmel was the managing partner of Allied Health Advisors, LLC a boutique healthcare consulting company in Miami. Dr. Schimmel
is a serial medical-related business entrepreneur having been Co-founder and CEO of Allied Health Group, a national medical management
company, and Florida Specialty Network. Allied Health Group and Florida Specialty Network managed approximately $500 million in
provider payments on behalf of managed care organizations for approximately 3 million lives during his time as CEO. Allied Health
Group was a licensed TPA in Florida and Texas and acted as a third-party intermediary in other areas of the country. Previously,
Dr. Schimmel was the Founding Chairman and served on the Board of Directors of Megabank and subsequently served on the Board of
Directors of Executive National Bank in South Florida. Dr. Schimmel practiced General and Vascular Surgery in the Miami community
for 18 years. In addition to his lengthy medical career as a general and vascular surgeon, he held a management role with the
South Florida Surgical Group, and has consulted for physicians, hospitals, healthcare delivery systems, and Fortune 500 companies.
He received his B.A. from Rutgers College, received his Doctor of Medicine degree from the New Jersey College of Medicine and
conducted his post graduate training at the University of Miami.
Elisa
Luqman, Chief Financial Officer, General Counsel and Director. Ms. Luqman is the co-founder of iGambit, Inc., formerly
bigVault Storage Technologies with over 20 years of experience with intellectual property and technology companies. Prior to co-founding
the Company, Ms. Luqman was president of University Software Corp., a software development company focused on a wide range of
student educational and intellectual applications. Ms. Luqman was Chief Operating Officer of the Company, from April 1, 2000 until
February 28, 2006. From March 1, 2006 through February 28, 2009, Ms. Luqman was employed as Chief Operating Officer of the Vault
Services Division of Digi-Data Corporation, the company that acquired the Company’s assets in 2006, and subsequently during
her tenure with Digi-Data Corporation she became the in-house general counsel for the entire corporation. In that capacity she
was responsible for acquisitions, mergers, patents, and employee contracts, and worked very closely with Digi-Data’s outside
counsel firms. As of March 1, 2009, Ms. Luqman rejoined the Company in her current capacities. Ms. Luqman has overseen and been
responsible for the Company’s SEC filings and public company compliance requirements from its initial Form10 filing with
the SEC in 2010 through the present. Ms. Luqman received a BA degree in Marketing, a JD in Law, and a MBA Degree in Finance from
Hofstra University. Ms. Luqman is a member of the bar in New York and New Jersey.
Martin
Breslin, Director. From 2016 to 2019 Martin Breslin was the Chief Executive Officer of QualMetrix and is responsible
for charting QualMetrix's strategic direction to drive customer value for payer and provider organizations. In 2013 Mr. Breslin
joined QualMetrix as an investor and co-foudner, later assuming the roles of chairman and Chief Executive Officer. He has extensive
experience with technology companies that serve healthcare as well as other industries. Prior to QualMetrix, Mr. Breslin founded
VSS Monitoring. VSS, which focused on the network packet broker market, quickly established itself as an industry leader and,
in 2011, was recognized as the Silicon Valley's ninth-fastest-growing privately held company. Breslin later sold VSS to Danaher
Corp. where he remained for two years serving as president of the VSS unit and as chief technology officer for Danaher's $1 billion
in revenue communications division. Since, Mr. Breslin has played both executive and advisory roles at a number of technology
start-ups, including a Switzerland-based healthcare technology firm. His experience there led to an interest in the application
of advanced analytics in healthcare. Mr. Breslin holds a Master of Business Administration from Golden Gate University of San
Francisco. He received a Bachelor's degree in Engineering from the University of Ulster in Northern Ireland as well as a Bachelor's
degree in Computer Science from National University of Ireland, Maynooth.
Mitchell
Creem, Director. Mr. Creem has spent over 30 years as a “C-level” executive of healthcare organizations,
and he brings strong business evaluation and operational experience to the Company. Since July 2017 to Present Mr. Creem has served
as President of The Bridgewater Healthcare Group, which provides hospital and health network management services and performance
consulting. From October 2015 to July 2017 Mr. Creem served as the CEO of Verity Health System, a six-hospital system in California.
Prior to this, he served as the CFO and Board Member of ApolloMed from October 2012 to October 2015. Prior to ApolloMed, he served
as the CEO of the Keck Hospital of USC and USC Norris Cancer Center. Prior to his tenure at USC, he served as the CFO and Associate
Vice Chancellor of UCLA Health Sciences, including UCLA Medical Center, the Geffen School of Medicine at UCLA, and UCLA Faculty
Practice. Prior to UCLA, he served as CFO of Beth Israel Deaconess Medical Center, a Harvard University teaching hospital, and
CFO of Tufts University Medical Center. Prior to this, he worked for several years in a senior management position at the healthcare
practice group of PricewaterhouseCoopers, where he was responsible for numerous consulting engagements, financial statement audits
and financial feasibility studies. He has been a guest lecturer at USC, UCLA and Harvard. Mr. Creem holds a B.S. in Accounting
and Business Administration from Boston University and a Master’s degree in Health Administration from Duke University.
Mark
Fawcett, Director. Since 2002, Mr. Fawcett has served as Senior Vice President and Treasurer of Fresenius Medical Care
Holdings, Inc. (“FMCH”) and its subsidiaries. FMCH is a wholly-owned subsidiary of Fresenius Medical Care AG &
Co. KGaA (NYSE: FMS) (collectively with FMCH and their respective subsidiaries, “FMS”). FMS is a leading provider
of chronic kidney failure products and services. Prior to joining FMS, Mr. Fawcett was a director of corporate finance at BankBoston
beginning in 1997. Mr. Fawcett held various positions of increasing responsibility beginning in 1988 with Merrill Lynch in New
York and London, and then at The Bank of New York. Mr. Fawcett has been a member of the board of directors of Apollo Medical Holdings,
Inc. (Nasdaq: AMEH) (“ApolloMed”) since January 2016. Mr. Fawcett graduated with a B.A. in psychology from Wesleyan
University and a M.B.A. from Columbia Business School at Columbia University.
David
Meiri, Director Mr. Meiri was a member of the Board of Managers of Clinigence, LLC. Since 2014 Mr. Meiri has served
as a Director of Software Engineering in the Xtremio Division of Dell EMC, has been leading a project for Native Replication of
contents-based data storage, David has received multiple awards for innovation at Dell EMC, including the 2018 and 2019 prolific
inventor awards, and holds close to a hundred patents.. He has led several such projects for third parties resulting in the successful
commercialization of products. Mr. Meiri has expertise in high-performance multi-threaded systems, storage arrays and data replication.
Since 1997 he has developed, innovated, and led teams building products in diverse technologies such as synchronous and asynchronous
remote replication, business continuity, high availability, clones & snapshots, active/active replication, and performance
optimization. Mr. Meiri has researched virtualization technologies and integration of hypervisors with storage products. This
led him to work on federation, cluster algorithms and cloud infrastructure. Other areas Mr. Meiri is interested in are caching,
data reduction, encryption, data deduplication and compression. He holds 78 US issued patents with an additional 30 pending. Mr.
Meiri holds a Ph.D. in Mathematics (Ergodic Theory), from the Hebrew University in Jerusalem, Israel.
John
Waters, Director. Mr. Waters is a former Senior Partner at Arthur Andersen (1967-2001) with exceptional leadership
skills in mergers and acquisitions (particularly reverse mergers) and 1933 Act fillings with the Securities and Exchange Commission.
In the last fifteen years with the firm Mr. Waters built three very successful businesses within Andersen in the areas of merger
and acquisition, manufacturing and entertainment. In 2001, Mr. Waters started his own merger and acquisition advisory consulting
business and has consummated the acquisition of three manufacturing companies with combined annual sales of $50 million. In 2003,
he participated in a group that acquired A-1 Components Corp., a wholly owned subsidiary of United Technologies Corp. Mr. Waters
led due diligence efforts and created a tax structure beneficial to both the buyer and seller. In September 2004 participated
with a group of investors that acquired Metpar Corp., a $19 million manufacturer of metal sanitary and plastic plumbing fixtures.
In October 2007, he participated with a group of investors that acquired World Dryer Corporation, a $20 million manufacturer of
hand dryer products. He prepared pro-forma financial statements for the lenders and assisted in obtaining financing for these
transactions. In July of 2004 he was appointed Chief Administrative Officer of Authentidate Holding Corp. and led a massive restructuring
of the business and hired an entirely new executive management team. In January of 2006 he was appointed Chief Financial Officer
of Avantair Inc., which was taken public through a merger with a Special Purpose Acquisition Company (SPAC) and raised $60 million
in capital for this company. From 2016 to present Mr. Waters has served as an Advisor to the Board of Directors of iGambit Inc.
Previously he was a member of the Board of Directors of iGambit and served as a member of the Audit Committee. For the past five
years he has also worked as a consultant to various companies and serves on the board of two privately held companies. Mr. Waters
is a Certified Public Accountant, Member of AICPA and New York State Society of CPA's and has a BBA degree from Iona
College.
Family
Relationships
There
are no family relationships among the Company’s proposed directors or officers. Ms. Luqman is Mr. Salerno’s daughter.
Involvement
in Certain Legal Proceedings
During
the past five years, none of Dr. Warren Hosseinion, Jacob Margolin, Dr. Lawrence Schimmel, Martin Breslin, Mitchell Creem, Mark
Fawcett, David Meiri, and John Waters (the “New Directors”) have been involved in any legal proceeding concerning:
(i) any bankruptcy petition filed by or against any business of which the New Directors were a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time; (ii) any conviction in a criminal proceeding or being
subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) being subject to any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity; or (iv)
being found by a court, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law (and the judgment has not been reversed, suspended or vacated).
EFFECTIVENESS
OF CORPORATE ACTION
Under
Rule 14c-2 of the Securities Exchange Act of 1934, as amended, the Actions will not be effective until 20 days after this Information
Statement is first mailed or otherwise delivered to our stockholders entitled to receive notice thereof and after the filing of
the amended Certificate of Incorporation with Secretary of State of the State of Delaware with respect to the Reverse Stock Split
and the Name Change, which is expected to occur as soon as reasonably practicable on or after the 20th day following the mailing
of this Information Statement to stockholders.
MARKET
PRICES AND DIVIDEND DATA
Market
Information
iGambit’s
common stock is quoted under the symbol “IGMB” on the OTC Pink Marketplace operated by OTC Markets Group, Inc.
Only
a limited market exists for iGambit’s securities. There is no assurance that a regular trading market will develop, or if
developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in iGambit.
[The
following table sets forth the range of high and low bid quotations for iGambit’s common stock for each of the periods indicated
as reported by the OTC Market Groups. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
Six
Months Ending June 30, 2019
|
Quarter
Ended
|
|
High
$
|
|
Low
$
|
|
June
30, 2019
|
|
|
|
$0.0043
|
|
|
|
$0.0032
|
|
|
March
31, 2019
|
|
|
|
$0.0030
|
|
|
|
$0.0026
|
|
Fiscal
Year Ending December 31, 2018
|
Quarter
Ended
|
|
High
$
|
|
Low
$
|
|
December
31, 2018
|
|
|
|
$0.0051
|
|
|
|
$0.0050
|
|
|
September
30, 2018
|
|
|
|
$0.01
|
|
|
|
$0.01
|
|
|
June
30, 2018
|
|
|
|
$0.03
|
|
|
|
$0.03
|
|
|
March
31, 2018
|
|
|
|
$0.07
|
|
|
|
$0.07
|
|
Fiscal
Year Ending December 31, 2017
|
Quarter
Ended
|
|
High
$
|
|
Low
$
|
|
December
31, 2017
|
|
|
|
$0.08
|
|
|
|
$0.04
|
|
|
September
30, 2017
|
|
|
|
$0.33
|
|
|
|
$0.26
|
|
|
June
30, 2017
|
|
|
|
$0.10
|
|
|
|
$0.10
|
|
|
March
31, 2017
|
|
|
|
$0.09
|
|
|
|
$0.08]
|
|
On
[ , 2019], the last sales price per share of iGambit’s common stock on the OTC Pink Marketplace operated by OTC Markets
Group was $0.00.
Penny
Stock
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature
and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of
the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect
to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description
of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
(d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure
document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including
language, type size and format, as the SEC shall require by rule or regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.
In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions
involving penny stocks, and a signed and dated copy of a written suitability statement.
These
disclosure requirements may have the effect of reducing the trading activity for iGambit’s common stock. Therefore, stockholders
may have difficulty selling iGambit’s securities.
Holders
of iGambit Common Stock
As
of August 7, 2019, we had 388,553,890 (not including 10 million shares held in treasury) of iGambit’s common stock issued
and outstanding, held by 716 stockholders of record, other than approximately 1,500 beneficial owners.
Dividends
The
holders of shares of common stock are entitled to receive pro rata dividends, when and if declared by the Board of Directors in
its discretion, out of funds legally available therefore, but only if dividends on preferred stock have been paid in accordance
with the terms of the outstanding preferred stock and there exists no deficiency in the sinking fund for the preferred stock.
Dividends
on the common stock are declared by the Board of Directors. In addition, the payment of any such dividends will depend on the
Company’s financial condition, results of operations, capital requirements and such other factors as the Board of Directors
deems relevant.
SECURITY
OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND FIVE PERCENT STOCKHOLDERS
The
following table sets forth certain information concerning the ownership of the Company’s common stock as of [ , 2019] with
respect to: (i) each person known to the Company to be the beneficial owner of more than five percent of the Company’s common
stock; (ii) all directors and executive officers; and (iii) directors and executive officers of the Company as a group. The notes
accompanying the information in the table below are necessary for a complete understanding of the figures provided below. As of
[ , 2019], there were 388,553,890 (not including 10 million shares held in treasury) shares of common stock issued and outstanding.
Security
Ownership of Certain Beneficial Owners
Name
and Title
|
|
Common
Shares Beneficially Owned
|
|
%
|
|
Series
A Preferred Shares Beneficially Owned
|
|
%
|
John
Salerno, C.E.O., Chairman of the Board, and Director
|
|
|
5,000,000
|
|
|
|
1.30
|
|
|
|
1,000
|
|
|
|
100.00
|
|
Elisa
Luqman, C.F.O., Executive Vice President, General Counsel and Director
|
|
|
5,685,000
|
(1)
|
|
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry
Robinson President, HealthDatix
|
|
|
3,750,000
|
|
|
|
1.00
|
|
|
|
|
|
|
|
|
|
MaryJo
Robinson. EVP HealthDatix
|
|
|
3,750,000
|
|
|
|
1.00
|
|
|
|
|
|
|
|
|
|
Kathleen
Shepherd, CTO, HealthDatix
|
|
|
5,250,000
|
(2)
|
|
|
1.36
|
|
|
|
|
|
|
|
|
|
Executive
Officers and Directors as Group:
|
|
|
23,435,000
|
(3)
|
|
|
6.00
|
|
|
|
|
|
|
|
100.00
|
|
(1)
Includes 685,000 shares of common stock held by Muhammad Luqman, Ms. Luqman’s husband.
(2)
Includes 1,500,000 shares of common stock held by Edwin Shepherd, Ms. Shepherd’s husband.
(3)
Includes the disclosures in footnotes 1 through 2 above.
The
applicable percentage of ownership for each beneficial owner is based on 388,553,890 (not including 10 million shares held in
treasury) shares of common stock outstanding as of October 7, 2019 In calculating the number of shares beneficially owned by a
stockholder and the percentage of ownership of that stockholder, shares of common stock issuable upon the exercise of options
or warrants, or the conversion of other securities held by that stockholder, that are exercisable within 60 days, are deemed outstanding
for that holder; however, such shares are not deemed outstanding for computing the percentage ownership of any other stockholder.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance
with the Securities Exchange Act, we file periodic reports, documents, and other information with the Securities and Exchange
Commission relating to our business, financial statements, and other matters. Our SEC filings are also available to the public
on the SEC’s website.
The
SEC allows the Company to “incorporate by reference” information that it files with the SEC in other documents into
this Information Statement. This means that the Company may disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by reference is considered to be part of this Information
Statement. This Information Statement and the information that the Company files later with the SEC may update and supersede the
information incorporated by reference. Such updated and superseded information will not, except as so modified or superseded,
constitute part of this Information Statement.
The
Company incorporates by reference each document it files under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of the initial filing of this Information Statement and before the Effective Time.
Some
banks, brokers and other nominee record holders may be participating in the practice of “householding” Information
Statements and annual reports. This means that only one copy of our information statement and annual report to stockholders may
have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document upon written
or oral request. Please direct your inquiry or request by email, mail or telephone to us at the above address and telephone number.
If you want to receive separate copies of this Information Statement or annual report to stockholders in the future, or if you
are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other
nominee record holder, or you may contact us by email, by mail at the above address or telephone number (631) 670-6777.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This
Information Statement is for informational purposes only. Please read this Information Statement carefully.
Dated:
October 7, 2019
|
|
|
|
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
/s/
John Salerno
|
|
|
Chairman
of the Board
|
|
|
ANNEX
A AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
CLINIGENCE
HOLDINGS, INC.,
IGAMBIT,
INC.,
HEALTHDATIX,
INC.
AND
JOHN
SALERNO
August 8,
2019
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of August 8, 2019 (the “Signing
Date”) by and among Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”), iGambit, Inc.,
a Delaware corporation (“iGambit”), HealthDatix, Inc., a Delaware corporation and wholly owned subsidiary of
iGambit (“Merger Sub”), and John Salerno, an individual and holder of iGambit shares constituting a majority
of the votes eligible to be cast by all of the stockholders of iGambit (the “Signing Stockholder”).
RECITALS
WHEREAS,
the parties intend that Merger Sub be merged with and into Clinigence, with Clinigence surviving that merger on the terms
and subject to the conditions set forth herein;
WHEREAS,
the Board of Directors of Clinigence (the “Clinigence Board”) has by the unanimous vote of all of the directors
present: (a) determined that it is in the best interests of Clinigence and the holders of shares of Clinigence’s common
stock, par value $0.00001 per share (the “Clinigence Common Stock”), and declared it advisable, to enter into
this Agreement with iGambit, Merger Sub and the Signing Stockholder; (b) approved the execution, delivery, and performance
of this Agreement and the consummation of the Merger contemplated hereby, including the Merger; and (c) resolved, subject to the
terms and conditions set forth in this Agreement, to recommend adoption of this Agreement by the stockholders of Clinigence; in
each case, in accordance with the Delaware General Corporation Law (the “DGCL”);
WHEREAS,
the respective Boards of Directors of iGambit (the “iGambit Board”) and Merger Sub (the “Merger
Sub Board”) have each unanimously: (a) determined that it is in the best interests of iGambit or Merger Sub, as applicable,
and their respective stockholder(s), and declared it advisable, to enter into this Agreement; and (b) approved the execution,
delivery, and performance of this Agreement and the consummation of the Merger contemplated hereby, including the Merger; in each
case, in accordance with the DGCL;
WHEREAS,
the iGambit Board has unanimously approved the issuance of shares of iGambit’s common stock, par value $0.001 per share
(the “iGambit Common Stock”) in connection with the Merger on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS,
for U.S. federal income Tax purposes, the parties intend that the Merger qualify as a “reorganization” within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this
Agreement be, and is hereby, adopted as a plan of reorganization within the meaning of Section 368(a) of the Code and Treasury
Regulations Sections 1.368-2(g) and 1.368-3; and
WHEREAS,
the parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and
the other transactions contemplated by this Agreement and also to prescribe certain terms and conditions to the Merger.
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual representations, warranties, covenants and promises contained
herein, the adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE
1.
DEFINED TERMS
1.1
Defined Terms. Certain capitalized terms used in this Agreement are defined on Schedule 1 attached hereto.
ARTICLE
2.
the Merger
2.1
The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at
the Effective Time: (a) Merger Sub will merge with and into Clinigence (the “Merger”); (b) the separate corporate
existence of Merger Sub will cease; (c) Clinigence will continue its corporate existence under the DGCL as the surviving corporation
in the Merger and a Subsidiary of iGambit (sometimes referred to herein as the “Surviving Corporation”) and
(d) the Surviving Corporation shall change its name to Clinigence, Inc.
2.2
Closing. Upon the terms and subject to the conditions set forth herein, the closing of the Merger (the “Closing”)
will take place as soon as practicable (and, in any event, within three (3) Business Days) after the satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth in ARTICLE 9 (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver
of all such conditions), unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed
to in writing by the parties hereto. The actual date of the Closing is hereinafter referred to as the “Closing Date.”
2.3
Effective Time. Subject to the provisions of this Agreement, at the Closing, Clinigence, iGambit, and Merger Sub will cause
a certificate of merger (the “Certificate of Merger”) to be executed, acknowledged, and filed with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger will become effective at such time as the Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware or at such later date or time as may be agreed by Clinigence and iGambit in writing
and specified in the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being hereinafter referred
to as the “Effective Time”).
2.4
Effects of the Merger. The Merger shall have the effects set in this Agreement and in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property,
rights, privileges, immunities, powers, franchises, licenses, and authority of Clinigence and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, and duties of each of Clinigence and Merger Sub shall become
the debts, liabilities, obligations, restrictions, and duties of the Surviving Corporation.
2.5
Certificate of Incorporation; Bylaws. At the Effective Time: (a) the certificate of incorporation of the Surviving Corporation
shall be amended and restated so as to read in its entirety as mutually agreed to by the parties, and, as so amended and restated,
shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the terms thereof
or as provided by applicable Law; and (b) the bylaws of Merger Sub as in effect immediately prior to the Effective Time shall
be the bylaws of the Surviving Corporation, except that references to Merger Sub’s name shall be replaced with references
to the Surviving Corporation’s name, until thereafter amended in accordance with the terms thereof, the certificate of incorporation
of the Surviving Corporation, or as provided by applicable Law.
2.6
Directors and Officers . Schedule 2.6 sets forth the Persons who shall be the directors and officers of
the Surviving Corporation from and after the Effective Time, until their respective successors are duly elected or appointed and
qualified or their earlier death, resignation or removal in accordance with the DGCL and the certificate of incorporation and
bylaws of the Surviving Corporation.
ARTICLE
3.
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
3.1
Effect of the Merger on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part
of iGambit, Merger Sub, or Clinigence or the holder of any capital stock of iGambit, Merger Sub, or Clinigence:
(a)
Cancellation of Certain Clinigence Common Stock. Each share of Clinigence Common Stock that is owned by Clinigence (as
treasury stock or otherwise) or any of its direct or indirect wholly-owned Subsidiaries as of immediately prior to the Effective
Time (the “Cancelled Shares”) will automatically be cancelled and retired and will cease to exist, and no consideration
will be delivered in exchange therefor.
(b)
Conversion of Clinigence Common Stock. Each share of Clinigence Common Stock issued and outstanding immediately prior to
the Effective Time (other than Cancelled Shares) will be converted into the right to receive such number of fully paid and nonassessable
shares of iGambit Common Stock (the “Merger Consideration”) that would result in the shareholders of Clinigence
(the “Clinigence Stockholders”) having a right to receive an aggregate number of shares of iGambit Common Stock
immediately following the Effective Time that represent eighty-five percent (85%) of the total issued and outstanding iGambit
Common Stock on a fully diluted, as-converted basis immediately following the Effective Time, assuming there are no Dissenting
Stockholder Interests as of the Effective Time (the “Exchange Ratio”). For the avoidance of doubt, the shareholders
of iGambit shall, in the aggregate, own no more than fifteen percent (15%) of the total issued and outstanding shares of iGambit
Common Stock on a fully diluted, as-converted basis immediately following the Effective Time. Notwithstanding the foregoing, and
for the avoidance of doubt, for purposes of calculating the Exchange Ratio, (i) the aggregate number of shares of iGambit
held by the Clinigence Stockholders immediately following the Effective Time shall include the number of iGambit Option Shares
and the iGambit Warrant Shares on an as-converted basis, and (ii) the aggregate number of issued and outstanding iGambit Common
Stock immediately prior to the Effective Time shall include subscriptions, options, warrants, conversion, exchange or other rights,
agreements or commitments of any kind relating to or obligating iGambit to issue or sell, or cause to be issued or sold, any shares
of capital stock of iGambit or any securities convertible into or exchangeable for any such shares from and after the Signing
Date and to the Effective Time.
(c)
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable
share of common stock, par value $0.0001 per share, of the Surviving Corporation with the same rights, powers, and privileges
as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From
and after the Effective Time, all certificates representing shares of Merger Sub Common Stock shall be deemed for all purposes
to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with
the immediately preceding sentence.
(d)
iGambit Capital Stock. iGambit shall reserve and take all other actions necessary or appropriate to have available for
issuance or transfer a sufficient number of iGambit Common Stock for delivery in accordance with this Section 3.1.
3.2
Exchange Procedures.
(a)
Exchange Agent. Prior to the Effective Time, iGambit shall appoint an exchange agent reasonably acceptable to Clinigence
(the “Exchange Agent”) to act as the agent for the purpose of paying the Merger Consideration for the Certificates;
and the Book-Entry Shares. At or promptly following the Effective Time, iGambit shall deposit, or cause the Surviving Corporation
to deposit, with the Exchange Agent certificates representing the shares of iGambit Common Stock to be issued as Merger Consideration
(or make appropriate alternative arrangements if uncertificated shares of iGambit Common Stock represented by book-entry shares
will be issued).
(b)
Procedures for Surrender; No Interest. Promptly after the Effective Time, the Exchange Agent shall send to each record
holder of shares of Clinigence Common Stock at the Effective Time a transmittal letter in a form mutually agreed to by the parties
(the “Transmittal Letter”). Each holder of shares of Clinigence Common Stock shall be entitled to receive the
Merger Consideration in respect of the Clinigence Common Stock represented by a Certificate or Book-Entry Share upon: (i) surrender
to the Exchange Agent of a Certificate; or (ii) receipt of an “agent’s message” by the Exchange Agent (or such
other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of Book-Entry Shares; in each case,
together with a duly completed and validly executed Transmittal Letter and such other documents as may reasonably be requested
by the Exchange Agent or Clinigence. No interest shall be paid or accrued upon the surrender or transfer of any Certificate or
Book-Entry Share. Upon payment of the Merger Consideration pursuant to the provisions of this ARTICLE 3, each Certificate
or Certificates or Book-Entry Share or Book-Entry Shares so surrendered or transferred, as the case may be, shall immediately
be cancelled.
(c)
Payments to Non-Registered Holders. If any portion of the Merger Consideration is to be paid to a Person other than the
Person in whose name the surrendered Certificate or the transferred Book-Entry Share, as applicable, is registered, it shall be
a condition to such payment that: (i) such Certificate shall be properly endorsed or shall otherwise be in proper form for
transfer or such Book-Entry Share shall be properly transferred; and (ii) the Person requesting such payment shall pay to the
Exchange Agent any transfer or other Tax required as a result of such payment to a Person other than the registered holder of
such Certificate or Book-Entry Share, as applicable, or establish to the reasonable satisfaction of the Exchange Agent that such
Tax has been paid or is not payable.
(d)
Full Satisfaction. All Merger Consideration paid upon the surrender of Certificates or transfer of Book-Entry Shares in
accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares
of Clinigence Common Stock formerly represented by such Certificate or Book-Entry Shares, and from and after the Effective Time,
there shall be no further registration of transfers of shares of Clinigence Common Stock on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this ARTICLE 3.
(e)
Distributions with Respect to Unsurrendered Shares of Clinigence Common Stock. All shares of iGambit Common Stock to be
issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by iGambit in respect of the iGambit Common Stock, the record date for which is after the Effective Time,
that declaration shall include dividends or other distributions in respect of all shares issuable pursuant to this Agreement.
(f)
Adjustments. Without limiting the other provisions of this Agreement, if at any time during the period between the date
of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of Clinigence Common Stock or
iGambit Common Stock shall occur (other than the issuance of additional shares of capital stock of Clinigence or iGambit as permitted
by this Agreement), including by reason of any reclassification, recapitalization, stock split, or combination, exchange, readjustment
of shares, or similar transaction (other than the Recapitalization), or any stock dividend or distribution paid in stock, the
Exchange Ratio and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to reflect such change;
provided, however, that this sentence shall not be construed to permit iGambit or Clinigence to take any action with respect to
its securities that is prohibited by the terms of this Agreement.
(g)
Withholding Rights. Each of the Exchange Agent, iGambit, Merger Sub, and the Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any Person pursuant to this ARTICLE 3 such amounts as may
be required to be deducted and withheld with respect to the making of such payment under any Tax Laws. To the extent that amounts
are so deducted and withheld by the Exchange Agent, iGambit, Merger Sub, or the Surviving Corporation, as the case may be, such
amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Exchange
Agent, iGambit, Merger Sub, or the Surviving Corporation, as the case may be, made such deduction and withholding.
(h)
No Fractional Shares. No fractional iGambit Common Stock shall be issued upon the surrender of Certificates for exchange,
no dividend or distribution with respect to iGambit Common Stock shall be payable on or with respect to any fractional share,
and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of iGambit.
Notwithstanding anything to the contrary contained herein, each holder of Clinigence Common Stock who would otherwise have been
entitled to receive a fractional share of iGambit Common Stock (after taking into account all Clinigence Common Stock owned by
such Person) shall receive, in lieu thereof, such fractional shares rounded up to the nearest whole share.
(i)
Lost Certificates. If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen, or destroyed, the Exchange Agent will issue, in exchange for
such lost, stolen, or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Clinigence Common
Stock formerly represented by such Certificate as contemplated under this ARTICLE 3.
3.3
Treatment of Warrants and Other Stock-Based Compensation. At the Effective Time, as a result of the Merger and without
any action on the part of iGambit, Merger Sub, or Clinigence or the holder of any capital stock of iGambit, Merger Sub, or Clinigence:
(a)
Clinigence Stock Options. Each option to acquire shares of Clinigence Common Stock (each, a “Clinigence Stock
Option”) that is outstanding under any Clinigence Stock Plan immediately prior to the Effective Time, whether or not
then vested or exercisable, shall be, by virtue of the Merger and without any action on the part of the holder thereof, or any
other Person, be assumed by iGambit and shall be converted into an iGambit Stock Option in accordance with this Section 3.3(a).
Each such iGambit Stock Option as so assumed and converted shall continue to have, and shall be subject to, the same terms and
conditions as applied to the Clinigence Stock Option immediately prior to the Effective Time. As of the Effective Time, each such
iGambit Stock Option as so assumed and converted shall be an option to acquire that number of whole shares of iGambit Common Stock
(rounded down to the nearest whole share) (the “iGambit Option Shares”) equal to the product of: (i) the number
of shares of Clinigence Common Stock subject to such Clinigence Stock Option; and (ii) the Exchange Ratio, at an exercise price
per share of iGambit Common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (A) the exercise
price per share of Clinigence Common Stock of such Clinigence Stock Option by (B) the Exchange Ratio; provided, that the exercise
price and the number of shares of iGambit Common Stock subject to the iGambit Stock Option shall be determined in a manner consistent
with the requirements of Section 409A of the Code, and, in the case of Clinigence Stock Options that are intended to qualify as
incentive stock options within the meaning of Section 422 of the Code, consistent with the requirements of Section 424(a) of the
Code.
(b)
Clinigence Warrants. Each warrant to acquire shares of Clinigence Common Stock (each, a “Clinigence Warrant”)
that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall be, by virtue of
the Merger and without any action on the part of the holder thereof, or any other Person, be assumed by iGambit and shall be converted
into an iGambit Warrant in accordance with this Section 3.3(b). Each such iGambit Warrant as so assumed and converted
shall continue to have, and shall be subject to, the same terms and conditions as applied to the Clinigence Warrant immediately
prior to the Effective Time. As of the Effective Time, each such iGambit Warrant as so assumed and converted shall be a warrant
to acquire that number of whole shares of iGambit Common Stock (rounded down to the nearest whole share) (the “iGambit
Warrant Shares”) equal to the product of: (i) the number of shares of Clinigence Common Stock subject to such Clinigence
Warrant; and (ii) the Exchange Ratio, at an exercise price per share of iGambit Common Stock (rounded up to the nearest whole
cent) equal to the quotient obtained by dividing (A) the exercise price per share of Clinigence Common Stock of such Clinigence
Warrant by (B) the Exchange Ratio.
(c)
Clinigence Convertible Debt. To the extent that any convertible Debt of Clinigence is not repaid in full at Closing and
holders of such Debt elect to convert such Debt, such Debt shall be deemed to have been converted into shares of Clinigence Common
Stock immediately prior to the Effective Time and the holders of such shares of Clinigence Common Stock shall be entitled to receive
Merger Consideration in accordance with Section 3.2.
(d)
Tax Treatment. For U.S. federal income Tax purposes, it is intended that the Merger qualify as a “reorganization”
within the meaning of Section 368(a) of the Code, and the regulations promulgated thereunder, that this Agreement will constitute
a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.
(e)
Capitalization Certificate. At least five (5) Business Days before the Closing Date, iGambit shall prepare and deliver
to Clinigence a certificate (the “Capitalization Certificate”) setting forth, as of immediately prior to the
Effective Time, the number of the total issued and outstanding iGambit Common Stock on a fully diluted, as-converted basis, calculated
in accordance with Section 3.1(b).
(f)
Consideration Spreadsheet. At least three (3) Business Days before the Closing Date, Clinigence shall prepare and deliver
to iGambit a spreadsheet (the “Consideration Spreadsheet”), certified by the President of Clinigence, which
shall set forth, as of the Closing Date and based on the information provided by iGambit in the Capitalization Certificate, (i)
each Clinigence Stockholder’s address and, if available to Clinigence, social security number (or tax identification number,
if applicable), (ii) the number of shares of Clinigence Common Stock held by such Person, (iii) the respective certificate number(s)
representing such shares of Clinigence Common Stock, and (iv) the number of shares of iGambit Common Stock issuable to such Person
at the Closing in respect of such Clinigence Common Stock as Merger Consideration in accordance with this ARTICLE 3.
3.4
Appraisal Rights. Notwithstanding any provision of this Agreement to the contrary, any outstanding shares of Clinigence
Common Stock held by Persons who have exercised and perfected appraisal rights for such shares of Clinigence Common Stock in accordance
with Section 262 of the DGCL, if such Section provides for appraisal rights for such shares in the Merger (“Dissenting
Shares”), and as of the Effective Time have neither effectively withdrawn nor lost any right to such appraisal, shall
not be converted into or represent a right to receive a portion of the Merger Consideration or any other amounts payable under
this ARTICLE 3 attributable to such Dissenting Shares. Such holders of Clinigence Common Stock (the “Dissenting
Stockholders”) shall be entitled to receive payment of the appraised value of such shares of Clinigence Common Stock
held by them in accordance with Section 262 of the DGCL, unless and until such Dissenting Stockholders fail to perfect, effectively
withdraw or otherwise lose their appraisal rights under the DGCL. Notwithstanding the foregoing, if any Dissenting Stockholder
shall effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal, then as of the Effective
Time or the occurrence of such event, whichever occurs later, such Dissenting Shares shall automatically be converted into and
represent only the right to receive a portion of the Merger Consideration and any other amounts payable under this ARTICLE
3, without interest thereon, upon surrender of the Certificate or Certificates representing such Dissenting Shares in accordance
with Section 3.2. Prior to the Effective Time, Clinigence shall provide iGambit prompt notice of any written demands
for appraisal or payment of the fair value of any shares of Clinigence Common Stock, the withdrawal of such demands and any other
related instruments served pursuant to the DGCL and received by Clinigence. Prior to the Effective Time, Clinigence shall provide
iGambit the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal or payment of
the fair value of any shares of Clinigence Common Stock. Clinigence shall not, except with the prior written consent of iGambit,
voluntarily make any payment with respect to any demands for appraisal or payment of the fair value of any shares of Clinigence
Common Stock, offer to settle or settle any such demands or approve any withdrawal of any such demands.
ARTICLE
4.
PRE-CLOSING COVENANTS
4.1
Pre-Merger iGambit Recapitalization. On the terms and subject to the conditions of this Agreement, prior to the Closing,
iGambit shall, and the Signing Stockholder shall cause iGambit to, take the following actions:
(a)
Redeem at par value or cancel for no consideration all issued and outstanding shares of iGambit Series A Preferred Stock; provided,
however, that iGambit shall not redeem or cancel the iGambit Series A Preferred Stock more than two (2) Business Days prior to
the Closing Date without the prior consent of Clinigence.
(b)
Repay or convert in full any outstanding promissory notes issued by iGambit, other than the promissory notes in favor of Clinigence
and as specifically set forth on Section 6.3(c) of the iGambit Disclosure Schedule as not being repaid or converted prior to the
Closing.
(c)
Convert to equity a portion of each of the deferred compensation obligations of iGambit in the percentages specified on Schedule
4.1.
(d)
Complete a reverse stock split of between 100-to-1 and 500-to-1, including providing an information statement to its securityholders
with respect thereto at least 20 days prior to such stock split becoming effective.
(e)
Adopt, and submit to its stockholders for approval, an equity incentive plan in form and substance satisfactory to Clinigence.
(f)
Amend its Certificate of Incorporation to change its name to Clinigence Holdings, Inc., eliminate its Series A Preferred Stock
as authorized shares and, if necessary to complete the Merger, increase the number of authorized shares of iGambit Common Stock.
(g)
Submit an application to the Financial Industry Regulatory Authority (“FINRA”) to change its ticker symbol
to one that is mutually agreed upon by iGambit and Clinigence, and obtain any requisite consent from FINRA with respect to the
Merger, the reverse stock split contemplated in this Section 4.1 and any of the other transactions contemplated by
this Agreement.
4.2
iGambit’s Conduct of the Business.
(a)
From the Signing Date until the Closing Date, iGambit covenants and agrees, and the Signing Stockholder covenants and agrees to
use his reasonable best efforts to cause iGambit to, conduct its business only in, and shall not take any action, and the Signing
Stockholder covenants and agrees to use his reasonable best efforts to cause iGambit not to take any action, except in the ordinary
course of business and in a manner consistent with past practice; and iGambit shall use, and the Signing Stockholder covenants
and agrees to use his reasonable best efforts to cause iGambit to use, its commercially reasonable efforts to preserve substantially
intact the business organization of iGambit, to keep available the services of the current Service Providers of iGambit and to
preserve the current relationships of iGambit with customers, suppliers and other Persons with which iGambit has significant business
relations. iGambit shall promptly notify Clinigence of any event or occurrence not in the ordinary course of business of iGambit.
(b)
Without limiting the generality of Section 4.2(a), except as expressly contemplated by this Agreement or disclosed
in the iGambit Disclosure Schedule, iGambit shall not, from the Signing Date until the Closing Date, directly or indirectly, do
or propose, and the Signing Stockholder covenants and agrees to cause iGambit not to, directly or indirectly, do or propose, any
of the following without the prior written consent of Clinigence:
(i)
Declare or pay any non-cash dividends on or make any other non-cash distributions with respect to any of its shares or other equity,
or split, combine or reclassify any of its securities or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for its shares, or repurchase or otherwise acquire, directly or indirectly, any of its shares except
from former Service Providers in accordance with agreements providing for the repurchase of shares in connection with any termination
of service to iGambit;
(ii)
Declare or pay any dividends on or make any other distributions with respect to any of its shares or other equity, or repurchase
or otherwise acquire, directly or indirectly, any of its shares, that would, individually or in the aggregate, reasonably be expected
to result in (A) the fair value and fair market value of iGambit’s assets failing to exceed its liabilities, (B) iGambit’s
remaining assets to be unreasonably small in relation to iGambit’s present and intended future business (without regard
to whether the Merger are consummated or not) or (C) iGambit not being able to pay its debts as they become due;
(iii)
Cause or permit any amendments to the iGambit Certificate of Incorporation or equivalent documents;
(iv)
Enter into any commitment or transaction not in the ordinary course of business;
(v)
Terminate any Service Providers or grant severance or termination pay to any Service Provider;
(vi)
Enter into any material transaction with its officers, directors or stockholders, or their Affiliates, except (A) as provided
in any equity incentive plan or award agreement entered into in connection therewith, or (B) other agreements relating to compensation
or (C) pursuant to a binding agreement effective as of the date hereof and disclosed to Clinigence in writing;
(vii)
Amend or otherwise modify the terms of any Material Contract to which iGambit is a party;
(viii)
Amend or otherwise modify the material terms of any Governmental Approval;
(ix)
Transfer to any Person any rights to iGambit’s Intellectual Property Rights other than non-exclusive licenses granted to
end-user customers in the ordinary course of business consistent with past practice;
(x)
Sell, lease, license or otherwise dispose of any of iGambit’s assets outside of the ordinary course of business;
(xi)
Commence a Proceeding other than for the routine collection of bills;
(xii)
Acquire or agree to acquire by merging, consolidating or entering into a joint venture arrangement with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any Entity or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to the financial condition, results of operations,
business or properties of iGambit taken as a whole;
(xiii)
Adopt, amend or terminate any Service Provider benefit plans, programs, policies or other arrangements, or enter into any employment
or Service Provider contract, pay any special bonus or special remuneration to any current or former Service Provider, or increase
the salaries or wage rates of its Service Providers other than pursuant to scheduled Service Provider reviews under iGambit’s
normal Service Provider review cycle, in all cases consistent with past practice;
(xiv)
Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee
any debt securities of others;
(xv)
Pay, discharge or satisfy any Liability, other than the payment, discharge or satisfaction of obligations in the ordinary course
of business or liabilities reflected or reserved against in iGambit’s Financial Statements;
(xvi)
Make any Tax election other than in the ordinary course of business and consistent with past practice, change any Tax election,
adopt any Tax accounting method other than in the ordinary course of business and consistent with past practice, change any tax
accounting method, file any Tax Return (other than any estimated tax returns, payroll tax returns or sales tax returns) or any
amendment to a Tax return, enter into any closing agreement, settle any Tax claim or assessment, or consent to any extension or
waiver of the limitation period, applicable to any Tax claim or assessment (but in each case only if such action would reasonably
be expected to result in an iGambit Material Adverse Effect, and if such action would not reasonably be expected to result in
an iGambit Material Adverse Effect, then iGambit shall only be obligated to notify Clinigence of such action);
(xvii)
Fail to pay or otherwise satisfy its monetary obligations as they become due, except such as are being contested in good faith;
(xviii)
Waive or commit to waive any rights with a value in excess of $25,000, or forgive any indebtedness owed to iGambit;
(xix)
Cancel, amend or renew any insurance policy other than in the ordinary course of business;
(xx)
Take any action or fail to take any action that could reasonably be expected to cause or result in an iGambit Material Adverse
Effect; or
(xxi)
Enter into any contract or agree, in writing or otherwise, to take any of the actions described above in this Section
4.2(b), or any action that would make any of its representations or warranties contained in this Agreement untrue or incorrect
in any material respect or prevent it from performing or cause it not to perform its covenants hereunder.
4.3
Clinigence’s Conduct of the Business.
(a)
From the Signing Date until the Closing Date, Clinigence covenants and agrees that Clinigence’s business shall be conducted
only in, and Clinigence shall not take any action except in, the ordinary course of business and in a manner consistent with past
practice; and Clinigence shall use its commercially reasonable efforts to preserve substantially intact the business organization
of Clinigence, to keep available the services of the current Service Providers of Clinigence and to preserve the current relationships
of Clinigence with customers, suppliers and other Persons with which Clinigence has significant business relations. Clinigence
shall promptly notify iGambit of any event or occurrence not in the ordinary course of business of Clinigence.
(b)
Without limiting the generality of Section 4.3(a), except as expressly contemplated by this Agreement or disclosed
in the Clinigence Disclosure Schedule, Clinigence shall not, from the Signing Date until the Closing Date, directly or indirectly,
do or propose to do any of the following without the prior written consent of iGambit:
(i)
Declare or pay any non-cash dividends on or make any other non-cash distributions with respect to any of its shares or other equity,
or split, combine or reclassify any of its securities or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for its shares, or repurchase or otherwise acquire, directly or indirectly, any of its shares except
from former Service Providers in accordance with agreements providing for the repurchase of shares in connection with any termination
of service to Clinigence;
(ii)
Declare or pay any dividends on or make any other distributions with respect to any of its shares or other equity, or repurchase
or otherwise acquire, directly or indirectly, any of its shares, that would, individually or in the aggregate, reasonably be expected
to result in (A) the fair value and fair market value of Clinigence’s assets failing to exceed its liabilities, (B) Clinigence’s
remaining assets to be unreasonably small in relation to Clinigence’s present and intended future business (without regard
to whether the Merger are consummated or not) or (C) Clinigence not being able to pay its debts as they become due;
(iii)
Cause or permit any amendments to the Clinigence Certificate of Incorporation, operating agreement or equivalent documents;
(iv)
Enter into any commitment or transaction not in the ordinary course of business;
(v)
Terminate any Service Providers or grant severance or termination pay to any Service Provider;
(vi)
Enter into any material transaction with its officers, directors or stockholders, or their Affiliates, except (A) as provided
in any equity incentive plan or award agreement entered into in connection therewith, or (B) other agreements relating to compensation
or (C) pursuant to a binding agreement effective as of the date hereof and disclosed to iGambit in writing;
(vii)
Amend or otherwise modify the terms of any Material Contract to which Clinigence is a party;
(viii)
Amend or otherwise modify the material terms of any Governmental Approval;
(ix)
Transfer to any Person any rights to Clinigence’s Intellectual Property Rights other than non-exclusive licenses granted
to end-user customers in the ordinary course of business consistent with past practice;
(x)
Sell, lease, license or otherwise dispose of any of Clinigence’s assets outside of the ordinary course of business;
(xi)
Commence a Proceeding other than for the routine collection of bills;
(xii)
Acquire or agree to acquire by merging, consolidating or entering into a joint venture arrangement with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any Entity or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to the financial condition, results of operations,
business or properties of Clinigence taken as a whole;
(xiii)
Adopt, amend or terminate any Service Provider benefit plans, programs, policies or other arrangements, or enter into any employment
or Service Provider contract, pay any special bonus or special remuneration to any current or former Service Provider, or increase
the salaries or wage rates of its Service Providers other than pursuant to scheduled Service Provider reviews under Clinigence’s
normal Service Provider review cycle, in all cases consistent with past practice;
(xiv)
Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee
any debt securities of others;
(xv)
Pay, discharge or satisfy any Liability, other than the payment, discharge or satisfaction of obligations in the ordinary course
of business or liabilities reflected or reserved against in Clinigence’s Financial Statements;
(xvi)
Make any Tax election other than in the ordinary course of business and consistent with past practice, change any Tax election,
adopt any Tax accounting method other than in the ordinary course of business and consistent with past practice, change any tax
accounting method, file any Tax Return (other than any estimated tax returns, payroll tax returns or sales tax returns) or any
amendment to a Tax return, enter into any closing agreement, settle any Tax claim or assessment, or consent to any extension or
waiver of the limitation period, applicable to any Tax claim or assessment (but in each case only if such action would reasonably
be expected to result in a Clinigence Material Adverse Effect, and if such action would not reasonably be expected to result in
a Clinigence Material Adverse Effect, then Clinigence shall only be obligated to notify iGambit of such action);
(xvii)
Fail to pay or otherwise satisfy its monetary obligations as they become due, except such as are being contested in good faith;
(xviii)
Waive or commit to waive any rights with a value in excess of $25,000, or forgive any indebtedness owed to Clinigence;
(xix)
Cancel, amend or renew any insurance policy other than in the ordinary course of business;
(xx)
Take any action or fail to take any action that could reasonably be expected to cause or result in a Clinigence Material Adverse
Effect; or
(xxi)
Enter into any contract or agree, in writing or otherwise, to take any of the actions described above in this Section
4.3(b), or any action that would make any of its representations or warranties contained in this Agreement untrue or incorrect
in any material respect or prevent it from performing or cause it not to perform its covenants hereunder.
4.4
Access to Information. From the Signing Date until the Closing Date, upon notice, iGambit and Clinigence shall each:
(a)
give the other party and its Representatives full access during normal business hours to its buildings, offices, and other facilities,
to Persons having business relationships with iGambit or Clinigence (including suppliers, licensees and customers), and to all
its books and records, whether located on its premises or at another location,
(b)
permit the other party to make such inspections as it may require,
(c)
cause its officers to furnish the other party with such financial, operating, technical and product data and other information
with respect to the Business and the Assets of iGambit and Clinigence as it from time to time may request, including financial
statements and schedules,
(d)
allow the other party the opportunity to interview its current and former Service Providers, and
(e)
assist and cooperate with the other party in the development of integration plans for implementation by iGambit and Clinigence
following the Closing;
provided,
that no investigation pursuant to this Section 4.4 shall affect or be deemed to modify any representation or warranty
made by iGambit or Clinigence herein.
4.5
Commercially Reasonable Efforts. From the Signing Date until the Closing, each of iGambit, Clinigence and Signing Stockholder
shall use their respective commercially reasonable efforts to cause to be fulfilled and satisfied all of the other party’s
conditions to Closing set forth in ARTICLE 9.
4.6
Acquisition Transaction. From the Signing Date to the earlier of the Closing and the termination of this Agreement, none
of the parties hereto shall initiate, solicit, negotiate, encourage or provide information to facilitate, and none of the parties
hereto shall cause or knowingly permit any Representative of any of the parties hereto, or any counsel, accountant, investment
banker, financial advisor or other agent retained by it or them to initiate, solicit, negotiate, encourage or provide information
to facilitate, any proposal or offer to acquire all or any substantial part of iGambit’s business or assets (its Subsidiaries’
business or assets) or Clinigence’s business or assets, or any equity interests of iGambit or Clinigence, or any Subsidiary
thereof, whether by merger, purchase of assets or otherwise, whether for cash, securities or any other consideration or combination
thereof (any such transaction being referred to herein as an “Acquisition Transaction”). Each of the parties
hereto shall immediately notify the other parties after receipt of any proposal for an Acquisition Transaction, indication of
interest or request for information from a third party relating to iGambit or Clinigence in connection with an Acquisition Transaction
or for access to the properties, books or records of iGambit or Clinigence by any person or entity that indicates to any party
hereto that such third-party is considering making, or has made, a proposal for an Acquisition Transaction (an “Acquisition
Proposal”), and provide the other parties with copies of all documents and written or electronic communications relating
to any Acquisition Proposal; provided, however, that any time prior to twenty (20) days after the initial mailing of the iGambit
Information Statement, this Section 4.6 shall not prohibit iGambit from entering into discussions with any Person in response
to an Acquisition Proposal that is likely to result in a Superior Offer that is submitted to iGambit (and not withdrawn) if the
iGambit Board determines in good faith, after consultation with outside counsel, that such action is required to comply with its
fiduciary duties to the stockholders of iGambit under applicable Law.
4.7
Notices of Certain Events; Continuing Disclosure. Each of Clinigence, iGambit and the Signing Stockholder shall promptly
notify the other party of, and deliver to such other party copies of all documentation relating to:
(a)
any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection
with the Merger contemplated by this Agreement’
(b)
the occurrence of any breach by Clinigence, the Signing Stockholder or iGambit, as applicable, of any representation, warranty,
covenant or agreement contained in this Agreement, promptly after Clinigence, the Signing Stockholder or iGambit, as applicable,
becomes aware of any such breach, including without limitation any such breach that could reasonably be expected to cause any
of the closing conditions set forth in ARTICLE 9 not to be satisfied;
(c)
any Action commenced or, to Clinigence’s Knowledge, iGambit’s Knowledge or the Signing Stockholder’s Knowledge,
as applicable, threatened against or relating to or involving Clinigence or iGambit, as applicable, that relates to the consummation
of the Merger contemplated by this Agreement, or relates to any of the material assets of Clinigence or iGambit, as applicable,
or any developments relating to any Action otherwise disclosed pursuant to this Agreement;
(d)
any notice, correspondence, document or other communication sent by or on behalf of Clinigence or iGambit, as applicable, to any
party to any Material Contract or iGambit Material Contract or sent to Clinigence or iGambit, as applicable, by any party to any
Material Contract or iGambit Material Contract (other than any communication that relates solely to routine commercial Merger
between Clinigence and the other party to any such material contract and that is of the type sent in the Ordinary Course of Business);
(e)
any notice, report or other document either filed with or sent to, or received from, any Governmental Authority, or any governmental
investigation on an alleged violation or noncompliance with Legal Requirements on behalf of Clinigence or iGambit, as applicable,
subsequent to the Signing Date in connection with the Merger or any of the other transactions contemplated by this Agreement;
and
(f)
copies of all material operating and financial reports prepared by Clinigence or iGambit, as applicable, for such party’s
senior management or for use in preparing such party’s consolidated financial statements, including: (A) copies of
the unaudited monthly consolidated balance sheets of Clinigence or iGambit, as applicable, and the related unaudited monthly consolidated
statements of operations, statements of shareholders’ equity and statements of cash flows and (B) copies of any forecasts,
write-off reports, hiring reports and capital expenditure reports prepared for Clinigence or iGambit’s senior management,
as applicable.
The
delivery of any notice pursuant to this Section 4.7 will not limit any of the representations and warranties of Clinigence
or iGambit set forth in this Agreement or the remedies available hereunder.
4.8
Confidentiality, Press Releases and Public Announcements.
(a)
The terms of the Nondisclosure Agreement entered into previously by Clinigence and iGambit are hereby incorporated by reference
and shall continue in full force and effect until the Closing. The parties hereto acknowledge that any information provided to,
or otherwise acquired by, him or it in connection with this Agreement and the Merger contemplated by this Agreement is subject
to the terms of the Nondisclosure Agreement, the terms of which are incorporated herein by reference. Each of the parties hereto
agrees for itself and himself and its and his representatives and Affiliates to use the Confidential Information (as such term
is defined in the Nondisclosure Agreement) solely for the purposes of evaluating the other parties hereto and consummating the
Merger and for no other purpose and to keep the Confidential Information confidential. Clinigence covenants and agrees for itself
and himself and its and his representatives and Affiliates not to use the Confidential Information, at any time, for trading in
iGambit’s securities.
(b)
iGambit and Clinigence will consult with each other before issuing, and provide each other the opportunity to review, comment
upon and concur with, and use commercially reasonable efforts to agree on, any press release or other public statements with respect
to the Merger contemplated by this Agreement, including the Merger, and shall not issue any such press release or make any such
public statement prior to such consultation, except as either party may determine is required by applicable Legal Requirements,
court process or by obligations pursuant to any securities exchange or stock market. Notwithstanding the foregoing, if iGambit
determines it is required by applicable Legal Requirements to make a public announcement, including, without limitation, with
respect to any filing with the SEC that iGambit may be required to make as a result of the execution of this Agreement or the
consummation of the Merger contemplated hereby, iGambit shall give Clinigence as much prior notice as is reasonably practicable
and shall consult with Clinigence about the text of such announcement or filing but shall not be required to obtain the consent
of Clinigence with regard to such announcement or filing. iGambit and Clinigence will consult with each other concerning the means
by which any employee, customer or supplier of Clinigence (or their respective subsidiaries) or iGambit or any other Person having
any business relationship with either Clinigence or iGambit (or their respective subsidiaries) will be informed of the Merger
contemplated by this Agreement, and the other Party will have the right to be present for any such communication.
4.9
Stockholder Vote. Clinigence shall promptly after the date hereof obtain the consent of its stockholders and shall take
all action required by the laws of the State of Delaware, the Clinigence Certificate of Incorporation and any equivalent documents
for the purpose of approving this Agreement, the other Transaction Documents to which Clinigence is a party and the Merger.
4.10
Consents. Each of iGambit and Clinigence will use commercially reasonable efforts to obtain prior to Closing all Consents
from Governmental Authorities as may be required in connection with the Merger. Prior to the Closing and thereafter, each of iGambit
and Clinigence will use its commercially reasonable efforts to obtain all Consents under any iGambit Contracts (including all
Specified iGambit Contracts) and Clinigence Contracts (including all Specified Clinigence Contracts), as applicable, as required
to consummate the Merger with respect to such iGambit Contracts and Clinigence Contracts and to preserve all rights of and benefits
under such iGambit Contracts and Clinigence Contracts in connection therewith.
4.11
Section 16(b) Board Approval. Prior to the Closing, the iGambit Board shall, by resolution duly adopted by such board of
directors or a duly authorized committee of “non-employee directors” thereof, approve and adopt, for purposes of exemption
from “short-swing” liability under Section 16(b) of the Exchange Act, the acquisition of iGambit Common Stock at the
Effective Time by management of Clinigence who become, prior to, at, or following the Effective Time of the Merger, management
of iGambit as a result of the exchange of Clinigence Common Stock in the Merger. Such resolution shall set forth the name of the
applicable “insiders” for purposes of Section 16 of the Exchange Act, the number of securities to be acquired by each
individual that the approval is being granted to exempt the transaction under Rule 16b-3 under the Exchange Act.
ARTICLE
5.
CLOSING DELIVERIES
5.1
Closing Deliveries by iGambit. At the Closing, iGambit shall deliver the following items, duly executed by iGambit and
its Affiliates, as applicable, all of which shall be in form and substance reasonably acceptable to Clinigence except where otherwise
indicated:
(a)
Luqman Employment Agreement. An employment agreement between iGambit and Elisa Luqman in form and substance satisfactory
to the parties and which shall include a 6-month severance provision for termination without cause, duly executed by Elisa Luqman
(the “Luqman Employment Agreement”).
(b)
Indemnification Agreements. An indemnification agreement in form and substance satisfactory to the parties thereto, duly
executed by iGambit and each of its officers and directors as of immediately following the Effective Time.
(c)
iGambit Secretary’s Certificate. A certificate of the secretary of iGambit, dated as of the Closing Date, certifying
as to:
(i)
the iGambit Certificate of Incorporation and iGambit’s Bylaws as in effect as of the Closing Date,
(ii)
resolutions of iGambit’s Board of Directors and, as applicable, stockholders (x) approving the Merger and authorizing
the execution, delivery and performance of this Agreement and of all other Transaction Documents, including the requisite amendments
to iGambit’s Certificate of Incorporation and bylaws, (y) electing to the iGambit Board of Directors, effective as of the
Effective Time, Warren Hosseinion (who shall be chairman), Jacob Margolin, Lawrence Schimmel, Martin Breslin, Mitchell Creem,
Mark Fawcett, David Meiri, John Waters and Elisa Luqman, and (z) electing as officers of iGambit, effective as of the Effective
Time, Jacob Margolin as Chief Executive Officer, Elisa Luqman, as Chief Financial Officer, Secretary and General Counsel, Lawrence
Schimmel as Chief Medical Officer, and Charles Kandzierski, as Chief Operating and Information Officer; and
(iii)
the incumbency of iGambit’s officers executing this Agreement and all other Transaction Documents.
(d)
Merger Sub Secretary’s Certificate. A certificate of the secretary of Merger Sub, dated as of the Closing Date, certifying
as to:
(i)
the Certificate of Incorporation and Bylaws of Merger Sub as in effect as of the Closing Date,
(ii)
resolutions of Merger Sub’s Board of Directors and stockholder approving the Merger and authorizing the execution, delivery
and performance of this Agreement and of all other Transaction Documents, and
(iii)
the incumbency of Merger Sub’s officers executing this Agreement and all other Transaction Documents.
(e)
iGambit Closing Certificate. A certificate of an officer of iGambit, dated as of the Closing Date, certifying that:
(i)
the representations and warranties of iGambit set forth in this Agreement are true and correct in all respects as of the Closing
Date as if made on the Closing Date, with the same effect as if made on and as of the Closing Date (or, if made as of a specified
date, shall have been true and correct as of such date), except for inaccuracies of representations or warranties the circumstances
giving rise to which, individually or in the aggregate, do not constitute and could not reasonably be expected to result in an
iGambit Material Adverse Effect (it being understood that for purposes of determining the accuracy of such representations and
warranties, all material adverse effect qualifications and other materiality qualifications contained in such representations
and warranties shall be disregarded), and
(ii)
iGambit has performed all obligations and covenants required to be performed by it under this Agreement and any other agreement
or document entered into in connection herewith on or prior to the Closing Date.
(f)
Merger Sub Closing Certificate . A certificate of an officer of Merger Sub, dated as of the Closing Date, certifying that:
(i)
the representations and warranties of Merger Sub set forth in this Agreement are true and correct in all respects as of the Closing
Date as if made on the Closing Date, with the same effect as if made on and as of the Closing Date (or, if made as of a specified
date, shall have been true and correct as of such date), except for inaccuracies of representations or warranties the circumstances
giving rise to which, individually or in the aggregate, do not constitute and could not reasonably be expected to result in an
iGambit Material Adverse Effect (it being understood that for purposes of determining the accuracy of such representations and
warranties, all material adverse effect qualifications and other materiality qualifications contained in such representations
and warranties shall be disregarded), and
(ii)
Merger Sub has performed all obligations and covenants required to be performed by it under this Agreement and any other agreement
or document entered into in connection herewith on or prior to the Closing Date.
(g)
Certificates of Good Standing. A certificate from the Secretary of State of Delaware as to each of iGambit’s and
Merger Sub’s good standing and payment of all applicable Taxes, and the Secretary of State of each state in which iGambit
is qualified to do business as a foreign corporation, as to iGambit’s good standing and payment of all applicable Taxes.
(h)
Capitalization Certificate. The Capitalization Certificate, duly executed by an officer of iGambit.
(i)
Other Documents. Such other documents and instruments as Clinigence may reasonably request and which are deemed by Clinigence
to be necessary to effect the Merger.
5.2
Closing Deliveries by Clinigence. At the Closing, Clinigence shall deliver the following items, duly executed by Clinigence,
all of which shall be in form and substance reasonably acceptable to iGambit except where otherwise indicated:
(a)
Clinigence Officer’s Certificate. A certificate of an officer of Clinigence, dated as of the Closing Date, certifying
as to:
(i)
the Clinigence Certificate of Incorporation and Bylaws as in effect as of the Closing Date,
(ii)
resolutions of Clinigence’s Board of Directors and stockholders approving the Merger and authorizing the execution, delivery
and performance of this Agreement and of all other Transaction Documents, and
(iii)
the incumbency of Clinigence officers executing this Agreement and all other Transaction Documents.
(b)
Clinigence Closing Certificate. A certificate of an officer of Clinigence, dated as of the Closing Date, certifying that:
(i)
the representations and warranties of Clinigence set forth in this Agreement are true and correct in all respects as of the Closing
Date as if made on the Closing Date, with the same effect as if made on and as of the Closing Date (or, if made as of a specified
date, shall have been true and correct as of such date), except for inaccuracies of representations or warranties the circumstances
giving rise to which, individually or in the aggregate, do not constitute and could not reasonably be expected to result in a
Clinigence Material Adverse Effect (it being understood that for purposes of determining the accuracy of such representations
and warranties, all material adverse effect qualifications and other materiality qualifications contained in such representations
and warranties shall be disregarded), and
(ii)
Clinigence has performed all obligations and covenants required to be performed by it under this Agreement and any other agreement
or document entered into in connection herewith on or prior to the Closing Date.
(c)
Certificate of Good Standing. A certificate from the Secretary of State of Delaware as to Clinigence’s good standing
and payment of all applicable Taxes, and a certificate from the Secretary of State of each state in which Clinigence is qualified
to do business as a foreign corporation, as to the good standing and payment of all applicable Taxes of Clinigence.
(d)
Consideration Spreadsheet. The Consideration Spreadsheet.
(e)
Other Documents. Such other documents and instruments as iGambit may request and which are deemed by iGambit to be necessary
to effect the Merger.
ARTICLE
6.
REPRESENTATIONS AND WARRANTIES OF IGAMBIT, MERGER SUB and the signing stockholder
Except
as set forth in the corresponding sections of the disclosure schedule of iGambit delivered to Clinigence concurrently with the
execution and delivery of this Agreement (the “iGambit Disclosure Schedule”), iGambit, Merger Sub and
the Signing Stockholder hereby jointly and severally represent and warrant to Clinigence that, as of the Signing Date and as of
the Closing Date:
6.1
Organization and Qualification. Each of iGambit and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. HealthDatix Florida is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida. Each of iGambit and its Subsidiaries has all requisite power and authority
to own, lease and operate its properties and to carry on its business as now being conducted. Each of iGambit and its Subsidiaries
is duly qualified or licensed as a foreign corporation (and, as of the Closing Date will be duly qualified as a foreign corporation)
to conduct business and is in good standing in each jurisdiction where the character of the properties owned, leased or operated
by it or the nature of its business makes such qualification or licensing necessary or where the failure to so qualify would not
reasonably be expected to result in an iGambit Material Adverse Effect.
6.2
Authority; Capacity. Each of iGambit, the Signing Stockholder and Merger Sub has all necessary power and authority to execute
and deliver this Agreement and the other Transaction Documents, to perform its or his obligations hereunder, and to consummate
the Merger. The execution and delivery of this Agreement and the other Transaction Documents and the consummation by iGambit and
Merger Sub of the Merger have been, or will be as of the Closing Date, duly and validly authorized by all requisite actions and
no other corporate or other proceedings on the part of iGambit or Merger Sub are necessary to authorize this Agreement or to consummate
the Merger. This Agreement, the Transaction Documents and the consummation of the Merger have been, or will be as of the Closing
Date, approved by iGambit’s directors and Merger Sub’s directors and stockholders. This Agreement has been and, at
Closing, the other Transaction Documents will be, duly and validly executed and delivered by iGambit, the Signing Stockholder
and Merger Sub. This Agreement constitutes and, at Closing, together with the other Transaction Documents, will constitute the
legal, valid and binding obligation of iGambit, the Signing Stockholder and Merger Sub, enforceable against iGambit, the Signing
Stockholder and Merger Sub in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws and equitable principles related to or limiting creditors’ rights generally and by the availability
of equitable remedies and defenses.
6.3
Capitalization; Ownership of iGambit; Debt.
(a)
Section 6.3(a) of the iGambit Disclosure Schedule sets forth the authorized and outstanding capital of iGambit and each of its
Subsidiaries, the number and series or class of shares issued and outstanding and the number of granted stock options and warrants,
including vesting schedule and exercise price. Each share of the capital stock of iGambit and each of its Subsidiaries is duly
and validly authorized and issued, fully paid and nonassessable, and was not issued in violation of any preemptive rights of any
stockholder of iGambit or any of its Subsidiaries. All of the issued and outstanding shares of capital stock of iGambit and its
Subsidiaries has been issued in accordance with all applicable federal and state securities Laws. Section 6.3(a) of the iGambit
Disclosure Schedule sets forth the name and contact information for iGambit’s transfer agent.
(b)
Except as set forth in Section 6.3(a) of the iGambit Disclosure Schedule, there are no (i) outstanding securities of iGambit
or its Subsidiaries convertible into or exchangeable for any capital stock or other equity interests or securities of iGambit
or any of its Subsidiaries; (ii) preemptive, registration or similar rights on the part of any holder of any class of securities
of iGambit or any of its Subsidiaries; (iii) subscriptions, options, warrants, conversion, exchange or other rights, agreements
or commitments of any kind relating to or obligating iGambit or any of its Subsidiaries to issue, sell, purchase or redeem, or
cause to be issued, sold, purchased or redeemed, any shares of capital stock of iGambit or any of its Subsidiaries or any securities
convertible into or exchangeable for any such shares; (iv) other than this Agreement, stockholder agreements, buy-sell agreements,
voting agreements, voting trusts or other agreements or understandings relating to the voting, purchase, transfer, redemption
or other acquisition of any shares of the capital stock of iGambit or any of its Subsidiaries; or (v) unpaid dividends or other
distributions, whether current or accumulated, due or payable on any of the capital stock of iGambit or any of its Subsidiaries.
Other than as expressly provided in Section 4.1 of this Agreement, neither iGambit nor any of its Subsidiaries is obligated
to redeem or otherwise acquire any of its outstanding shares of capital stock, and the consummation of the Merger will not trigger
any such obligation.
(c)
Section 6.3(c) of the iGambit Disclosure Schedule sets forth as of the Signing Date a true and complete list of all Debt
of iGambit and each of its Subsidiaries that exceeds $5,000 individually or $10,000 in the aggregate, including the number of
shares of iGambit or its Subsidiaries into which such Debt is convertible, as applicable.
(d)
The Signing Stockholder owns beneficially and of record 1,000 shares of Series A Preferred Stock of iGambit free and clear
of any Encumbrances, other than restrictions on transfer under applicable state or federal securities Laws. There are no restrictions
on or agreements with respect to the voting rights of the Signing Stockholder’s shares of iGambit stock that would impair
the ability of the Signing Stockholder to perform is obligations under this Agreement, including any proxies or voting trusts.
6.4
No Conflicts; Required Consents. No Consents other than those set forth in Section 6.4 of the iGambit Disclosure Schedule
are required with respect to iGambit’s, the Signing Stockholder’s or Merger Sub’s execution and delivery of
this Agreement, the other Transaction Documents, and the consummation of the Merger. The execution, delivery and performance of
this Agreement and the other Transaction Documents by iGambit, the Signing Stockholder and Merger Sub do not and will not, with
or without notice or lapse of time,
(a)
conflict with or violate the iGambit Certificate of Incorporation or iGambit’s bylaws, or the certificate of incorporation
or bylaws of Merger Sub;
(b)
conflict with or violate any Legal Requirement applicable to iGambit or any of its Subsidiaries or the Signing Stockholder or
by which the iGambit Assets or any other property or asset of iGambit or any of its Subsidiaries or the Signing Stockholder is
bound or affected;
(c)
assuming the Consents listed in Section 6.4 of the iGambit Disclosure Schedule are obtained, result in any breach of or constitute
a default under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation
of any Encumbrance on the iGambit Assets or the assets of iGambit or any of iGambit’s Subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation;
(d)
violate or conflict with any other restriction of any kind or character to which iGambit or any of its Subsidiaries or the Signing
Stockholder is subject; or
(e)
require iGambit or any of its Subsidiaries or the Signing Stockholder to obtain any Consent of, or make or deliver any filing
or notice to, a Governmental Authority.
6.5
Subsidiaries. Except for HealthDatix Florida and Merger Sub, each of which iGambit is the record and beneficial holder
of all of the issued and outstanding capital stock, iGambit does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any Entity. Since the
date of its incorporation, Merger Sub has not engaged in any business activities or conducted any operations, nor will Merger
Sub prior to the Closing Date engage in any business activities or conduct any operations other than in connection with the transactions
contemplated by this Agreement. At the Effective Time, Merger Sub will not have any assets, Liabilities or obligations other than
those contemplated by this Agreement.
6.6
Financial Statements.
(a)
All of iGambit’s financial statements set forth in its annual report on Form 10-K filed with the SEC on April 16, 2019 and
in its quarterly report filed with the SEC on Form 10-Q on May 20, 2019 (collectively, the “iGambit Financial Statements”):
(i)
are true, accurate and complete in all material respects;
(ii)
are consistent in all material respects with the Books and Records of iGambit and its Subsidiaries;
(iii)
present fairly and accurately the financial condition of iGambit and its Subsidiaries as of the respective dates thereof and the
results of operations, changes in stockholders’ equity and cash flows of iGambit and its Subsidiaries for the periods covered
thereby; and
(iv)
have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered.
6.7
Absence of Undisclosed Liabilities. Neither iGambit nor any of its Subsidiaries has any Liabilities other than:
(i)
those set forth in the unaudited consolidated balance sheets, and the related unaudited consolidated statements of operations,
changes in stockholders’ equity and cash flows, of iGambit included in iGambit’s quarterly report filed with the SEC
on Form 10-Q on May 20, 2019 (the ”iGambit Interim Balance Sheet”);
(ii)
those incurred in the ordinary course of business and not required to be set forth in the iGambit Interim Balance Sheet under
GAAP and not in excess of an aggregate amount of $25,000;
(iii)
the Debt listed in Section 6.3(c) of the iGambit Disclosure Schedule;
(iv)
those incurred in the ordinary course of business after the Balance Sheet Date and not in excess of $25,000 in the aggregate;
or
(v)
those incurred in connection with the execution of any of the Transaction Documents.
6.8
Absence of Changes. Since the Balance Sheet Date, except as expressly contemplated by this Agreement, (i) iGambit
and its Subsidiaries have conducted the iGambit Business in the ordinary course of business, (ii) no event or circumstance
has occurred that has had or is likely to have an iGambit Material Adverse Effect, and (iii) neither iGambit nor any of its
Subsidiaries has:
(a)
Entered into any commitment or transaction in excess of $50,000 or any commitment or transaction not in the ordinary course of
business;
(b)
Entered into any transaction with its officers, directors or stockholders, or their Affiliates, except pursuant to a binding agreement
effective as of the Signing Date and disclosed to Clinigence in writing;
(c)
Amended or otherwise modified the material terms of any iGambit Material Contract or Governmental Approval except as approved
in writing by Clinigence;
(d)
Commenced a Proceeding other than for the routine collection of bills;
(e)
Incurred any indebtedness for borrowed money or guaranteed any such indebtedness or issued or sold any debt securities or guaranteed
any debt securities of others;
(f)
Took any action or failed to take any action that could reasonably be expected to cause or result in an iGambit Material Adverse
Effect; or
(g)
Entered into any contract or agree, in writing or otherwise, to take any of the actions described above in this Section 6.8,
or any action that would make any of its representations or warranties contained in this Agreement untrue or incorrect or prevent
it from performing or cause it not to perform its covenants hereunder.
6.9
Material Contracts.
(a)
Section 6.9 of the iGambit Disclosure Schedule provides a true and complete list of each of the following contracts to which
iGambit or any of its Subsidiaries is party other than this Agreement (collectively, the “iGambit Material Contracts”):
(i)
All leases for real property used by iGambit or any of its Subsidiaries and all leases of personal property and any Contract affecting
any right, title or interest in or to real property;
(ii)
All Contracts with Persons who are Service Providers, and all iGambit Plans;
(iii)
Any Contract involving financing or borrowing of money, or evidencing indebtedness; any liability for borrowed money; any letters
of credit; any obligation for the deferred purchase price of property in excess of $25,000; or guaranteeing in any way any Contract
in connection with any Person;
(iv)
Any joint venture, partnership, cooperative arrangement or any other Contract involving a sharing of profits;
(v)
Any Contract with any Governmental Authority;
(vi)
Any Contract with respect to the discharge, storage or removal of effluent, waste or pollutants;
(vii)
Any Contract for the purchase or sale of any iGambit Assets or assets of or any of its Subsidiaries other than in the ordinary
course of business or for the option or preferential rights to purchase or sell any iGambit Assets or assets of or any of its
Subsidiaries;
(viii)
Any Contract containing covenants not to compete in any line of business or with any Person in any geographical area or that would
otherwise result in iGambit or any of its Subsidiaries being bound by, or subject to, any non-compete or other restriction on
the operation or scope of its businesses, including the iGambit Business;
(ix)
Any Contract related to the acquisition of a business or the equity of any other Entity or the sale of iGambit or any of its Subsidiaries
or any of the iGambit Assets or any assets of any of its Subsidiaries;
(x)
Any other Contract which (i) provides for payment or performance by either party thereto having an aggregate value of $25,000
or more; (ii) is not terminable without payment or penalty on thirty (30) days (or less) notice; or (iii) is between,
inter alia, iGambit or any of its Subsidiaries and an Affiliate thereof;
(xi)
Any proposed arrangement of a type that, if entered into, would be a Contract described in any of Section 6.9(a)(i) through
6.9(a)(x) above.
(b)
True and complete copies of each written iGambit Material Contract and true and complete written summaries of each oral iGambit
Material Contract (including all amendments, supplements, modifications and waivers thereto) have been provided to Clinigence
by iGambit.
(c)
Each iGambit Material Contract is currently valid, in full force and effect, and is enforceable by iGambit or its Subsidiaries,
as applicable, in accordance with its terms.
(d)
Neither iGambit nor any of its Subsidiaries is in default, and no party has notified iGambit or any of its Subsidiaries in writing
that iGambit or any of its Subsidiaries is in default, under any iGambit Material Contract. No event has occurred, and no circumstance
or condition exists, that might, with or without notice or lapse of time:
(i)
result in a violation or breach of any of the provisions of any iGambit Material Contract;
(ii)
give any Person the right to declare a default or exercise any remedy under any iGambit Material Contract;
(iii)
give any Person the right to accelerate the maturity or performance of any iGambit Material Contract or to cancel, terminate or
modify any iGambit Material Contract; or
(iv)
otherwise have an iGambit Material Adverse Effect in connection with any iGambit Material Contract.
(e)
Neither iGambit nor any of its Subsidiaries has waived any of its rights under any iGambit Material Contract.
(f)
The performance of the iGambit Material Contracts will not result in any violation of or failure by iGambit or any of its Subsidiaries
to comply in all material respects with any Legal Requirement.
(g)
The iGambit Material Contracts constitute all of the Contracts necessary to enable iGambit and its Subsidiaries to conduct the
iGambit Business in the manner in which such iGambit Business is currently being conducted.
(h)
The consummation of the Merger shall not result in iGambit or any of its Subsidiaries being bound by, or subject to, any non-compete
or other restriction on the operation or scope of its businesses, including the iGambit Business.
6.10
Title; Sufficiency; Condition of Assets. iGambit or its Subsidiaries has good and marketable title to or, in the case of
leased property and assets, has valid and enforceable leasehold interests in, all of the Assets and properties reasonably necessary
for the conduct of the iGambit Business as presently conducted, in each case free and clear of all Encumbrances other than Permitted
Encumbrances. No Assets, licenses or other rights that are used in the iGambit Business are held by any stockholder of iGambit
or any Affiliate of any such stockholder. The Assets and leasehold improvements of iGambit and its Subsidiaries are in good operating
condition, reasonable wear and tear excepted, and are adequate for the purposes for which they are being used.
6.11
Leased Real Property.
(a)
Neither iGambit nor any of its Subsidiaries owns or has ever owned any real property. iGambit or its Subsidiaries have a valid,
binding and enforceable leasehold interest in each of the leased real properties (collectively, the “iGambit Facilities”)
listed in Section 6.11 of the iGambit Disclosure Schedule, free and clear of any Encumbrances, except for iGambit Facility
Leases and Permitted Encumbrances. Each lease, including all amendments thereto (excluding subordination and non-disturbance agreements,
which will be delivered to Clinigence on or before Closing), evidencing such leased real property (the “iGambit Facility
Leases”) is also listed in Section 6.11 of the iGambit Disclosure Schedule. Section 6.11 of the iGambit Disclosure
Schedule sets forth, in respect of each iGambit Facility Lease, the date and name of the parties to such iGambit Facility Lease,
description of the leased premises, the commencement and expiration dates of the lease term and any renewal terms, the amount
of monthly or annual rental payments, the amount of the security deposit, and the status of rental payments, including any rental
payments in arrears, any prepaid rent and the date through which rent is paid as of the Signing Date. iGambit or its Subsidiaries
presently occupies each of the iGambit Facilities free of any subleases, occupancy agreements, licenses, concessions or other
agreements granting to any party or parties (other than iGambit, its Subsidiaries or the applicable landlord) a right of use or
occupancy of any portion of any iGambit Facility. iGambit’s or its Subsidiaries’ possession and quiet enjoyment of
iGambit Facilities under each of iGambit Facility Leases has not been disturbed and there are no material disputes with respect
to any of iGambit Facility Leases. Each iGambit Facility Lease is valid and in full force and effect, and, to iGambit’s
Knowledge, no default or event which with the giving of notice or the passage of time, or both, will constitute default has occurred
under any iGambit Facility Lease or been claimed to have occurred by either the landlord or the tenant thereunder. All iGambit
Facilities and tenant improvements located on or within such leased real property are adequate and suitable for the purposes for
which they are currently being used and there are no deferred maintenance or repair items at any iGambit Facility in excess of
$25,000. No security deposit or portion thereof deposited with respect to any iGambit Facility Lease has been applied in respect
of a breach of or default under any of iGambit Facility Leases that has not been re-deposited in full. Neither iGambit nor any
of its Subsidiaries owes and will not in the future owe any brokerage commissions or finder’s fees with respect to any of
iGambit Facility Leases. There are no material unsatisfied capital expenditure requirements or remodeling obligations of iGambit
or any of its Subsidiaries under any of iGambit Facility Leases, other than ordinary maintenance and repair obligations. Neither
iGambit nor any of its Subsidiaries has assigned, transferred, sublet, or granted any person the right to use or occupy any of
iGambit Facilities arising under iGambit Facility Leases or granted any other security interest in any iGambit Facility Lease
or any interest therein. Neither iGambit nor any of its Subsidiaries has made any material modifications to iGambit Facilities
that will be required to be restored or otherwise removed at the expiration or termination of any iGambit Facility Lease.
(b)
Neither iGambit nor any of its Subsidiaries has any leasehold interest in any leased real property other than iGambit Facilities.
Prior to the Signing Date, iGambit has provided Clinigence with true, correct and complete copies of all iGambit Facility Leases,
including all amendments and supplements thereto. The iGambit Facility Leases constitute all of the written and oral agreements
of any kind for the leasing, rental, use or occupancy of leased real property to which iGambit or any of its Subsidiaries is a
party. The iGambit Facility Leases are the result of bona fide arm’s length negotiations between the parties thereto. No
delivery date of any iGambit Facilities under any iGambit Facility Leases has been accelerated and the premises not yet delivered.
(c)
Neither iGambit nor any of its Subsidiaries has received any written notice that its occupancy, use or the condition of any iGambit
Facility is in violation of any Applicable Laws, zoning ordinances or land use restrictions. There are no encroachments on the
leased real property or any iGambit Facility and no encroachment of any improvements to each onto adjacent property. Each iGambit
Facility is in good and operable condition and repair and in material compliance with all Applicable Laws.
(d)
iGambit does not know of any facts that would adversely affect the possession, use or occupancy of any of any leased real property
or any iGambit Facility. No portion of any leased real property nor any iGambit Facility is currently subject to any condemnation
proceedings, and, to the Knowledge of iGambit, no condemnation or taking is threatened or contemplated.
(e)
iGambit or its Subsidiaries possess all easements, rights, licenses, permits and approvals necessary to continue operation of
the iGambit Business including those related to the leased real property and any iGambit Facility copies of which, to the extent
in iGambit’s possession, have been provided to Clinigence.
(f)
All utilities serving the leased real property and each iGambit Facility are adequate to operate each in the manner it is currently
operated and, to the Knowledge of iGambit, all utility lines, pipes, hook-ups and wires serving the leased real property and each
iGambit Facility are located within recorded easements for the benefit of each or in a public right-of-way, and any associated
charges accrued to date have been fully paid.
6.12
Intellectual Property.
(a)
Section 6.12 of the iGambit Disclosure Schedule sets forth an accurate and complete list and description of (i) all Registered
Intellectual Property Rights owned or held by or on behalf of iGambit or any of its Subsidiaries, and (ii) all trade and
corporate names and all material unregistered trademarks and service marks owned or used by iGambit or any of its Subsidiaries
(collectively, the ”iGambit Registered Intellectual Property Rights”), specifying as to each such item:
the name of the applicant/registrant and current owner, the jurisdictions by or in which each such iGambit Registered Intellectual
Property Right has been issued or registered or in which an application for such issuance or registration has been filed (or,
for domain names, the applicable registrar), the respective registration or application numbers, the dates of issuance, registration
or filing, and the prosecution status. iGambit or its Subsidiaries are listed in the record of the appropriate Governmental Authority
as the sole owner of each item of iGambit Registered Intellectual Property Rights (except in the case of unregistered trademarks
and service marks).
(b)
Each item of iGambit Intellectual Property is owned solely by or is duly and validly licensed to iGambit or its Subsidiaries for
use in the manner currently used by iGambit or its Subsidiaries in the conduct of the iGambit Business, free and clear of any
Encumbrances, except for non-exclusive licenses granted to end-user customers in the ordinary course of business. Each item of
iGambit Intellectual Property owned by iGambit or its Subsidiaries is valid, subsisting, in full force and effect and, to iGambit’s
Knowledge, none is involved in any interference, reexamination, cancellation, or opposition proceeding, or any other currently
pending or threatened proceeding or claim challenging the ownership, use, validity or enforceability of any such item of iGambit
Intellectual Property. The iGambit Intellectual Property constitutes all of the Intellectual Property and Intellectual Property
Rights used in or reasonably necessary for the conduct of the iGambit Business.
(c)
No Person who has licensed Intellectual Property to iGambit or any of its Subsidiaries has ownership rights or license rights
to improvements made by iGambit or any of its Subsidiaries in such Intellectual Property pursuant to the terms of such license.
Neither iGambit nor any of its Subsidiaries has transferred ownership of, or granted any exclusive license of or right to use,
or authorized the retention of any exclusive rights to use or joint ownership of, any Intellectual Property Rights that are included
in iGambit Intellectual Property to any Person.
(d)
All material registration, maintenance and renewal fees due and payable in connection with each item of iGambit Registered Intellectual
Property Rights have been paid and all documents and certificates necessary to maintain such iGambit Registered Intellectual Property
Rights have been timely filed with the relevant Government Authority, including the United States Patent and Trademark Office
(the ”PTO”), the U.S. Copyright Office, or their respective counterparts in any relevant foreign jurisdiction,
as the case may be. To iGambit’s Knowledge, there are no actions that must be taken by iGambit or any of its Subsidiaries
within one hundred and twenty (120) days following the Closing Date, including the payment of any registration, maintenance
or renewal fees or the filing of any responses to offices actions, documents, applications or certificates for the purposes of
obtaining, maintaining, perfecting, preserving or renewing any iGambit Registered Intellectual Property Rights. iGambit or its
Subsidiaries has timely recorded an assignment of each Registered Intellectual Property Right assigned to iGambit or any of its
Subsidiaries, if any, with the relevant Governmental Authority, including the PTO, the U.S. Copyright Office or their respective
counterparts in any relevant foreign jurisdiction, as the case may be. All iGambit Registered Intellectual Property Rights were
prosecuted and recorded in good faith and in compliance with all applicable rules, policies and procedures of any applicable Governmental
Authority.
(e)
iGambit and its Subsidiaries have taken commercially reasonable steps sufficient to maintain and protect the secrecy, confidentiality,
value and iGambit’s and its Subsidiaries’ rights in all Confidential Information and Trade Secrets of iGambit and
its Subsidiaries, respectively. Since December 31, 2010, neither iGambit nor any of its Subsidiaries has received written
notice of any misappropriation or unauthorized disclosure of any Trade Secret or Confidential Information related to the iGambit
Business, the iGambit Assets or the assets of any of its Subsidiaries, or any violation or breach of obligations of confidentiality
with respect to such, nor does iGambit have Knowledge of any basis for such misappropriation, unauthorized disclosure, violation
or breach.
(f)
The operation of the iGambit Business does not infringe or misappropriate any Intellectual Property Rights of any Person, violate
any right of any Person (including any right to privacy or publicity) or constitute unfair competition or trade practices under
the laws of any jurisdiction. Neither iGambit nor any of its Subsidiaries has received written notice from any Person claiming
that such operation or any iGambit Product infringes or misappropriates any Intellectual Property Rights of any Person, violate
any right of any Person (including any right to privacy or publicity) or constitutes unfair competition or trade practices under
the laws of any jurisdiction (nor does iGambit have Knowledge of any basis therefor). Neither iGambit nor any of its Subsidiaries
incorporates or uses the content or images of any third party in any software or website owned or licensed by iGambit or any of
its Subsidiaries.
(g)
To iGambit’s Knowledge, no Person is violating, infringing or misappropriating any iGambit Intellectual Property. Neither
iGambit nor any of its Subsidiaries has made any such claims against any Person with respect to any iGambit Intellectual Property,
and neither iGambit nor any of its Subsidiaries has invited any Person to take a license, authorization, covenant not to sue or
the like with respect to any iGambit Intellectual Property.
(h)
There are no Proceedings to which iGambit or any of its Subsidiaries is a party before any Governmental Authority (including before
the PTO) anywhere in the world related to any of the iGambit Intellectual Property, including any iGambit Registered Intellectual
Property Rights and, to iGambit’s Knowledge, no such Proceedings are threatened.
(i)
No iGambit Intellectual Property or iGambit Product is subject to any Proceeding or any outstanding Order that restricts the use,
transfer or licensing thereof by iGambit or any of its Subsidiaries or that would reasonably be expected to adversely affect the
validity, use or enforceability of such iGambit Intellectual Property.
(j)
Neither this Agreement nor the consummation of the Merger will (i) result in any loss of, or give rise to a right to modify
or terminate the right to use, any material iGambit Intellectual Property, (ii) result in (x) iGambit or any of its
Subsidiaries granting to any Person any license, covenant not to sue, immunity or other right with respect to any iGambit Intellectual
Property, including any release of iGambit Intellectual Property from escrow; (y) iGambit, any of its Subsidiaries or any
of their respective Affiliates being bound by, or subject to, any non-compete or other restriction on the operation or scope of
their businesses, including the iGambit Business; or (z) iGambit, any of its Subsidiaries or any of their respective Affiliates
being obligated to pay any royalties or other amounts to any Person.
(k)
No current or former Service Provider of iGambit or any of its Subsidiaries: (i) is, to iGambit’s Knowledge, in violation
of any term or covenant of any employment contract, consulting contract, services contract, statement of work, patent disclosure
agreement, invention assignment agreement, non-disclosure agreement, non-competition, non-solicitation agreement or any other
contract or agreement with any other party by virtue of such Service Provider’s being employed by, retained or engaged by,
or performing services for, iGambit or any of its Subsidiaries; or (ii) to iGambit’s Knowledge has developed any technology,
software or other copyrightable, patentable, or otherwise proprietary work for iGambit or any of its Subsidiaries that is subject
to any agreement executed prior to the termination of such Service Provider’s employment or other service to iGambit or
any of its Subsidiaries (or executed after the termination of such Service Provider’s employment or other service to iGambit
or any of its Subsidiaries) under which such Service Provider has assigned or otherwise granted to any third party any rights
(including any Intellectual Property Rights) in or to such technology, software or other copyrightable, patentable or otherwise
proprietary work.
(l)
iGambit and its Subsidiaries have taken commercially reasonable steps to preserve and maintain all the interests and proprietary
rights of iGambit and its Subsidiaries in, to and under the iGambit Intellectual Property.
(m)
Section 6.12 of the iGambit Disclosure Schedule lists all software that is distributed as “free software” or “open
source software,” or under any licensing or distribution model that purports to require, as a condition of use, modification
and/or distribution of such software, that such software or other software incorporated into, derived from, or distributed with
such software be disclosed or distributed in source code form, be licensed for the purpose of making derivative works, or be redistributable
at no or minimal charge, or any license listed at www.opensource.org (collectively, “Open Source Software”)
incorporated into, integrated or bundled with, linked to or otherwise used in or in the development of any iGambit Product (or
any part thereof) or otherwise used in any manner that may subject any iGambit Product, in whole or in part, to all or part of
any license obligations of any Open Source Software. To the extent that Open Source Software is incorporated in any iGambit Products,
neither iGambit nor any of its Subsidiaries is required directly or indirectly to grant, or purport to grant, to third parties,
by virtue of intermingling or integration of such software with any iGambit Products, any rights or immunities under any iGambit
Products. iGambit and its Subsidiaries have established a commercially reasonable policy that is designed to identify Open Source
Software used by or for iGambit or any of its Subsidiaries. With respect to any Open Source Software that is or has been used
by or for iGambit or any of its Subsidiaries in any way, iGambit and its Subsidiaries have been and are in compliance with all
applicable licenses with respect thereto, including all copyright notice and attribution requirements.
(n)
Neither iGambit nor any of its Subsidiaries has (i) licensed any of the software included in any iGambit Products or iGambit
Intellectual Property in source code form to any Person, or (ii) entered into any escrow agreements with respect to any such
software. No event has occurred, and no circumstances or conditions exist, that (with or without notice or lapse of time, or both)
will, or would reasonably be expected to, result in the disclosure or delivery by iGambit or any of its Subsidiaries (or any Person
acting on behalf of iGambit or any of its Subsidiaries) of any source code included in any iGambit Products or iGambit Intellectual
Property, other than pursuant to agreements with Service Providers engaged in development activities for iGambit or any of its
Subsidiaries in the ordinary course of business.
6.13
Service Providers.
(a)
Service Providers and Contracts. No Service Provider of iGambit or any of its Subsidiaries has been granted the right to
continued employment by iGambit or any of its Subsidiaries, as applicable, or to any compensation following termination of employment
with iGambit or any of its Subsidiaries. iGambit does not have any Knowledge that any Service Provider of iGambit or any of its
Subsidiaries intends to terminate his or her employment or other engagement with iGambit or any of its Subsidiaries, nor does
iGambit or any of its Subsidiaries have a present intention to terminate the employment or engagement of any Service Provider.
(b)
Compensation. iGambit has made available to Clinigence an accurate, correct and complete list of all:
(i)
current Service Providers of iGambit and its Subsidiaries, including each Service Provider’s name, title or position, present
annual compensation (including bonuses, commissions and deferred compensation), accrued and unused paid vacation and other paid
leave, years of service, interests in any incentive compensation plan, and estimated entitlements to receive supplementary retirement
benefits or allowances (whether pursuant to a contractual obligation or otherwise),
(ii)
individuals who are currently performing services for iGambit or any of its Subsidiaries related to the iGambit Business who are
classified as “consultants” or “independent contractors,”
(iii)
bonuses, severance payments, termination pay and other special compensation of any kind paid to, accrued with respect to, or that
would be payable to (as a result of the Merger), any present or former Service Provider since the Balance Sheet Date,
(iv)
increases in any Service Provider’s wage, salary or other compensation since the Balance Sheet Date, and
(v)
increases or changes in any other benefits or insurance provided to any Service Provider since the Balance Sheet Date. No Service
Provider of iGambit or any of its Subsidiaries is eligible for payments that would constitute “parachute payments”
under Section 280G of the Code.
(c)
Disputes. There are no claims, disputes or controversies pending or, to iGambit’s Knowledge, threatened involving
any Service Provider or group of Service Providers. Since December 31, 2010, neither iGambit nor any of its Subsidiaries
has suffered or sustained any work stoppage and no such work stoppage is threatened.
(d)
Wage and Hour Liabilities. Neither iGambit nor any of its Subsidiaries has (i) any overtime, meal period, break period,
hours of service or wage and hour obligation or liability of whatsoever kind with respect to any of its past or current Service
Providers or any liability for failure to comply with any Applicable Law relating to any of the foregoing, or (ii) any obligation
or liability for any payment to any trust, pension or other fund, including union trust funds, or to any governmental or administrative
authority, with respect to unemployment compensation benefits, workers’ compensation benefits, social security, disability
or other benefits for its Service Providers (other than routine payments to be made in the normal course of business and consistent
with past practice).
(e)
Labor Relations. There are no strikes, slowdowns, work stoppages or material labor relations controversies pending or,
to the Knowledge of iGambit, threatened between iGambit or any of its Subsidiaries, on one hand, and any of their respective Service
Providers, and neither iGambit nor any of its Subsidiaries has experienced any such strike, slowdown, work stoppage or material
controversy within the past three (3) years.
(f)
Compliance with Employment Laws. iGambit and its Subsidiaries are in compliance in all material respects with all Applicable
Laws relating to employment practices and the employment of labor or use of contract workers, including those related to immigration,
wages, hours and the payment and withholding of Taxes and other sums as required by the appropriate Governmental Authority, and
have each withheld and paid to the appropriate Governmental Authority or are holding for payment not yet due to such Governmental
Authority all amounts required to be withheld from Service Providers of iGambit or any of its Subsidiaries, as applicable, and
are not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing. Neither
iGambit or nor any of its Subsidiaries knowingly utilizes or continues to utilize contractors who fail to comply with Form I-9,
Employment Eligibility Verification, obligations relating to the contractor’s employees or who otherwise fail to comply
with U.S. immigration laws. Since January 1, 2015, neither iGambit nor any of its Subsidiaries has received any notices from the
Social Security Administration or the U.S. Department of Homeland Security regarding a “mismatch” of employee names
and Social Security Numbers or employee names and immigration-related documents.
(g)
FLSA. Since January 1, 2015, for purposes of the Fair Labor Standards Act of 1938, as amended (the “FLSA”),
and all other Applicable Laws, (i) all individuals characterized and treated by iGambit or any of its Subsidiaries as consultants
or independent contractors are properly treated as independent contractors; (ii) all current or former employees compensated on
a commission or piecework basis qualify or qualified for an applicable exemption, including Section 7(i) of the FLSA; and (iii)
all current and former employees classified as exempt under the FLSA and Applicable Laws are or have been properly classified.
(h)
Compliance with Legal Requirements. Since December 31, 2000, iGambit and its Subsidiaries have complied in all material
respects with all Legal Requirements related to the employment or engagement of their respective Service Providers, including
provisions related to wages, hours, leaves of absence, equal opportunity, occupational health and safety, workers’ compensation,
severance, employee handbooks or manuals, collective bargaining and the payment of social security and other Taxes. Neither iGambit
nor any of its Subsidiaries has any Liability under any Legal Requirements related to employment and attributable to an event
occurring or a state of facts existing on or prior to the Signing Date or the Closing Date.
6.14
iGambit Benefit Plans.
(a)
Section 6.14 of the iGambit Disclosure Schedule lists each employee benefit plans, as that term is defined in Section 3(3) of
ERISA, and fringe benefit plans, as that term is defined in Section 6039D(d) of the Internal Revenue Code, which now are or ever
have been maintained by iGambit or any of its Subsidiaries, or by any trade or business, whether or not incorporated (an “iGambit
ERISA Affiliate”), or to which any iGambit ERISA Affiliate now has or since December 31, 2016 has had an obligation
to contribute (the “iGambit Plans”). Section 6.14 of the iGambit Disclosure Schedule identifies each of
the iGambit Plans that is an “employee welfare benefit plan,” or “employee pension benefit plan” as such
terms are defined in Sections 3(1) and 3(2) of ERISA (the “ERISA Plans”). No event has occurred nor has there
been any omission which would result in violation of any laws, rulings, or regulations applicable to any employee benefit plan.
There are no claims pending or, to the Knowledge of the iGambit, threatened with respect to any employee benefit plan, other than
claims for benefits by employees, beneficiaries, or dependents arising in the normal course of the operation of any such plan.
(b)
Each iGambit Plan that is intended to be qualified under Section 401(a) or 401(k) of the Internal Revenue Code is identified as
a “Qualified Plan” on the schedule of employee benefit plans and has in fact been so qualified from the effective
date of its establishment and continues to be so qualified. No event or omission has occurred which would cause any such plan
to lose its qualification under Section 401(a) or 401(k) of the Internal Revenue Code, or which would cause the iGambit to incur
liability for any excise tax under the Internal Revenue Code with respect to the maintenance, operation, or any other aspect of
any such Qualified Plan.
(c)
With respect to each “group health plan” (as defined in Section 607(1) of ERISA) that has been maintained by the iGambit,
all notices required pursuant to Section 606 of ERISA have been provided on a timely basis and each such plan has otherwise complied
in all material respects with the requirements of Sections 606 through 608 of ERISA.
(d)
With respect to each iGambit Plan maintained by the iGambit within the three years preceding the Closing, complete and correct
copies of the following documents have been delivered to the Acquirer: (i) all documents embodying or governing such iGambit Plan;
(ii) the most recent IRS determination letter with respect to such iGambit Plan; (iii) the three most recently filed IRS Forms
5500, with all applicable schedules attached thereto; (iv) the three most recent actuarial valuation reports completed with respect
to such iGambit Plan; (v) the summary plan description for such iGambit Plan; and (vi) any insurance policy related to such iGambit
Plan.
(e)
All contributions and premiums that iGambit, any of its Subsidiaries or any iGambit ERISA Affiliate is required to pay under the
terms of each of the ERISA Plans and Sections 412, 430 and 431 of the Code, if any, have, to the extent due, been paid in full
or properly recorded on the financial statements or records of iGambit or any of its Subsidiaries, and none of the ERISA Plans
or any trust established thereunder has incurred any “accumulated funding deficiency” (as defined in Section 306(a)
of ERISA and Section 431 of the Code), or any “unpaid minimum required contribution” (as defined in Section 4971(c)
of the Code) whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to
the Signing Date. No lien has been imposed under Section 430(k)(n) of the Code or Section 306(g) of ERISA on the iGambit Assets
or any iGambit ERISA Affiliate, and no event or circumstance has occurred that is reasonably likely to result in the imposition
of any such lien on any such assets on account of any ERISA Plan.
(f)
All contributions or other amounts withheld from any employee’s pay for deposit in a 401(k) plan or for payment of any health
or insurance premiums or for any other purpose with respect to an iGambit Plan have been timely deposited or transmitted to an
insurance company in accordance with ERISA and applicable Department of Labor regulations and guidance.
(g)
Each of the iGambit Plans has been operated and administered in all material respects in accordance with its terms and applicable
laws, including ERISA and the Code.
6.15
Compliance
with Laws; Governmental Approvals.
(a)
Neither iGambit nor any of its Subsidiaries is now, or during the past five (5) years has been, in conflict with, or in default,
breach or violation of, in any material respect, any Legal Requirement applicable to iGambit or any of its Subsidiaries, as applicable,
or by which any iGambit Asset is bound, subject or affected, and iGambit and its Subsidiaries have filed all material reports,
data and other information required to be filed with any Governmental Authority. iGambit and its Subsidiaries are in possession
of all Governmental Approvals reasonably necessary for iGambit or any of its Subsidiaries, as applicable, to own, lease and operate
its properties or to carry on the iGambit Business. No suspension or cancellation of any Governmental Approvals is pending or,
to the Knowledge of iGambit, threatened, and, other than FINRA, no Governmental Approval is required to be obtained or filed in
connection with the execution and delivery of this Agreement and the other Transaction Documents. Neither iGambit nor any of its
Subsidiaries has received written notice or communication from any Person of any inquiry, proceeding or investigation by any Governmental
Authority alleging or based upon a violation of any Legal Requirement by iGambit or any of its Subsidiaries or that involves services
furnished or data submitted by iGambit or any of its Subsidiaries.
(b)
Since December 31, 2000, no Governmental Authority or other Person has conducted, or has given iGambit or any of its Subsidiaries
any notice or communication that it intends to conduct, any audit or other review of iGambit’s or any of its Subsidiaries’
services to any of its customers with regard to such customer’s participation in, provision of services under, or submission
of data in connection with the Medicare or similar state programs, and no such audit or review would reasonably be expected to
result in any liability to iGambit or any of its Subsidiaries for any reimbursement, penalty or interest with respect to payments
received by iGambit or any of its Subsidiaries. To iGambit’s Knowledge, other than normal claims disputes, none of iGambit’s
or any of its Subsidiaries’ customers has any reimbursement or payment rate appeals, disputes or contested positions currently
pending before any Governmental Authority or with any other third-party payor. Neither iGambit nor any of its Subsidiaries has
on behalf of any of its customers submitted any false or fraudulent claim to any third party and has not received any notice from
any third party for any allegation of a billing mistake, overpayment claim, false claim or fraud by iGambit or any of its Subsidiaries.
All billing practices of iGambit and its Subsidiaries have been true, fair and correct and in compliance with all Applicable Laws,
and neither iGambit nor any of its Subsidiaries have billed for or received any payment or reimbursement in excess of amounts
permitted by Applicable Laws. Neither iGambit nor any of its Subsidiaries has knowingly or willfully solicited, received, paid
or offered to pay any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, for the purpose of making
or receiving any referral, that violated any applicable federal or state self-referral or anti-kickback law (including 42 U.S.C.
§ 1320a-7b(b)), rule, regulation, and Governmental Authority instructions and guidance. iGambit and its Subsidiaries
have complied with all applicable security and privacy standards regarding protected health information under the Health Insurance
Portability and Accountability Act of 1996, as amended (“HIPAA”), and all Applicable Laws relating to data
privacy and security. The iGambit Business is being conducted in material compliance with all Legal Requirements, including those
relating to licensing and Governmental Approvals. Neither iGambit nor any of its Subsidiaries has been subject to a corporate
integrity agreement, deferred prosecution agreement, consent decree or settlement agreement with or sanction by any Governmental
Authority. If required consents timely are obtained and required notices timely are given, the consummation of the Merger will
not adversely affect the reimbursement of iGambit’s or any of its Subsidiaries’ customers by any third party payor.
6.16
Litigation.
There is no Proceeding pending or, to the Knowledge of iGambit, threatened against or affecting iGambit or any of its Subsidiaries,
any iGambit Asset or the ability of iGambit or any of its Subsidiaries to consummate the Merger. None of iGambit, any of its Subsidiaries
or any iGambit Asset is subject to any Order or any proposed Order that would prevent or delay the consummation of the Merger
or would have a material adverse effect on the iGambit Assets, the iGambit Business or the ability of iGambit to consummate the
Merger.
6.17
Taxes.
(a)
Except as set forth on Section 6.17 of the iGambit Disclosure Schedule, since December 31, 2012, iGambit and its Subsidiaries
have filed all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by iGambit and its Subsidiaries,
and all such Tax Returns are true, correct and complete in all material respect. iGambit and its Subsidiaries have paid all Taxes
required to be paid whether or not shown to be due on such Returns. Copies of all Tax Returns for the three (3) most recent years
ending prior to the Signing Date, together with copies of all other Tax Returns, have been made available to Clinigence.
(b)
iGambit and its Subsidiaries have withheld or paid, with respect to their respective employees, all federal and state income Taxes,
Taxes pursuant to the Federal Insurance Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act and other Taxes required
to be withheld.
(c)
Except as set forth on Section 6.17 of the iGambit Disclosure Schedule, since December 31, 2012, neither iGambit nor any
of its Subsidiaries has been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding, assessed or, to
the Knowledge of iGambit, proposed against iGambit or any of its Subsidiaries. Neither iGambit nor any of its Subsidiaries has
executed any unexpired waiver of any statute of limitations on or extension of any period for the assessment or collection of
any Tax.
(d)
No audit or other examination of any Tax Return of iGambit or any of its Subsidiaries by any Tax Authority is presently in progress,
nor has iGambit or any of its Subsidiaries been notified in writing of any request for such an audit or other examination. No
claim has been made in writing by any Governmental Authority in a jurisdiction where iGambit or any of its Subsidiaries does not
file Tax Returns that iGambit or such Subsidiary is or may be subject to taxation by that jurisdiction.
(e)
No adjustment relating to any Tax Returns filed or required to be filed by iGambit or any of its Subsidiaries has been proposed
in writing by any Tax Authority to iGambit or any of its Subsidiaries or any representative thereof.
(f)
Neither iGambit nor any of its Subsidiaries has any liability for any unpaid Taxes (whether or not shown to be due on any Tax
Return) which has not been accrued for or reserved on their respective balance sheets as of the Balance Sheet Date in accordance
with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to iGambit or any of its Subsidiaries. There
are no Encumbrances with respect to Taxes on any of the iGambit Assets, other than Encumbrances which are not individually or
in the aggregate material, or customary Encumbrances for current Taxes not yet due and payable.
(g)
Neither iGambit nor any of its Subsidiaries (A) has ever been a member of a consolidated group other than a consolidated group
of which iGambit is the parent corporation, or (B) has any liability for the Taxes of any person (other than iGambit or any
of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as
a transferee or successor, by contract or otherwise. Neither iGambit nor any of its Subsidiaries is a party to or has any obligation
under any tax-sharing, tax indemnity or tax allocation agreement or arrangement (other than such agreements existing as of the
Signing Date between current members of iGambit’s affiliated group).
(h)
To the Knowledge of iGambit, none of the iGambit Assets are tax-exempt use property within the meaning of Section 168(h) of the
Code.
(i)
iGambit and its Subsidiaries are in full compliance with all terms and conditions of any Tax exemptions, Tax holiday or other
Tax reduction agreement or order of a territorial or foreign government and the consummation of the Merger will not have any material
adverse effect on the continued validity and effectiveness of any such Tax exemptions, Tax holiday or other Tax reduction agreement
or order.
(j)
Neither iGambit nor any of its Subsidiaries has with respect to any open taxable period applied for and been granted permission
to adopt a change in their respective methods of accounting requiring adjustments under Section 481 of the Code or comparable
Applicable Law.
(k)
Neither iGambit nor any of its Subsidiaries is a partner or owner in any entity classified as a partnership for federal income
tax purposes.
(l)
Neither iGambit nor any of its Subsidiaries is classified as a disregarded entity for federal and state income Tax purposes. Neither
iGambit nor any of its Subsidiaries has made an election under Treasury Regulations Section 301.7701-3 with respect to itself
or any Entity.
(m)
No equity options, equity appreciation rights or other equity based awards issued or granted by iGambit are not in material compliance
with Code Section 409A. Each “nonqualified deferred compensation plan” (as such term is defined in Code Section 409A
and the guidance thereunder) under which iGambit or any of its Subsidiaries makes or is obligated to make payments is in good
faith operational compliance with the requirements of Code Section 409A and the guidance thereunder. No payment to be made by
iGambit or any of its Subsidiaries is or will be subject to penalties of Code Section 409A.
(n)
Neither iGambit nor any of its Subsidiaries will be required to include any material item of income in, or to exclude any material
item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of
any (A) change in method of accounting, (B) closing agreement, (C) intercompany transaction or excess loss account described in
Treasury Regulations under Section 1502 of the IRC (or any similar provision of state, local or foreign law), (D) installment
sale or open transaction disposition made on or prior to the Closing Date, or (E) prepaid amount received on or prior to
the Closing Date outside of the ordinary course of business.
(o)
Neither iGambit nor any of its Subsidiaries has engaged in any “reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b)(1).
(p)
Neither iGambit nor any of its Subsidiaries has distributed stock of another Person, and neither iGambit nor any of its Subsidiaries
has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in
part by Section 355 of the Code in the two (2) years prior to the Closing Date or that could otherwise constitute part of a “plan”
or “series of related transactions” (within the meaning of Code Section 355(e)) that includes the transactions contemplated
by this Agreement.
(q)
Neither iGambit nor any of its Subsidiaries is or has been at any time during the past five years a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(r)
To the best of iGambit’s Knowledge, there is no property or obligation of it, any of its Subsidiaries or any of their respective
Affiliates, including uncashed checks to vendors, customers or employees, non-refunded overpayments, or unclaimed subscription
balances, that is escheatable or reportable as unclaimed property to any state, municipality or other governmental agency or Tax
Authority under any applicable escheatment or unclaimed property Legal Requirements.
6.18
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission
in connection with the Merger based upon arrangements made by or on behalf of iGambit, any of its Subsidiaries or any of their
respective Affiliates.
6.19
Transactions with Affiliates. Except as set forth on Section 6.19 of the iGambit Disclosure Schedule, there are no existing
contracts, Merger, indebtedness or other arrangements, or any related series thereof, between iGambit, on the one hand, and any
of the directors, officers or other Affiliates of iGambit, on the other hand.
6.20
Insurance Policies. iGambit has made available to Clinigence true and correct copies of all policies of insurance maintained
by iGambit and its Subsidiaries covering or affecting iGambit, its Subsidiaries, the iGambit Business or any of the iGambit Assets.
All such policies are valid, outstanding and enforceable and neither iGambit nor any of its Subsidiaries has agreed to modify
or cancel any of such insurance policies prior to the Signing Date, and no such entity has received notice of any actual or threatened
modification or cancellation of any such insurance. All premiums due and payable on or prior to the Signing Date for such insurance
policies have been duly paid.
6.21
Bank Accounts. iGambit has provided to Clinigence the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which iGambit and its Subsidiaries maintain any deposit or checking account,
the account numbers of all such accounts and the names of all persons authorized to draw thereon or make withdrawals therefrom.
6.22
Powers of Attorney. There are no Persons who hold general or special powers of attorney from iGambit or any of its Subsidiaries.
6.23
Certain Securities Law Matters.
(a)
iGambit is not and never has been a shell company within the meaning of Rule 405 promulgated by the SEC.
(b)
No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification
Event”) is applicable to iGambit or, to iGambit’s Knowledge, any iGambit Covered Person (as defined in Rule 506(d)),
except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.
(c)
iGambit has filed all reports, schedules, forms, statements and other documents required to be filed by iGambit under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve (12) months preceding the date
hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension or further extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of iGambit included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of iGambit and its consolidated subsidiaries and affiliates
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case
of unaudited statements, to normal, immaterial, year-end audit adjustments.
6.24
Full Disclosure.
(a)
Neither this Agreement nor any of the other Transaction Documents, (i) contains or will contain as of the Closing Date any
untrue statement of fact or (ii) omits or will omit to state any material fact necessary to make any of the representations,
warranties or other statements or information contained herein or therein (in light of the circumstances under which they were
made) not misleading.
(b)
All of the information set forth in the iGambit Disclosure Schedule and provided to Clinigence or Clinigence’ counsel in
connection with the Merger is accurate, correct and complete in all material respects.
ARTICLE
7.
REPRESENTATIONS AND WARRANTIES OF CLINIGENCE
Except
as set forth in the corresponding sections of the disclosure schedule of Clinigence delivered to iGambit concurrently with the
execution and delivery of this Agreement (the “Clinigence Disclosure Schedule”), Clinigence hereby represents
and warrants to iGambit that, as of the Signing Date and as of the Closing Date:
7.1
Organization and Qualification. Clinigence is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Clinigence, LLC is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Georgia. Clinigence India is a corporation duly organized, validly existing and in good
standing under the laws of India. Each of Clinigence and its Subsidiaries has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted. Each of Clinigence and its Subsidiaries is duly
qualified or licensed as a foreign corporation or other entity (and, as of the Closing Date will be duly qualified as a foreign
corporation or other entity) to conduct business and is in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary or where the failure
to so qualify would not reasonably be expected to result in a Clinigence Material Adverse Effect.
7.2
Authority; Capacity. Clinigence has all necessary power and authority to execute and deliver this Agreement and the other
Transaction Documents, to perform its obligations hereunder, and to consummate the Merger. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation by Clinigence of the Merger have been, or will be as of the
Closing Date, duly and validly authorized by all requisite actions and no other corporate or other proceedings on the part of
Clinigence are necessary to authorize this Agreement or to consummate the Merger. This Agreement, the Transaction Documents and
the consummation of the Merger have been, or will be as of the Closing Date, approved by Clinigence’s Board of Directors
and the Clinigence Stockholders. This Agreement has been and, at Closing, the other Transaction Documents will be, duly and validly
executed and delivered by Clinigence. This Agreement constitutes and, at Closing, together with the other Transaction Documents,
will constitute the legal, valid and binding obligation of Clinigence, enforceable against Clinigence in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws and equitable principles
related to or limiting creditors’ rights generally and by the availability of equitable remedies and defenses.
7.3
Capitalization; Ownership of Clinigence; Debt.
(a)
Section 7.3(a) of the Clinigence Disclosure Schedule sets forth the authorized and outstanding capital of Clinigence and each
of its Subsidiaries, and the names of the record owners of all of the issued and outstanding Clinigence Common Stock owned
by the Clinigence Stockholders and the number of shares of Clinigence Common Stock so owned. Each share of the capital stock
or equity interest of Clinigence and each of its Subsidiaries is duly and validly authorized and issued, fully paid and nonassessable,
and was not issued in violation of any preemptive rights of any stockholder or member of Clinigence or any of its Subsidiaries.
All of the issued and outstanding shares of capital stock or equity interests of Clinigence and its Subsidiaries has been issued
in accordance with all applicable federal and state securities Laws.
(b)
Except as set forth in Section 7.3(a) of the Clinigence Disclosure Schedule, there are no (i) outstanding securities of Clinigence
or its Subsidiaries convertible into or exchangeable for any capital stock or other equity interests or securities of Clinigence
or any of its Subsidiaries; (ii) preemptive, registration or similar rights on the part of any holder of any class of securities
of Clinigence or any of its Subsidiaries; (iii) subscriptions, options, warrants, conversion, exchange or other rights, agreements
or commitments of any kind relating to or obligating Clinigence or any of its Subsidiaries to issue, sell, purchase or redeem,
or cause to be issued, sold, purchased or redeemed, any shares of capital stock or other equity interests of Clinigence or any
of its Subsidiaries or any securities convertible into or exchangeable for any such shares or interests; (iv) other than
this Agreement, stockholder agreements, buy-sell agreements, voting agreements, voting trusts or other agreements or understandings
relating to the voting, purchase, transfer, redemption or other acquisition of any shares of the capital stock or other equity
interests of Clinigence or any of its Subsidiaries; or (v) unpaid dividends or other distributions, whether current or accumulated,
due or payable on any of the capital stock or other equity interests of Clinigence or any of its Subsidiaries. Neither Clinigence
nor any of its Subsidiaries is obligated to redeem or otherwise acquire any of its outstanding shares of capital stock or other
equity interests, and the consummation of the Merger will not trigger any such obligation.
(c)
Section 7.3(c) of the Clinigence Disclosure Schedule sets forth as of the Signing Date a true and complete list of all Debt
of Clinigence and each of its Subsidiaries that exceeds $5,000 individually or $10,000 in the aggregate, including the number
of shares or other equity interests of Clinigence or its Subsidiaries into which such Debt is convertible, as applicable.
7.4
No Conflicts; Required Consents. No Consents other than those set forth in Section 7.4 of the Clinigence Disclosure
Schedule are required with respect to Clinigence’s execution and delivery of this Agreement, the other Transaction Documents,
and the consummation of the Merger. The execution, delivery and performance of this Agreement and the other Transaction Documents
by Clinigence do not and will not, with or without notice or lapse of time,
(a)
conflict with or violate the Clinigence Certificate of Incorporation;
(b)
conflict with or violate any Legal Requirement applicable to Clinigence or any of its Subsidiaries or by which any property or
Assets of Clinigence or any of its Subsidiaries are bound or affected;
(c)
assuming the Consents listed in Section 7.4 of the Clinigence Disclosure Schedule are obtained, result in any breach of or
constitute a default under, or give to others any right of termination, amendment, acceleration or cancellation of, or result
in the creation of any Encumbrance on any Assets of Clinigence or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation;
(d)
violate or conflict with any other restriction of any kind or character to which Clinigence or any of its Subsidiaries is subject;
or
(e)
require Clinigence or any of its Subsidiaries to obtain any Consent of, or make or deliver any filing or notice to, a Governmental
Authority.
7.5
Subsidiaries. Except for Clinigence LLC, of which Clinigence is the record and beneficial holder of all of the issued and
outstanding equity interests, and Clinigence India, of which Clinigence is the record and beneficial holder of 51% of the issued
and outstanding equity interests, Clinigence does not directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar interest in, any Entity.
7.6
Financial Statements.
(a)
Clinigence has delivered to iGambit the following financial statements (collectively, the “Clinigence Financial
Statements”):
(i)
the audited consolidated balance sheets, and the related consolidated statements of operations, changes in stockholders’
equity and cash flows, of Clinigence and its Subsidiaries as of and for the fiscal years ended December 31, 2017 and December 31,
2018, and review of the first quarter 2019 interim financial statements, together with the notes thereto; and
(ii)
the unaudited consolidated balance sheets, and the related unaudited consolidated statements of operations, changes in stockholders’
equity and cash flows, of Clinigence and its Subsidiaries (the “Clinigence Interim Balance Sheet”) as
of the Balance Sheet Date.
(b)
All of the Clinigence Financial Statements:
(i)
are true, accurate and complete in all material respects;
(ii)
are consistent in all material respects with the Books and Records of Clinigence and its Subsidiaries;
(iii)
present fairly and accurately the financial condition of Clinigence and its Subsidiaries as of the respective dates thereof and
the results of operations, changes in stockholders’ equity and cash flows of Clinigence for the periods covered thereby;
and
(iv)
have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered.
7.7
Absence of Undisclosed Liabilities. Neither Clinigence nor any of its Subsidiaries has any Liabilities other than:
(i)
those set forth in the Clinigence Interim Balance Sheet;
(ii)
those incurred in the ordinary course of business and not required to be set forth in the Clinigence Interim Balance Sheet under
GAAP and not in excess of an aggregate amount of $25,000;
(iii)
the Debt listed in Section 7.3(c) of the Clinigence Disclosure Schedule;
(iv)
those listed in Section 7.7 of the Clinigence Disclosure Schedule;
(v)
those incurred in the ordinary course of business after the Balance Sheet Date and not in excess of $25,000 in the aggregate;
or
(vi)
those incurred in connection with the execution of any of the Transaction Documents.
7.8
Absence of Changes. Since the Balance Sheet Date, except as expressly contemplated by this Agreement, (i) Clinigence
and its Subsidiaries have conducted the Clinigence Business in the ordinary course of business, (ii) no event or circumstance
has occurred that has had or is likely to have a Clinigence Material Adverse Effect, and (iii) neither Clinigence nor any
of its Subsidiaries has:
(a)
Entered into any commitment or transaction in excess of $50,000 or any commitment or transaction not in the ordinary course of
business;
(b)
Entered into any transaction with its officers, directors, managers, members or stockholders, or their Affiliates, except pursuant
to a binding agreement effective as of the Signing Date and disclosed to iGambit in writing;
(c)
Amended or otherwise modified the material terms of any Clinigence Material Contract or Governmental Approval except as approved
in writing by iGambit;
(d)
Commenced a Proceeding other than for the routine collection of bills;
(e)
Incurred any indebtedness for borrowed money or guaranteed any such indebtedness or issued or sold any debt securities or guaranteed
any debt securities of others;
(f)
Took any action or failed to take any action that could reasonably be expected to cause or result in a Clinigence Material Adverse
Effect; or
(g)
Entered into any contract or agree, in writing or otherwise, to take any of the actions described above in this Section 7.8,
or any action that would make any of its representations or warranties contained in this Agreement untrue or incorrect or prevent
it from performing or cause it not to perform its covenants hereunder.
7.9
Material Contracts.
(a)
Section 7.9(a) of the Clinigence Disclosure Schedule provides a true and complete list of each of the following contracts
to which Clinigence or any of its Subsidiaries is party other than this Agreement (collectively, the “Clinigence
Material Contracts”):
(i)
All leases for real property used by Clinigence or any of its Subsidiaries and all leases of personal property and any Contract
affecting any right, title or interest in or to real property;
(ii)
All Contracts with Persons who are Service Providers, and all Clinigence Plans;
(iii)
Any Contract involving financing or borrowing of money, or evidencing indebtedness; any liability for borrowed money; any letters
of credit; any obligation for the deferred purchase price of property in excess of $25,000; or guaranteeing in any way any Contract
in connection with any Person;
(iv)
Any joint venture, partnership, cooperative arrangement or any other Contract involving a sharing of profits;
(v)
Any Contract with any Governmental Authority;
(vi)
Any Contract with respect to the discharge, storage or removal of effluent, waste or pollutants;
(vii)
Any Contract for the purchase or sale of any Assets of Clinigence or any of its Subsidiaries other than in the ordinary course
of business or for the option or preferential rights to purchase or sell any Assets of Clinigence or any of its Subsidiaries;
(viii)
Any Contract containing covenants not to compete in any line of business or with any Person in any geographical area or that would
otherwise result in Clinigence or any of its Subsidiaries being bound by, or subject to, any non-compete or other restriction
on the operation or scope of its businesses, including the Clinigence Business;
(ix)
Any Contract related to the acquisition of a business or the equity of any other Entity or the sale of Clinigence or any of its
Subsidiaries or any Asset of Clinigence or any of its Subsidiaries;
(x)
Any other Contract which (i) provides for payment or performance by either party thereto having an aggregate value of $25,000
or more; (ii) is not terminable without payment or penalty on thirty (30) days (or less) notice; or (iii) is between,
inter alia, Clinigence or any of its Subsidiaries and an Affiliate thereof;
(xi)
Any proposed arrangement of a type that, if entered into, would be a Contract described in any of Section 7.9(a)(i) through
7.9(a)(x) above.
(b)
True and complete copies of each written Clinigence Material Contract and true and complete written summaries of each oral Clinigence
Material Contract (including all amendments, supplements, modifications and waivers thereto) have been provided to iGambit by
Clinigence.
(c)
Each Clinigence Material Contract is currently valid, in full force and effect, and is enforceable by Clinigence or its Subsidiaries,
as applicable, in accordance with its terms.
(d)
Neither Clinigence nor any of its Subsidiaries is in default, and no party has notified Clinigence or any of its Subsidiaries
in writing that Clinigence or any of its Subsidiaries is in default, under any Clinigence Material Contract. No event has occurred,
and no circumstance or condition exists, that might, with or without notice or lapse of time:
(i)
result in a violation or breach of any of the provisions of any Clinigence Material Contract;
(ii)
give any Person the right to declare a default or exercise any remedy under any Clinigence Material Contract;
(iii)
give any Person the right to accelerate the maturity or performance of any Clinigence Material Contract or to cancel, terminate
or modify any Clinigence Material Contract; or
(iv)
otherwise have an Clinigence Material Adverse Effect in connection with any Clinigence Material Contract.
(e)
Neither Clinigence nor any of its Subsidiaries has waived any of its rights under any Clinigence Material Contract.
(f)
The performance of the Clinigence Material Contracts will not result in any violation of or failure by Clinigence or any of its
Subsidiaries to comply in all material respects with any Legal Requirement.
(g)
The Clinigence Material Contracts constitute all of the Contracts necessary to enable Clinigence and its Subsidiaries to conduct
the Clinigence Business in the manner in which such Clinigence Business is currently being conducted.
(h)
The consummation of the Merger shall not result in Clinigence or any of its Subsidiaries being bound by, or subject to, any non-compete
or other restriction on the operation or scope of its businesses, including the Clinigence Business.
7.10
Title; Sufficiency; Condition of Assets. Clinigence or its Subsidiaries has good and marketable title to or, in the case
of leased property and assets, has valid and enforceable leasehold interests in, all of the Assets and properties reasonably necessary
for the conduct of the Clinigence Business as presently conducted, in each case free and clear of all Encumbrances other than
Permitted Encumbrances. No Assets, licenses or other rights that are used in the Clinigence Business are held by any Clinigence
Stockholder or any Affiliate of any such stockholder. The Assets and leasehold improvements of Clinigence and its Subsidiaries
are in good operating condition, reasonable wear and tear excepted, and are adequate for the purposes for which they are being
used.
7.11
Leased Real Property.
(a)
Neither Clinigence nor any of its Subsidiaries owns or has ever owned any real property. Clinigence or its Subsidiaries has a
valid, binding and enforceable leasehold interest in each of the leased real properties (collectively, the “Clinigence
Facilities”) listed in Section 7.11(a) of the Clinigence Disclosure Schedule, free and clear of any Encumbrances,
except for Clinigence Facility Leases and Permitted Encumbrances. Each lease, including all amendments thereto (excluding subordination
and non-disturbance agreements, which will be delivered to iGambit on or before Closing), evidencing such leased real property
(the “Clinigence Facility Leases”) is also listed in Section 7.11(a) of the Clinigence Disclosure Schedule.
Section 7.11(a) of the Clinigence Disclosure Schedule sets forth, in respect of each Clinigence Facility Lease, the date
and name of the parties to such Clinigence Facility Lease, description of the leased premises, the commencement and expiration
dates of the lease term and any renewal terms, the amount of monthly or annual rental payments, the amount of the security deposit,
and the status of rental payments, including any rental payments in arrears, any prepaid rent and the date through which rent
is paid as of the Signing Date. Clinigence or its Subsidiaries presently occupies each of Clinigence Facilities free of any subleases,
occupancy agreements, licenses, concessions or other agreements granting to any party or parties (other than Clinigence, its Subsidiaries
or the applicable landlord) a right of use or occupancy of any portion of any Clinigence Facility. Clinigence’s or its Subsidiaries’
possession and quiet enjoyment of Clinigence Facilities under each of Clinigence Facility Leases has not been disturbed and there
are no material disputes with respect to any of Clinigence Facility Leases. Each Clinigence Facility Lease is valid and in full
force and effect, and, to Clinigence’s Knowledge, no default or event which with the giving of notice or the passage of
time, or both, will constitute default has occurred under any Clinigence Facility Lease or been claimed to have occurred by either
the landlord or the tenant thereunder. All Clinigence Facilities and tenant improvements located on or within such leased real
property are adequate and suitable for the purposes for which they are currently being used and there are no deferred maintenance
or repair items at any Clinigence Facility in excess of $25,000. No security deposit or portion thereof deposited with respect
to any Clinigence Facility Lease has been applied in respect of a breach of or default under any of Clinigence Facility Leases
that has not been re-deposited in full. Neither Clinigence nor any of its Subsidiaries owes and will not in the future owe any
brokerage commissions or finder’s fees with respect to any of Clinigence Facility Leases. There are no material unsatisfied
capital expenditure requirements or remodeling obligations of Clinigence or any of its Subsidiaries under any of Clinigence Facility
Leases, other than ordinary maintenance and repair obligations. Neither Clinigence nor any of its Subsidiaries has assigned, transferred,
sublet, or granted any person the right to use or occupy any of Clinigence Facilities arising under Clinigence Facility Leases
or granted any other security interest in any Clinigence Facility Lease or any interest therein. Neither Clinigence nor any of
its Subsidiaries has made any material modifications to Clinigence Facilities that will be required to be restored or otherwise
removed at the expiration or termination of any Clinigence Facility Lease.
(b)
Neither Clinigence nor any of its Subsidiaries has any leasehold interest in any leased real property other than Clinigence Facilities.
Prior to the Signing Date, Clinigence has provided iGambit with true, correct and complete copies of all Clinigence Facility Leases,
including all amendments and supplements thereto. The Clinigence Facility Leases constitute all of the written and oral agreements
of any kind for the leasing, rental, use or occupancy of leased real property to which Clinigence or its Subsidiaries is a party.
The Clinigence Facility Leases are the result of bona fide arm’s length negotiations between the parties thereto. No delivery
date of any Clinigence Facilities under any Clinigence Facility Leases has been accelerated and the premises not yet delivered.
(c)
Neither Clinigence nor any of its Subsidiaries has received any written notice that its occupancy, use or the condition of any
Clinigence Facility is in violation of any Applicable Laws, zoning ordinances or land use restrictions. There are no encroachments
on the leased real property or any Clinigence Facility and no encroachment of any improvements to each onto adjacent property.
Each Clinigence Facility is in good and operable condition and repair and in material compliance with all Applicable Laws.
(d)
Neither Clinigence nor any of its Subsidiaries knows of any facts that would adversely affect the possession, use or occupancy
of any of any leased real property or any Clinigence Facility. No portion of any leased real property nor any Clinigence Facility
is currently subject to any condemnation proceedings, and, to the Knowledge of Clinigence, no condemnation or taking is threatened
or contemplated.
(e)
Clinigence or its Subsidiaries possesses all easements, rights, licenses, permits and approvals necessary to continue operation
of the Clinigence Business including those related to the leased real property and any Clinigence Facility copies of which, to
the extent in Clinigence’s possession, have been provided to Clinigence.
(f)
All utilities serving the leased real property and each Clinigence Facility are adequate to operate each in the manner it is currently
operated and, to the Knowledge of Clinigence, all utility lines, pipes, hook-ups and wires serving the leased real property and
each Clinigence Facility are located within recorded easements for the benefit of each or in a public right-of-way, and any associated
charges accrued to date have been fully paid.
7.12
Intellectual Property.
(a)
Section 7.12 of the Clinigence Disclosure Schedule sets forth an accurate and complete list and description of (i) all
Registered Intellectual Property Rights owned or held by or on behalf of Clinigence or any of its Subsidiaries, and (ii) all
trade and corporate names and all material unregistered trademarks and service marks owned or used by Clinigence or any of its
Subsidiaries (collectively, the “Clinigence Registered Intellectual Property Rights”), specifying as to
each such item: the name of the applicant/registrant and current owner, the jurisdictions by or in which each such Clinigence
Registered Intellectual Property Right has been issued or registered or in which an application for such issuance or registration
has been filed (or, for domain names, the applicable registrar), the respective registration or application numbers, the dates
of issuance, registration or filing, and the prosecution status. Clinigence or its Subsidiaries are listed in the record of the
appropriate Governmental Authority as the sole owner of each item of Clinigence Registered Intellectual Property Rights (except
in the case of unregistered trademarks and service marks).
(b)
Each item of Clinigence Intellectual Property is owned solely by or is duly and validly licensed to Clinigence or its Subsidiaries
for use in the manner currently used by Clinigence or its Subsidiaries in the conduct of the Clinigence Business, free and clear
of any Encumbrances, except for non-exclusive licenses granted to end-user customers in the ordinary course of business. Each
item of Clinigence Intellectual Property owned by Clinigence or its Subsidiaries is valid, subsisting, in full force and effect
and, to Clinigence’s Knowledge, none is involved in any interference, reexamination, cancellation, or opposition proceeding,
or any other currently pending or threatened proceeding or claim challenging the ownership, use, validity or enforceability of
any such item of Clinigence Intellectual Property. The Clinigence Intellectual Property constitutes all of the Intellectual Property
and Intellectual Property Rights used in or reasonably necessary for the conduct of the Clinigence Business.
(c)
No Person who has licensed Intellectual Property to Clinigence or any of its Subsidiaries has ownership rights or license rights
to improvements made by Clinigence or any of its Subsidiaries in such Intellectual Property pursuant to the terms of such license.
Clinigence has not transferred ownership of, or granted any exclusive license of or right to use, or authorized the retention
of any exclusive rights to use or joint ownership of, any Intellectual Property Rights that are included in Clinigence Intellectual
Property to any Person.
(d)
All material registration, maintenance and renewal fees due and payable in connection with each item of Clinigence Registered
Intellectual Property Rights have been paid and all documents and certificates necessary to maintain such Clinigence Registered
Intellectual Property Rights have been timely filed with the relevant Government Authority, including the PTO, the U.S. Copyright
Office, or their respective counterparts in any relevant foreign jurisdiction, as the case may be. To Clinigence’s Knowledge,
there are no actions that must be taken by Clinigence or any of its Subsidiaries within one hundred and twenty (120) days
following the Closing Date, including the payment of any registration, maintenance or renewal fees or the filing of any responses
to offices actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting, preserving
or renewing any Clinigence Registered Intellectual Property Rights. Clinigence or its Subsidiaries have timely recorded an assignment
of each Registered Intellectual Property Right assigned to Clinigence or any of its Subsidiaries, if any, with the relevant Governmental
Authority, including the PTO, the U.S. Copyright Office or their respective counterparts in any relevant foreign jurisdiction,
as the case may be. All Clinigence Registered Intellectual Property Rights were prosecuted and recorded in good faith and in compliance
with all applicable rules, policies and procedures of any applicable Governmental Authority.
(e)
Clinigence and its Subsidiaries have taken commercially reasonable steps sufficient to maintain and protect the secrecy, confidentiality,
value and Clinigence’s and its Subsidiaries’ rights in all Confidential Information and Trade Secrets of Clinigence
or its Subsidiaries, respectively. Neither Clinigence nor any of its Subsidiaries has received written notice of any misappropriation
or unauthorized disclosure of any Trade Secret or Confidential Information related to the Clinigence Business or the Assets of
Clinigence or any of its Subsidiaries, or any violation or breach of obligations of confidentiality with respect to such, nor
does Clinigence have Knowledge of any basis for such misappropriation, unauthorized disclosure, violation or breach.
(f)
The operation of the Clinigence Business does not infringe or misappropriate any Intellectual Property Rights of any Person, violate
any right of any Person (including any right to privacy or publicity) or constitute unfair competition or trade practices under
the laws of any jurisdiction. Neither Clinigence nor any of its Subsidiaries has received written notice from any Person claiming
that such operation or any Clinigence Product infringes or misappropriates any Intellectual Property Rights of any Person, violate
any right of any Person (including any right to privacy or publicity) or constitutes unfair competition or trade practices under
the laws of any jurisdiction (nor does Clinigence have Knowledge of any basis therefor).
(g)
To Clinigence’s Knowledge, no Person is violating, infringing or misappropriating any Clinigence Intellectual Property.
Neither Clinigence nor any of its Subsidiaries has made any such claims against any Person with respect to any Clinigence Intellectual
Property, and neither Clinigence nor any of its Subsidiaries has invited any Person to take a license, authorization, covenant
not to sue or the like with respect to any Clinigence Intellectual Property.
(h)
There are no Proceedings to which Clinigence or any of its Subsidiaries is a party before any Governmental Authority (including
before the PTO) anywhere in the world related to any of the Clinigence Intellectual Property, including any Clinigence Registered
Intellectual Property Rights and, to Clinigence’s Knowledge, no such Proceedings are threatened.
(i)
No Clinigence Intellectual Property or Clinigence Product is subject to any Proceeding or any outstanding Order that restricts
the use, transfer or licensing thereof by Clinigence or any of its Subsidiaries or that would reasonably be expected to adversely
affect the validity, use or enforceability of such Clinigence Intellectual Property.
(j)
Neither this Agreement nor the consummation of the Merger will (i) result in any loss of, or give rise to a right to modify
or terminate the right to use, any material Clinigence Intellectual Property, (ii) result in (x) Clinigence or any of
its Subsidiaries granting to any Person any license, covenant not to sue, immunity or other right with respect to any Clinigence
Intellectual Property, including any release of Clinigence Intellectual Property from escrow; (y) Clinigence, any of its
Subsidiaries or any of their respective Affiliates being bound by, or subject to, any non-compete or other restriction on the
operation or scope of their businesses, including the Clinigence Business; or (z) Clinigence, any of its Subsidiaries or
any of their respective Affiliates being obligated to pay any royalties or other amounts to any Person.
(k)
No current or former Service Provider of Clinigence or any of its Subsidiaries: (i) is, to Clinigence’s Knowledge,
in violation of any term or covenant of any employment contract, consulting contract, services contract, statement of work, patent
disclosure agreement, invention assignment agreement, non-disclosure agreement, non-competition, non-solicitation agreement or
any other contract or agreement with any other party by virtue of such Service Provider’s being employed by, retained or
engaged by, or performing services for, Clinigence or any of its Subsidiaries; or (ii) to Clinigence’s Knowledge has
developed any technology, software or other copyrightable, patentable, or otherwise proprietary work for Clinigence or any of
its Subsidiaries that is subject to any agreement executed prior to the termination of such Service Provider’s employment
or other service to Clinigence or any of its Subsidiaries (or executed after the termination of such Service Provider’s
employment or other service to Clinigence or any of its Subsidiaries) under which such Service Provider has assigned or otherwise
granted to any third party any rights (including any Intellectual Property Rights) in or to such technology, software or other
copyrightable, patentable or otherwise proprietary work.
(l)
Clinigence and its Subsidiaries have taken commercially reasonable steps to preserve and maintain all the interests and proprietary
rights of Clinigence and its Subsidiaries in, to and under the Clinigence Intellectual Property.
(m)
Section 7.12(m) of the Clinigence Disclosure Schedule lists all Open Source Software incorporated into, integrated or bundled
with, linked to or otherwise used in or in the development of any Clinigence Product (or any part thereof) or otherwise used in
any manner that may subject any Clinigence Product, in whole or in part, to all or part of any license obligations of any Open
Source Software. To the extent that Open Source Software is incorporated in any Clinigence Products, neither Clinigence nor any
of its Subsidiaries is required directly or indirectly to grant, or purport to grant, to third parties, by virtue of intermingling
or integration of such software with any Clinigence Products, any rights or immunities under any Clinigence Products. Clinigence
and its Subsidiaries have established a commercially reasonable policy that is designed to identify Open Source Software used
by or for Clinigence and its Subsidiaries. With respect to any Open Source Software that is or has been used by or for Clinigence
or any of its Subsidiaries in any way, Clinigence and its Subsidiaries have been and are in compliance with all applicable licenses
with respect thereto, including all copyright notice and attribution requirements.
(n)
Neither Clinigence nor any of its Subsidiaries has (i) licensed any of the software included in any Clinigence Products or
Clinigence Intellectual Property in source code form to any Person, or (ii) entered into any escrow agreements with respect
to any such software. No event has occurred, and no circumstances or conditions exist, that (with or without notice or lapse of
time, or both) will, or would reasonably be expected to, result in the disclosure or delivery by Clinigence or any of its Subsidiaries
(or any Person acting on behalf of Clinigence or any of its Subsidiaries) of any source code included in any Clinigence Products
or Clinigence Intellectual Property, other than pursuant to agreements with Service Providers engaged in development activities
for Clinigence or any of its Subsidiaries in the ordinary course of business.
7.13
Service Providers.
(a)
Service Providers and Contracts. No Service Provider of Clinigence or any of its Subsidiaries has been granted the right
to continued employment by Clinigence or any of its Subsidiaries, as applicable, or to any compensation following termination
of employment with Clinigence or any of its Subsidiaries. Clinigence does not have any Knowledge that any Service Provider of
Clinigence or any of its Subsidiaries intends to terminate his or her employment or other engagement with Clinigence or any of
its Subsidiaries, nor does Clinigence or any of its Subsidiaries have a present intention to terminate the employment or engagement
of any Service Provider.
(b)
Compensation. Clinigence has made available to iGambit an accurate, correct and complete list of all:
(i)
current Service Providers of Clinigence and its Subsidiaries, including each Service Provider’s name, title or position,
present annual compensation (including bonuses, commissions and deferred compensation), accrued and unused paid vacation and other
paid leave, years of service, interests in any incentive compensation plan, and estimated entitlements to receive supplementary
retirement benefits or allowances (whether pursuant to a contractual obligation or otherwise),
(ii)
individuals who are currently performing services for Clinigence or any of its Subsidiaries related to the Clinigence Business
who are classified as “consultants” or “independent contractors,”
(iii)
bonuses, severance payments, termination pay and other special compensation of any kind paid to, accrued with respect to, or that
would be payable to (as a result of the Merger), any present or former Service Provider since the Balance Sheet Date,
(iv)
increases in any Service Provider’s wage, salary or other compensation since the Balance Sheet Date, and
(v)
increases or changes in any other benefits or insurance provided to any Service Provider since the Balance Sheet Date. No Service
Provider of Clinigence or any of its Subsidiaries is eligible for payments that would constitute “parachute payments”
under Section 280G of the Code.
(c)
Disputes. There are no claims, disputes or controversies pending or, to Clinigence’s Knowledge, threatened involving
any Service Provider or group of Service Providers. Neither Clinigence nor any of its Subsidiaries has suffered or sustained any
work stoppage and no such work stoppage is threatened.
(d)
Wage and Hour Liabilities. Neither Clinigence nor any of its Subsidiaries has (i) any overtime, meal period, break
period, hours of service or wage and hour obligation or liability of whatsoever kind with respect to any of its past or current
Service Providers or any liability for failure to comply with any Applicable Law relating to any of the foregoing, or (ii) any
obligation or liability for any payment to any trust, pension or other fund, including union trust funds, or to any governmental
or administrative authority, with respect to unemployment compensation benefits, workers’ compensation benefits, social
security, disability or other benefits for its Service Providers (other than routine payments to be made in the normal course
of business and consistent with past practice).
(e)
Labor Relations. There are no strikes, slowdowns, work stoppages or material labor relations controversies pending or,
to the Knowledge of Clinigence, threatened between Clinigence or any of its Subsidiaries, on one hand, and any of their respective
Service Providers, and neither Clinigence nor any of its Subsidiaries has experienced any such strike, slowdown, work stoppage
or material controversy within the past three (3) years.
(f)
Compliance with Employment Laws. Clinigence and its Subsidiaries are in compliance in all material respects with all Applicable
Laws relating to employment practices and the employment of labor or use of contract workers, including those related to immigration,
wages, hours and the payment and withholding of Taxes and other sums as required by the appropriate Governmental Authority, and
has withheld and paid to the appropriate Governmental Authority or is holding for payment not yet due to such Governmental Authority
all amounts required to be withheld from Service Providers of Clinigence and its Subsidiaries and is not liable for any arrears
of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing. Neither Clinigence nor any of its Subsidiaries
knowingly utilizes or continues to utilize contractors who fail to comply with Form I-9, Employment Eligibility Verification,
obligations relating to the contractor’s employees or who otherwise fail to comply with U.S. immigration laws. Since January
1, 2015, neither Clinigence nor any of its Subsidiaries has received any notices from the Social Security Administration or the
U.S. Department of Homeland Security regarding a “mismatch” of employee names and Social Security Numbers or employee
names and immigration-related documents.
(g)
FLSA. Since January 1, 2015, for purposes of the FLSA and all other Applicable Laws, (i) all individuals characterized
and treated by Clinigence or any of its Subsidiaries as consultants or independent contractors are properly treated as independent
contractors; (ii) all current or former employees compensated on a commission or piecework basis qualify or qualified for an applicable
exemption, including Section 7(i) of the FLSA; and (iii) all current and former employees classified as exempt under the FLSA
and Applicable Laws are or have been properly classified.
(h)
Compliance with Legal Requirements. Clinigence and its Subsidiaries have complied in all material respects with all Legal
Requirements related to the employment or engagement of their respective Service Providers, including provisions related to wages,
hours, leaves of absence, equal opportunity, occupational health and safety, workers’ compensation, severance, employee
handbooks or manuals, collective bargaining and the payment of social security and other Taxes. Neither Clinigence nor any of
its Subsidiaries has any Liability under any Legal Requirements related to employment and attributable to an event occurring or
a state of facts existing on or prior to the Signing Date or the Closing Date.
7.14
Clinigence Benefit Plans.
(a)
Section 7.14(a) of the Clinigence Disclosure Schedule lists each employee benefit plans, as that term is defined in Section 3(3)
of ERISA, and fringe benefit plans, as that term is defined in Section 6039D(d) of the Internal Revenue Code, which now are or
ever have been maintained by Clinigence or any of its Subsidiaries, or by any trade or business, whether or not incorporated (an
“Clinigence ERISA Affiliate”), or to which any Clinigence ERISA Affiliate now has or since December 31,
2016 has had an obligation to contribute (the “Clinigence Plans”). Section 7.14(a) of the Clinigence Disclosure
Schedule identifies each of the Clinigence Plans that is an ERISA Plan. No event has occurred nor has there been any omission
which would result in violation of any laws, rulings, or regulations applicable to any employee benefit plan. There are no claims
pending or, to the Knowledge of the Clinigence, threatened with respect to any employee benefit plan, other than claims for benefits
by employees, beneficiaries, or dependents arising in the normal course of the operation of any such plan.
(b)
Each Clinigence Plan that is intended to be qualified under Section 401(a) or 401(k) of the Internal Revenue Code is identified
as a “Qualified Plan” on the schedule of employee benefit plans and has in fact been so qualified from the effective
date of its establishment and continues to be so qualified. No event or omission has occurred which would cause any such plan
to lose its qualification under Section 401(a) or 401(k) of the Internal Revenue Code, or which would cause the Clinigence to
incur liability for any excise tax under the Internal Revenue Code with respect to the maintenance, operation, or any other aspect
of any such Qualified Plan.
(c)
With respect to each “group health plan” (as defined in Section 607(1) of ERISA) that has been maintained by the Clinigence,
all notices required pursuant to Section 606 of ERISA have been provided on a timely basis and each such plan has otherwise complied
in all material respects with the requirements of Sections 606 through 608 of ERISA.
(d)
With respect to each Clinigence Plan maintained by the Clinigence within the three years preceding the Closing, complete and correct
copies of the following documents have been delivered to the Acquirer: (i) all documents embodying or governing such Clinigence
Plan; (ii) the most recent IRS determination letter with respect to such Clinigence Plan; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules attached thereto; (iv) the three most recent actuarial valuation reports completed
with respect to such Clinigence Plan; (v) the summary plan description for such Clinigence Plan; and (vi) any insurance policy
related to such Clinigence Plan.
(e)
All contributions and premiums that Clinigence, any of its Subsidiaries or any Clinigence ERISA Affiliate is required to pay under
the terms of each of the ERISA Plans and Sections 412, 430 and 431 of the Code, if any, have, to the extent due, been paid
in full or properly recorded on the financial statements or records of Clinigence or any of its Subsidiaries, and none of the
ERISA Plans or any trust established thereunder has incurred any “accumulated funding deficiency” (as defined in Section 306(a)
of ERISA and Section 431 of the Code), or any “unpaid minimum required contribution” (as defined in Section 4971(c)
of the Code) whether or not waived, as of the last day of the most recent fiscal year of each of the ERISA Plans ended prior to
the Signing Date. No lien has been imposed under Section 430(k)(n) of the Code or Section 306(g) of ERISA on the Clinigence Assets
or any Clinigence ERISA Affiliate, and no event or circumstance has occurred that is reasonably likely to result in the imposition
of any such lien on any such assets on account of any ERISA Plan.
(f)
All contributions or other amounts withheld from any employee’s pay for deposit in a 401(k) plan or for payment of any health
or insurance premiums or for any other purpose with respect to an Clinigence Plan have been timely deposited or transmitted to
an insurance company in accordance with ERISA and applicable Department of Labor regulations and guidance.
(g)
Each of the Clinigence Plans has been operated and administered in all material respects in accordance with its terms and applicable
laws, including ERISA and the Code.
7.15
Compliance with Laws; Governmental Approvals.
(a)
Neither Clinigence nor any of its Subsidiaries is now, or during the past five (5) years has been, in conflict with, or in
default, breach or violation of, in any material respect, any Legal Requirement applicable to Clinigence or any of its Subsidiaries,
or by which any Asset of Clinigence or any of its Subsidiaries is bound, subject or affected, and Clinigence and its Subsidiaries
have timely filed all material reports, data and other information required to be filed with any Governmental Authority. Clinigence
and its Subsidiaries are in possession of all Governmental Approvals reasonably necessary for Clinigence and its Subsidiaries
to own, lease and operate its properties or to carry on the Clinigence Business. No suspension or cancellation of any Governmental
Approvals is pending or, to the Knowledge of Clinigence, threatened, and no Governmental Approval is required to be obtained or
filed in connection with the execution and delivery of this Agreement and the other Transaction Documents. Neither Clinigence
nor any of its Subsidiaries has received written notice or communication from any Person of any inquiry, proceeding or investigation
by any Governmental Authority alleging or based upon a violation of any Legal Requirement by Clinigence or any of its Subsidiaries
or that involves services furnished or data submitted by Clinigence or any of its Subsidiaries.
(b)
No Governmental Authority or other Person has conducted, or has given Clinigence or any of its Subsidiaries any notice or communication
that it intends to conduct, any audit or other review of Clinigence’s or any of its Subsidiaries’ services to any
of its customers with regard to such customer’s participation in, provision of services under, or submission of data in
connection with the Medicare or similar state programs, and no such audit or review would reasonably be expected to result in
any liability to Clinigence or any of its Subsidiaries for any reimbursement, penalty or interest with respect to payments received
by Clinigence or any of its Subsidiaries. To Clinigence’s Knowledge, other than normal claims disputes, none of Clinigence’s
or any of its Subsidiaries’ customers has any reimbursement or payment rate appeals, disputes or contested positions currently
pending before any Governmental Authority or with any other third-party payor. Neither Clinigence nor any of its Subsidiaries
has on behalf of any of its customers submitted any false or fraudulent claim to any third party and has not received any notice
from any third party for any allegation of a billing mistake, overpayment claim, false claim or fraud by Clinigence or any of
its Subsidiaries. All billing practices of Clinigence and its Subsidiaries have been true, fair and correct and in compliance
with all Applicable Laws, and neither Clinigence nor any of its Subsidiaries has billed for or received any payment or reimbursement
in excess of amounts permitted by Applicable Laws. Neither Clinigence nor any of its Subsidiaries has knowingly or willfully solicited,
received, paid or offered to pay any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, for the purpose
of making or receiving any referral, that violated any applicable federal or state self-referral or anti-kickback law (including
42 U.S.C. § 1320a-7b(b)), rule, regulation, and Governmental Authority instructions and guidance. Clinigence and its
Subsidiaries have complied with all applicable security and privacy standards regarding protected health information under HIPAA,
and all Applicable Laws relating to data privacy and security. The Clinigence Business is being conducted in material compliance
with all Legal Requirements, including those relating to licensing and Governmental Approvals. Neither Clinigence nor any of its
Subsidiaries has been subject to a corporate integrity agreement, deferred prosecution agreement, consent decree or settlement
agreement with or sanction by any Governmental Authority. If required consents timely are obtained and required notices timely
are given, the consummation of the Merger will not adversely affect the reimbursement of Clinigence’s or any of its Subsidiaries’
customers by any third party payor.
7.16
Litigation. There is no Proceeding pending or, to the Knowledge of Clinigence, threatened against or affecting Clinigence,
any of its Subsidiaries, any Assets of Clinigence or its Subsidiaries or the ability of Clinigence to consummate the Merger. None
Clinigence or any of its Subsidiaries nor any Assets of Clinigence or any of its Subsidiaries is subject to any Order or any proposed
Order that would prevent or delay the consummation of the Merger or would have a material adverse effect on the Assets of Clinigence
or any of its Subsidiaries, the Clinigence Business or the ability of Clinigence to consummate the Merger.
7.17
Taxes.
(a)
Each of Clinigence and its Subsidiaries has duly and timely filed all Tax Returns in all jurisdictions in which Tax Returns are
required to be filed by it and all such Tax Returns are true, correct and complete in all material respect. Clinigence and its
Subsidiaries have paid all Taxes required to be paid whether or not shown to be due on such Returns. Copies of all Tax Returns
for the three (3) most recent years ending prior to the Signing Date have been made available to iGambit.
(b)
Clinigence and its Subsidiaries have withheld or paid, with respect to Clinigence’s and its Subsidiaries’ employees,
all federal and state income Taxes, Taxes pursuant to the Federal Insurance Contribution Act, Taxes pursuant to the Federal Unemployment
Tax Act and other Taxes required to be withheld.
(c)
Neither Clinigence nor any of its Subsidiaries has been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding,
assessed or, to the Knowledge of Clinigence, proposed against Clinigence or any of its Subsidiaries. Neither Clinigence nor any
of its Subsidiaries has executed any unexpired waiver of any statute of limitations on or extension of any period for the assessment
or collection of any Tax.
(d)
No audit or other examination of any Tax Return of Clinigence or any of its Subsidiaries by any Tax Authority is presently in
progress, nor has Clinigence or any of its Subsidiaries been notified in writing of any request for such an audit or other examination.
No claim has been made in writing by any Governmental Authority in a jurisdiction where Clinigence or any of its Subsidiaries
does not file Tax Returns that Clinigence or such Subsidiary is or may be subject to taxation by that jurisdiction.
(e)
No adjustment relating to any Tax Returns filed or required to be filed by Clinigence or any of its Subsidiaries has been proposed
in writing by any Tax Authority to Clinigence or any of its Subsidiaries or any representative thereof.
(f)
Neither Clinigence or any of its Subsidiaries has any liability for any unpaid Taxes (whether or not shown to be due on any Tax
Return) which has not been accrued for or reserved on Clinigence’s balance sheet as of the Balance Sheet Date in accordance
with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to Clinigence or any of its Subsidiaries.
There are no Encumbrances with respect to Taxes on any of the Assets of Clinigence or any of its Subsidiaries, other than Encumbrances
which are not individually or in the aggregate material, or customary Encumbrances for current Taxes not yet due and payable.
(g)
Neither Clinigence nor any of its Subsidiaries (A) has ever been a member of a consolidated group other than a consolidated group
of which Clinigence is the parent corporation or (B) has any liability for the Taxes of any person (other than Clinigence
or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract or otherwise. Neither Clinigence nor any of its Subsidiaries is a party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement (other than such agreements existing
as of the Signing Date between current members of Clinigence’s affiliated group).
(h)
To the Knowledge of Clinigence, none of the Assets of Clinigence or any of its Subsidiaries are tax-exempt use property within
the meaning of Section 168(h) of the Code.
(i)
Clinigence and its Subsidiaries are in full compliance with all terms and conditions of any Tax exemptions, Tax holiday or other
Tax reduction agreement or order of a territorial or foreign government and the consummation of the Merger will not have any material
adverse effect on the continued validity and effectiveness of any such Tax exemptions, Tax holiday or other Tax reduction agreement
or order.
(j)
Neither Clinigence nor any of its Subsidiaries has with respect to any open taxable period applied for or been granted permission
to adopt a change in its method of accounting requiring adjustments under Section 481 of the Code or comparable Applicable
Law.
(k)
Neither Clinigence nor any of its Subsidiaries is a partner or owner in any entity classified as a partnership for federal income
tax purposes.
(l)
Neither Clinigence nor any of its Subsidiaries is classified as a disregarded entity for federal and state income Tax purposes.
Clinigence has not made an election under Treasury Regulations Section 301.7701-3 with respect to itself or any Entity.
(m)
No equity options, equity appreciation rights or other equity based awards issued or granted by Clinigence or any of its Subsidiaries
are not in material compliance with Code Section 409A. Each “nonqualified deferred compensation plan” (as such
term is defined in Code Section 409A and the guidance thereunder) under which Clinigence or any of its Subsidiaries makes
or is obligated to make payments is in good faith operational compliance with the requirements of Code Section 409A and the guidance
thereunder. No payment to be made by Clinigence or any of its Subsidiaries is or will be subject to penalties of Code Section
409A.
(n)
There is no property or obligation of Clinigence, any of its Subsidiaries or any of their respective Affiliates, including uncashed
checks to vendors, customers or employees, non-refunded overpayments, or unclaimed subscription balances, that is escheatable
or reportable as unclaimed property to any state, municipality or other governmental agency or Tax Authority under any applicable
escheatment or unclaimed property Legal Requirements.
(o)
Neither Clinigence nor any of its Subsidiaries will be required to include any material item of income in, or to exclude any material
item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of
any (A) change in method of accounting, (B) closing agreement, (C) intercompany transaction or excess loss account described in
Treasury Regulations under Section 1502 of the IRC (or any similar provision of state, local or foreign law), (D) installment
sale or open transaction disposition made on or prior to the Closing Date, or (E) prepaid amount received on or prior to
the Closing Date outside of the ordinary course of business.
(p)
Neither Clinigence nor any of its Subsidiaries has engaged in any “reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b)(1).
(q)
Neither Clinigence nor any of its Subsidiaries has distributed stock of another Person, and neither Clinigence nor any of its
Subsidiaries has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in
whole or in part by Section 355 of the Code in the two (2) years prior to the Closing Date or that could otherwise constitute
part of a “plan” or “series of related transactions” (within the meaning of Code Section 355(e)) that
includes the transactions contemplated by this Agreement.
(r)
Neither Clinigence nor any of its Subsidiaries is or has been at any time during the past five years a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(s)
To the best of Clinigence’s Knowledge, there is no property or obligation of it, any of its Subsidiaries or any of their
respective Affiliates, including uncashed checks to vendors, customers or employees, non-refunded overpayments, or unclaimed subscription
balances, that is escheatable or reportable as unclaimed property to any state, municipality or other governmental agency or Tax
Authority under any applicable escheatment or unclaimed property Legal Requirements.
7.18
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission
in connection with the Merger based upon arrangements made by or on behalf of Clinigence or any of its Subsidiaries.
7.19
Transactions with Affiliates. There are no existing contracts, Merger, indebtedness or other arrangements, or any related
series thereof, between Clinigence or any of its Subsidiaries, on the one hand, and any of the directors, officers or other Affiliates
of Clinigence or any of its Subsidiaries, on the other hand.
7.20
Insurance Policies. Clinigence has made available to iGambit true and correct copies of all policies of insurance maintained
by Clinigence and its Subsidiaries covering or affecting Clinigence, its Subsidiaries the Clinigence Business or any of the Assets
of Clinigence or any of its Subsidiaries. All such policies are valid, outstanding and enforceable and neither Clinigence nor
any of its Subsidiaries has agreed to modify or cancel any of such insurance policies prior to the Signing Date, nor has Clinigence
or any of its Subsidiaries received notice of any actual or threatened modification or cancellation of any such insurance. All
premiums due and payable on or prior to the Signing Date for such insurance policies have been duly paid.
7.21
Bank Accounts. Clinigence has provided to iGambit the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which Clinigence or any of its Subsidiaries maintains any deposit or checking
account, the account numbers of all such accounts and the names of all persons authorized to draw thereon or make withdrawals
therefrom.
7.22
Powers of Attorney. There are no Persons who hold general or special powers of attorney from Clinigence or any of its Subsidiaries.
7.23
Full Disclosure.
(a)
Neither this Agreement nor any of the other Transaction Documents, (i) contains or will contain as of the Closing Date any
untrue statement of fact or (ii) omits or will omit to state any material fact necessary to make any of the representations,
warranties or other statements or information contained herein or therein (in light of the circumstances under which they were
made) not misleading.
(b)
All of the information set forth in the Clinigence Disclosure Schedule and provided to iGambit or iGambit’s counsel in connection
with the Merger is accurate, correct and complete in all material respects.
ARTICLE
8.
ADDITIONAL AGREEMENTS
8.1
Expenses. Whether or not the Merger is consummated, except as otherwise provided herein, all fees and expenses incurred
in connection with the Merger including all legal, accounting, financial, advisory, consulting and all other fees and expenses
of third parties incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement
and the Merger, shall be the obligation of the respective party incurring such fees and expenses.
8.2
Tax Returns.
(a)
As soon as reasonably practicable after the Closing, Clinigence and its Subsidiaries shall prepare, or cause to be prepared, all
Tax Returns of Clinigence and its Subsidiaries required to be filed under applicable Law on or prior to the Closing Date (the
“Clinigence Pre-Closing Tax Returns”) and shall be responsible for the timely filing (taking into account any extensions
received from the relevant Tax Authorities) of such Tax Returns. Each such Clinigence Pre-Closing Tax Return shall be prepared
on a basis consistent with those prepared for prior taxable periods unless otherwise required by applicable Law. Clinigence shall
provide iGambit with a copy of each such Tax Return for its review, comment and approval no less than twenty (20) days prior to
the earlier of the due date (taking into account valid extensions thereto) for such Tax Return, Clinigence shall revise such Tax
Returns to reflect iGambit’s reasonable comments, and Clinigence shall timely file the foregoing unless iGambit withholds
its consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. Clinigence stockholders shall be
responsible for the payment of all Taxes shown to be due or that may come to be due on such Clinigence Pre-Closing Tax Returns.
At the time of the filing of the Clinigence Pre-Closing Tax Returns, Clinigence shall contemporaneously deliver to iGambit an
executed copy of all final Tax Returns along with copies of payments submitted with those Tax Returns.
(b)
iGambit shall prepare or cause to be prepared all Tax Returns with respect to a Pre-Closing Tax Period required by Law to be filed
by Clinigence or any of its Subsidiaries after the Closing Date. If such Tax Return is a federal income Tax Return or reports
a material Liability for Taxes, iGambit will, at least twenty (20) days prior to the due date for filing such Tax Return (taking
into account valid extensions thereto), provide Clinigence with a copy of such proposed Tax Return (and such additional information
regarding such Tax Return as may reasonably be requested in writing for review and comment. iGambit will consider in good faith
any reasonable comments or suggestions made by the Signing Stockholders. All Taxes that are due and payable with respect to Tax
Returns described in this Section 8.2(b) shall be the responsibility of the Clinigence Stockholders to the extent they constitute
Pre-closing Taxes. The Tax Returns described in this Section 8.2(b) with respect to a Pre-Closing Tax Period shall be prepared
on a basis consistent with those prepared for prior taxable periods unless otherwise required by Law.
(c)
The portion of any Tax that is allocable to the portion of any Straddle Period that ends on the Closing Date will be: (A) in the
case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection
with the sale, transfer or assignment of property, (iii) that are real property Taxes, personal property Taxes and similar ad
valorem Taxes, or (iv) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with
the Closing Date; and (B) in the case of other Taxes, deemed to be the amount of such Taxes for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator
of which is the number of days in the entire taxable period.
8.3
Schedules. The parties hereto acknowledge and agree that, in the interest of expediting the execution and delivery of this
Agreement, they have not delivered all of the Schedules to this Agreement prior to the Signing Date, and it is expressly contemplated
that the parties will supplement any such Schedules delivered on or prior to the Signing Date and add additional Schedules after
the Signing Date but prior to the Closing Date so that the Schedules shall be accurate and complete as of the Closing Date. If
Clinigence discloses any facts, circumstances or matters not disclosed in any Schedules delivered on or prior to the Signing Date
that, individually or in the aggregate, could reasonably be expected to result in a Clinigence Material Adverse Effect, then iGambit
may elect to terminate this Agreement pursuant to Section 10.1(a)(v). If iGambit discloses any facts, circumstances or matters
not disclosed in any Schedules delivered on or prior to the Signing Date that, individually or in the aggregate, could reasonably
be expected to result in an iGambit Material Adverse Effect, then Clinigence may elect to terminate this Agreement pursuant to
Section 10.1(a)(vi).
8.4
Voting Agreement. Until the Effective Time or the earlier termination of this Agreement in accordance with its terms, the
Signing Stockholder shall vote the shares of iGambit stock owned by him (or provide his written consent) in favor of the approval
of this Agreement and the Merger and against the approval of any proposal made in opposition to, or in competition with, this
Agreement or the Merger, including any Acquisition Transaction. The Signing Stockholder hereby agrees, during the period commencing
on the Signing Date and ending at the Effective Time or the earlier termination of this Agreement in accordance with its terms,
except as expressly provided in this Agreement, not to transfer, sell, exchange, pledge or otherwise dispose of or encumber any
of the shares of iGambit owned by him. Notwithstanding anything to the contrary in this Agreement, the obligations of the Signing
Stockholder under this Agreement shall survive the termination of this Agreement.
8.5
iGambit Board Observer Rights. Promptly following the Closing, iGambit shall enter into an agreement with the Signing Stockholder
granting him customary observer rights with respect to the iGambit Board for two (2) years following the Closing.
8.6
HealthDatix Florida Management Team. iGambit shall use its commercially reasonable efforts to retain (and, to the extent
required, obtain the necessary consents to the Merger from) the management team of HealthDatix Florida, consisting of Jerry Robinson,
Mary Joe Robinson, Kathleen Shepherd and Mario Arnaoutoglou-Andreou (the “HealthDatix Florida Management Team”).
Following the Closing, iGambit and Clinigence agree not to terminate any member of the HealthDatix Florida Management Team prior
to the second anniversary of the Closing except for cause, as determined in good faith by the iGambit Board.
ARTICLE
9.
CONDITIONS TO CLOSING
9.1
Conditions Precedent to Obligations of Clinigence. The obligations of Clinigence to consummate the Merger are subject to
the satisfaction of the following conditions, unless waived by Clinigence in writing:
(a)
Representations and Warranties. The representations and warranties of iGambit, Merger Sub and the Signing Stockholder set
forth in this Agreement shall be true and correct in all respects on and as of the date made and as of the Closing Date as if
made on the date thereof (except to the extent such representation or warranty specifies an earlier date).
(b)
Performance of Obligations. iGambit, Merger Sub and the Signing Stockholder shall have performed in all respects all obligations
and covenants required to be performed by them under this Agreement, including those set forth in Section 4.1, and
any other agreement or document entered into in connection herewith prior to the Closing Date.
(c)
No Material Adverse Effect. There shall have been no iGambit Material Adverse Effect from the Balance Sheet Date through
the Closing Date.
(d)
Governmental Approvals. Each of the parties shall have obtained all Consents of Governmental Authorities required to consummate
the Merger, in form and substance satisfactory to Clinigence.
(e)
Legal Requirements. No Legal Requirement shall be in effect which prohibits or materially restricts the consummation of
the Merger at the Closing, or which otherwise materially adversely affects in any respect the right or ability of Clinigence to
own, operate or control iGambit or the iGambit Assets, or Clinigence or the Clinigence Business, respectively, in whole or part,
and no Proceeding is pending or threatened in writing by a Governmental Authority which is likely to result in a Legal Requirement
having such an effect.
(f)
Stockholder Consent. Clinigence shall have obtained the requisite consent of its stockholders in accordance with the laws
of the State of Delaware, the Clinigence Certificate of Incorporation or related documents, and any agreements applicable to Clinigence
approving this Agreement, the other Transaction Documents to which iGambit is a party and the consummation of the Merger.
(g)
Consents Under Specified iGambit Contracts. iGambit shall have obtained all requisite third party Consents to the consummation
of the Merger under those iGambit Contracts set forth in Schedule 9.1(g) (each, a “Specified iGambit
Contract”).
(h)
Consents Under Specified Clinigence Contracts. Clinigence shall have obtained all requisite third party Consents to the
consummation of the Merger under those Clinigence Contracts set forth in Schedule 9.1(h) (each, a “Specified
Clinigence Contract”).
(i)
Closing Deliveries. iGambit and the Signing Stockholder shall have delivered to Clinigence all of the closing documents
and agreements set forth in Section 5.1.
(j)
OTCQB Qualified. iGambit shall be OTCQB qualified and its securities shall be DTC eligible.
(k)
Securities Filings. iGambit shall have filed all forms, reports, statements and documents required to be filed by it with
the SEC, including information required pursuant to Rule 14f-1 of the Exchange Act regarding the Merger.
(l)
Form 8-K. iGambit and Clinigence shall have prepared a draft current report on Form 8-K with respect to the Merger in a
form reasonably satisfactory to Clinigence, which will be filed with the SEC immediately following the Effective Time.
(m)
FINRA Approvals. iGambit shall have provided required notice to FINRA of the transactions set forth in Section 4.1
(including the reverse stock split and name change) and of the Merger, and obtained all required FINRA approvals related to
the Merger.
(n)
Clinigence Audit. The audit of Clinigence by its accountants shall have been completed.
(o)
Clinigence Audited Financial Statements. Clinigence shall have completed two years of audited financial statements.
(p)
Dissenting Shares. The number of shares of Clinigence Common Stock that are Dissenting Shares shall be less than five percent
(5%) of the aggregate number of shares of Clinigence Common Stock issued and outstanding immediately prior to the Effective Time.
9.2
Conditions Precedent to Obligations of iGambit and the Signing Stockholder. The obligations of iGambit and the Signing
Stockholder to consummate the Merger are subject to the satisfaction of the following conditions, unless waived by iGambit and
the Signing Stockholder in writing:
(a)
Representations and Warranties. The representations and warranties of Clinigence set forth in this Agreement shall be true
and correct in all respects on and as of the date made and as of the Closing Date as if made on the date thereof (except to the
extent such representation or warranty specifies an earlier date).
(b)
Performance of Obligations. Clinigence shall have performed in all respects all obligations and covenants required to be
performed by them under this Agreement and any other agreement or document entered into in connection herewith prior to the Closing
Date.
(c)
No Material Adverse Effect. There shall have been no Clinigence Material Adverse Effect from the Balance Sheet Date through
the Closing Date.
(d)
Governmental Approvals. Each of the parties shall have obtained all Consents of Governmental Authorities required to consummate
the Merger, in form and substance satisfactory to iGambit.
(e)
Legal Requirements. No Legal Requirement shall be in effect which prohibits or materially restricts the consummation of
the Merger at the Closing, or which otherwise materially adversely affects in any respect the right or ability of Clinigence to
own, operate or control iGambit or the iGambit Assets, or Clinigence or the Clinigence Business, respectively, in whole or part,
and no Proceeding is pending or threatened in writing by a Governmental Authority which is likely to result in a Legal Requirement
having such an effect.
(f)
Consents Under Specified Clinigence Contracts. Clinigence shall have obtained all requisite third party Consents to the
consummation of the Merger under the Specified Clinigence Contracts.
(g)
Consents Under Specified iGambit Contracts. iGambit shall have obtained all requisite third party Consents to the consummation
of the Merger under the Specified iGambit Contracts.
(h)
Closing Deliveries. Clinigence shall have delivered to iGambit all of the closing documents and agreements set forth in
Section 5.2.
(i)
OTCQB Qualified. iGambit shall be OTCQB qualified and its securities shall be DTC eligible.
(j)
Form 8-K. iGambit and Clinigence shall have prepared a draft current report on Form 8-K with respect to the Merger in a
form reasonably satisfactory to Clinigence, which will be filed with the SEC immediately following the Effective Time.
(k)
Clinigence Audit. The audit of Clinigence by its accountants shall have been completed along with a clean opinion of such
accounting firm.
(l)
Clinigence Audited Financial Statements. Clinigence shall have completed two years of audited financial statements and
a review of the interim, unaudited financial statements for the first quarter of 2019.
(m)
Dissenting Shares. The number of shares of Clinigence Common Stock that are Dissenting Shares shall be less than five percent
(5%) of the aggregate number of shares of Clinigence Common Stock issued and outstanding immediately prior to the Effective Time.
ARTICLE
10.
TERMINATION
10.1
Termination.
(a)
Circumstances for Termination. At any time prior to the Closing, this Agreement may be terminated by written notice:
(i)
by the mutual written consent of Clinigence and iGambit;
(ii)
by Clinigence, if iGambit, the Signing Stockholder and/or Merger Sub is in material breach of any provision of this Agreement,
which material breach would give rise to a failure to satisfy any condition set forth in Section 9.1, and such breach
shall not have been cured within thirty (30) days of written notice from the terminating party of such breach, provided,
that the terminating party is not, on the date of termination, in material breach of any material provision of this Agreement;
(iii)
by iGambit, if Clinigence is in material breach of any provision of this Agreement, which material breach would give rise to a
failure to satisfy any condition set forth in Section 9.2, and such breach shall not have been cured within thirty (30)
days of written notice from the terminating party of such breach, provided, that the terminating party is not, on the date
of termination, in material breach of any material provision of this Agreement;
(iv)
by either Clinigence or iGambit if the Closing has not occurred on or prior to November 30, 2019, or such later date as mutually
agreed to in writing by the parties, for any reason, provided, that the terminating party shall not have breached its obligations
hereunder in any manner that shall have contributed to the failure to consummate the Closing by such date;
(v)
by iGambit, pursuant to Section 8.3;
(vi)
by Clinigence, pursuant to Section 8.3; and
(vii)
by iGambit if: (A) less than twenty (20) days have passed since the mailing of the iGambit Information Statement; (B) (w) the
iGambit Board has determined that an Acquisition Proposal constitutes a Superior Offer (provided that such Acquisition Proposal
was not solicited in violation of Section 4.6), (x) iGambit has provided at least ten (10) days’ prior written
notice to Clinigence of such determination (which notice shall specify the material terms and conditions of any such Superior
Offer (including the identity of the party making such Superior Offer), and shall have contemporaneously provided a copy of the
relevant proposed transaction agreements with the party making such Superior Offer and other material documents, including the
then current form of the definitive agreement with respect to such Superior Offer), (y) iGambit has negotiated in good faith with
Clinigence to amend the terms of this Agreement so that the Superior Offer would no longer constitute a Superior Offer, (z) ten
(10) days have elapsed since such notice to iGambit and the Acquisition Proposal remains a Superior Offer (it being understood
that any material revision or amendment to the terms of such Acquisition Proposal shall require a new notice to Clinigence); and
(C) concurrently with the termination hereunder, iGambit enters into a definitive acquisition agreement providing for the
Superior Offer; provided, that iGambit shall pay to Clinigence, in immediately available funds, an amount equal to (i) $400,000,
(ii) all out of pocket expenses incurred by Clinigence in connection with the transactions contemplated herein and (iii) the
outstanding principal balance and accrued interest outstanding (payable at the default rate thereunder) on the promissory notes
in favor of Clinigence, the total sum amount of which shall be due and payable immediately upon such termination.
(b)
Effect of Termination. If this Agreement is terminated in accordance with Section 10.1(a), all obligations
of the parties hereunder shall terminate, except for the obligations set forth in this Section 10.1 and in ARTICLE 11;
provided, that such termination shall not release either party from any liability that has already accrued as of the effective
date of such termination, and shall not constitute a waiver or release of, or otherwise be deemed to prejudice or adversely affect,
any rights, remedies or claims, whether for damages or otherwise, which a party may have hereunder, at law, equity or otherwise
or which may arise out of or in connection with such termination.
ARTICLE
11.
MISCELLANEOUS PROVISIONS
11.1
Amendments and Waivers. This Agreement may not be amended, supplemented or modified, except by an agreement in writing
signed by Clinigence, iGambit, and the Signing Stockholder. Any party may waive compliance by any other party with any term or
provision of this Agreement; provided, that such waiver shall not operate as a waiver of, or estoppel with respect to,
any other or subsequent failure. No waiver shall be effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
11.2
Notices. All notices, requests, demands and other communications required or permitted under this Agreement and under Applicable
Law shall be in writing and shall be deemed to have been duly given, made and received (i) when delivered personally or by
telecopy, (ii) one (1) Business Day following the day when deposited with a reputable, established overnight courier
service for delivery to the intended addressee, or (iii) three (3) Business Days following the day when deposited with
the United States Postal Service as first class, registered or certified mail, postage prepaid and addressed as set forth below:
If
to Clinigence:
Clinigence
Holdings, Inc.
55
Ivan Allen Jr. Blvd. NW, #875
Atlanta,
GA 30308
Attention: Jacob
Margolin
Warren
Hosseinion
Telephone
No.: (678) 778-5844
E-mail: kobi.margolin@clinigence.com
warren.hosseinion@clinigence.com
Following
Closing, with a copy, which shall not constitute notice, given in the manner prescribed above, to:
Shartsis Friese LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111-3598
Attention: P. Rupert Russell, Esq.
Telephone No.: (415) 421-6500
Facsimile No.: (415) 421-2922
Email: rrussell@sflaw.com
If
to iGambit, Merger Sub or the Signing Stockholder:
iGambit,
Inc.
1050
W. Jericho Turnpike, Suite A
Smithtown,
New York 11787
Attention:
Elisa Luqman
Telephone No.: [_]
E-mail:
elisa@igambit.com
With
a copy, which shall not constitute notice, given in the manner prescribed above, to:
Dickinson Wright PLLC
350 East Las Olas Blvd., Suite 1750
Ft. Lauderdale, FL 33301
Attention: Joel Mayersohn, Esq.
Telephone No.: (954)-991-5426
E-mail: jmayersohn@dickisonwright.com
Any
party may alter its notice address by notifying the other parties of such change of address in conformity with the provisions
of this section.
11.3
Governing Law. This Agreement is to be construed in accordance with and governed by the laws of the State of Delaware,
without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the
laws of the State of Delaware to the rights and duties of the parties.
11.4
Exhibits and Schedules. All Exhibits and Schedules attached hereto are hereby incorporated by reference into, and made
a part of, this Agreement.
11.5
Disclosure Schedule References. The parties hereto agree that any reference in a particular Section of the iGambit
Disclosure Schedule or Clinigence Disclosure Schedule, respectively, shall only be deemed to be an exception to (or, as applicable,
a disclosure for purposes of) the representations and warranties (or covenants, as applicable) that are contained in the corresponding
Section of this Agreement (except to the extent that the relevance of such disclosure to other Sections and subsections of the
iGambit Disclosure Schedule and Clinigence Disclosure Schedule, respectively, is reasonably apparent from the context of
the disclosure or such disclosure is specifically cross referenced in another part of the iGambit Disclosure Schedule or Clinigence
Disclosure Schedule, respectively, in which event such disclosure shall be deemed to relate to such other part of the iGambit
Disclosure Schedule or Clinigence Disclosure Schedule, respectively).
11.6
Assignments Prohibited; Successors and Assigns. No Person shall assign, suffer, or permit an assignment (by operation of
law or otherwise) of, its rights or obligations under or interest in this Agreement without the prior written consent of Clinigence.
Clinigence shall not assign, or suffer or permit an assignment (by operation of law or otherwise) of, its rights or obligations
under or interest in this Agreement without the prior written consent of iGambit, except that no such prior written consent shall
be required for any assignment or deemed assignment in connection with (a) any sale or transfer for value of all or substantially
all of the assets or business of Clinigence (whether by sale of assets, sale of equity, merger, recapitalization, reorganization
or similar transaction), (b) any change in the jurisdiction in which Clinigence is organized or incorporated or (c) in
connection with any bona fide initial public offering of Clinigence. Any purported assignment or other disposition, except as
permitted herein, shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and permitted assigns.
11.7
No Third-Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors and permitted assigns, and the parties do not intend to confer third-party beneficiary
rights upon any other Person.
11.8
Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures to this Agreement transmitted
by facsimile transmission, by electronic mail in PDF form, or by any other electronic means designed to preserve the original
graphic and pictorial appearance of a document, will be deemed to have the same effect as physical delivery of the paper document
bearing the original signatures. This Agreement shall become effective when each party hereto shall have received a counterpart
hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the
other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by
virtue of any other oral or written agreement or other communication).
11.9
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic
or legal substance of the Merger contemplated hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the Merger contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
11.10
Entire Agreement. This Agreement (which per Section 11.4 includes all Exhibits and Schedules attached hereto)
contains the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written among the parties.
The parties intend that this Agreement be the several, complete and exclusive embodiment of their agreement, and that any evidence,
oral or written, of a prior or contemporaneous agreement that alters or modifies this Agreement shall not be admissible in any
proceeding concerning this Agreement. The express terms hereof control and supersede any course of performance and/or usage of
the trade inconsistent with any of the terms hereof.
11.11
Interpretation. Unless otherwise indicated herein, with respect to any reference made in this Agreement to a Section (or
Article, Subsection, Paragraph, Subparagraph or Clause), Exhibit or Schedule, such reference shall be to a section (or article,
subsection, paragraph, subparagraph or clause) of, or an exhibit or schedule to, this Agreement. The table of contents and any
article, section, subsection, paragraph or subparagraph headings contained in this Agreement and the recitals at the beginning
of this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall
be deemed, as the context indicates, to be followed by the words “but (is/are) not limited to.” Words used herein,
regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. Where specific language
is used to clarify or illustrate by example a general statement contained herein, such specific language shall not be deemed to
modify, limit or restrict the construction of the general statement that is being clarified or illustrated.
11.12
Construction. The construction of this Agreement shall not take into consideration the party who drafted or whose representative
drafted any portion of this Agreement, and no canon of construction shall be applied that resolves ambiguities against the drafter
of a document. Each party acknowledges that: (a) it has read this Agreement; (b) it has been represented in the preparation,
negotiation and execution of this Agreement by legal counsel of its own choice or has voluntarily declined to seek such counsel;
and (c) it understands the terms and consequences of this Agreement and is fully aware of the legal and binding effect of
this Agreement.
11.13
Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties only in the State of Delaware, or, if it has or can acquire the
necessary jurisdiction, in the United States District Court for the District of Delaware. Each of the parties consents to the
exclusive jurisdiction of such courts (and the appropriate appellate courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere
in the world.
11.14
Waiver of Jury Trial. THE PARTIES HEREBY EXPRESSLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT
BY OR AGAINST EITHER OF THEM RELATING TO THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT INVOLVES COMPLEX MERGER AND
THAT DISPUTES HEREUNDER WILL BE MORE QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT DECISION MAKER. ACCORDINGLY,
THE PARTIES AGREE, BASED ON THE ADVICE OF THEIR COUNSEL, THAT ANY DISPUTE HEREUNDER BE RESOLVED BY A JUDGE APPLYING APPLICABLE
LAW.
11.15
Provisional Relief; Specific Performance. The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement are not performed in accordance with their specific terms or were otherwise breached. Accordingly,
it is agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any court as provided in Section 11.13, in addition
to any other remedy to which they are entitled at law or in equity.
11.16
Recovery of Fees by Prevailing Party. If any legal action, including an action for arbitration or injunctive relief, is
brought relating to this Agreement or the breach or alleged breach hereof, the prevailing party in any final judgment or arbitration
award, or the non-dismissing party in the event of a voluntary dismissal by the party instituting the action, shall be entitled
to the full amount of all reasonable expenses, including all court costs, arbitration fees and actual attorneys’ fees paid
or incurred in good faith.
11.17
Further Assurances. Each party agrees (a) to furnish upon request to each other party such further information, (b) to
execute and deliver to each other party such other documents and (c) to do such other acts and things, all as another party
may reasonably request for the purpose of carrying out the intent of this Agreement and the Merger contemplated by this Agreement.
11.18
Time of the Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the
essence.
[Signatures
Pages Follow]
IN
WITNESS WHEREOF, each of the parties has executed this Agreement or caused it to be executed on its behalf by their respective
officers thereunto duly authorized all as of the date first written above.
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CLINIGENCE:
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Clinigence
Holdings, Inc.
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By:
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Jacob
Margolin
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President
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By:
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Warren
Hosseinion
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Chairmain
of the Board
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IGAMBIT:
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iGambit,
Inc.
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By:
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John
Salerno
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Chief
Executive Officer
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MERGER
SUB:
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HealthDatix,
Inc.
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By:
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John
Salerno
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Chief
Executive Officer
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SIGNING
STOCKHOLDER:
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John
Salerno
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SCHEDULES
AND EXHIBITS
Schedule
1
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Definitions
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Schedule
2.6
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Directors
and Officers of Surviving Corporation
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Schedule
4.1
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Conversion
of iGambit Deferred Compensation
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Schedule 6
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iGambit
Disclosure Schedule
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Schedule 7
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Clinigence
Disclosure Schedule
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Schedule
9.1(g)
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Specified
iGambit Contracts
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Schedule
9.1(h)
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Specified
Clinigence Contracts
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SCHEDULE
1
Definitions
“Acquisition
Proposal” has the meaning specified in Section 4.6.
“Acquisition
Transaction” has the meaning specified in Section 4.6.
“Affiliate”
means, with respect to a specified Person, (a) any other Person, directly or indirectly, controlling or controlled by or
under direct or indirect common control with such specified Person; (b) any Person who is a director, officer, manager or
general partner (i) of such specified Person, or (ii) of any Person described in clause (a) above; or (c) any
Person who is related to a Person described in clauses (a) or (b) above by blood or marriage. For the purposes of this definition,
(1) ”control” when used with respect to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing, and (2) ”control” shall be deemed to
include ownership of 50% or more of the voting securities of such specified Person.
“Agreement”
means this Agreement and Plan of Merger (including the iGambit Disclosure Schedule, the Clinigence Disclosure Schedule, and all
other schedules and exhibits attached hereto), as amended from time to time.
“Applicable
Law” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution,
treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement
enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended
unless expressly specified otherwise.
“Assets”
means, with respect to iGambit, Clinigence or their respective Subsidiaries, as applicable, all of the assets whether real, personal,
tangible or intangible used or held for use in connection with the iGambit Business or the Clinigence Business, as applicable,
all of which are owned or leased by such Person.
“Balance
Sheet Date” means March 31, 2019.
“Books
and Records” means all books, files, papers, agreements, correspondence, databases, information systems, programs, software,
documents and records of iGambit, Clinigence or their respective Subsidiaries, as applicable, on whatever medium.
“Business
Day” means a day, other than Saturday, Sunday or other day on which commercial banks in San Francisco, California or
New York, New York are authorized or required by Applicable Law to close.
“Cancelled
Shares” has the meaning set forth in Section 3.1(a).
“Capitalization
Certificate” has the meaning set forth in Section 3.3(e).
“Certificate
of Merger” has the meaning set forth in Section 2.3.
“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.
“Clinigence”
has the meaning set forth in the Preamble.
“Clinigence
Assets” means all assets, properties, business and goodwill, owned, held or used in or arising from or related to the
conduct of the Clinigence Business by Clinigence or any of its Subsidiaries as the same shall exist as of the Closing Date.
“Clinigence
Board” has the meaning set forth in the Recitals.
“Clinigence
Business” means the business conducted by Clinigence or any of its Subsidiaries as of the Closing Date.
“Clinigence
Certificate of Incorporation” means the Certificate of Incorporation of Clinigence filed with the Secretary of
State of the State of Delaware.
“Clinigence
Common Stock” has the meaning set forth in the Recitals.
“Clinigence
Disclosure Schedule” has the meaning specified in the first paragraph of ARTICLE 7.
“Clinigence
ERISA Affiliate” has the meaning specified in Section 7.14(a).
“Clinigence
Facilities” has the meaning specified in Section 7.11(a).
“Clinigence
Facility Leases” has the meaning specified in Section 7.11(a).
“Clinigence
Financial Statements” has the meaning specified in Section 7.6(a).
“Clinigence
India” means Clinigence India Private Limited, an entity organized under the laws of India.
“Clinigence
Intellectual Property” means all Intellectual Property and Intellectual Property Rights used, held for use, or contemplated
to be used in connection with the Clinigence Business, any Clinigence Products, whether owned or controlled, licensed, owned or
controlled by or for, licensed to, or otherwise held by or for the benefit of Clinigence or any of its Subsidiaries, including
the Clinigence (or any of its Affiliates) Registered Intellectual Property Rights.
“Clinigence
Interim Balance Sheet” has the meaning set forth in Section 7.6(a)(ii).
“Clinigence
LLC” means Clinigence, LLC, a Georgia limited liability company.
“Clinigence
Material Adverse Effect” means any event, change or effect that, when taken individually or together with all other
adverse events, changes and effects, is or is reasonably likely (i) to be materially adverse to the financial condition,
properties, assets, liabilities, business, operations or results of operations of Clinigence, any of its Subsidiaries or the Clinigence
Business or (ii) to prevent or materially delay consummation of the Merger or otherwise to prevent Clinigence from performing
its obligations under this Agreement; and
“Clinigence
Material Contracts” has the meaning specified in Section 7.9(a).
“Clinigence
Plans” has the meaning specified in Section 7.14(a).
“Clinigence
Products” means all products and services that Clinigence has made commercially available and for which Clinigence or
any of its Subsidiaries currently receives revenue and all products and services under development as of the Signing Date by Clinigence
that Clinigence or any of its Subsidiaries intends to make commercially available.
“Clinigence
Registered Intellectual Property Rights” has the meaning specified in Section 7.12(a).
“Clinigence
Stockholders” has the meaning set forth in Section 3.1(b).
“Clinigence
Stock Option” has the meaning set forth in Section 3.3(a).
“Clinigence
Warrant” has the meaning set forth in Section 3.3(b).
“Closing”
has the meaning specified in Section 2.2.
“Closing
Date” has the meaning specified in Section 2.2.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Confidential
Information” means all Trade Secrets and other confidential and/or proprietary information of a Person, including information
derived from reports, investigations, research, work in progress, codes, marketing and sales programs, financial projections,
cost summaries, pricing formulae, algorithms, contract analyses, financial information, projections, confidential filings with
any state or federal agency, and all other confidential concepts, methods of doing business, ideas, materials or information prepared
or performed for, by or on behalf of such Person by its Service Providers or Representatives, and including confidential and/or
proprietary information obtained from other Person’s to whom such Person has a duty of confidentiality.
“Consent”
means any approval, consent, ratification, permission, waiver or authorization (including any Governmental Approval).
“Consideration
Spreadsheet” has the meaning specified in Section 3.3(f).
“Contract”
means any agreement, contract, consensual obligation, promise, understanding, arrangement, commitment or undertaking of any nature
(whether written or oral and whether express or implied), whether or not legally binding.
“Copyrights”
means all copyrights, including in and to works of authorship and all other rights corresponding thereto throughout the world,
whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and
copies, compilations and derivative works thereof.
“Debt”
means, with respect to any Person, all liabilities: (a) for money borrowed from banks or similar financial institutions or
evidenced by bonds, debentures, notes or other similar instruments; (b) under any capitalized lease liabilities; (c) under
any interest rate protection agreements (valued on a market quotation basis); (d) for any debt-like obligation in respect
of the deferred purchase price of property with respect to which such Person is liable as obligor; (e) for any accrued interest,
prepayment premiums or penalties or other costs or expenses related to any of the foregoing, in each case determined in accordance
with GAAP and (f) guarantees of any of the foregoing on behalf of another Person.
“Disqualification
Event” has the meaning set forth in Section 6.23(b).
“Dissenting
Shares” has the meaning set forth in Section 3.4.
“Dissenting
Stockholders” has the meaning set forth in Section 3.4.
“DGCL”
has the meaning set forth in the Recitals.
“Effective
Time” has the meaning set forth in Section 2.3.
“Encumbrance”
means, with respect to any property or asset, any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance,
equity, trust, equitable interest, adverse claim, preference, right of possession, lease, tenancy, license, encroachment, covenant,
infringement, interference, Order, proxy, option, right of first refusal, preemptive right, community property interest, legend,
defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature
in respect of such property or asset (including any restriction on the voting of any security, any restriction on the transfer
of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use
of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset). For
the purposes of this Agreement, a Person shall be deemed to own subject to an Encumbrance any property or asset which it has acquired
or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention
agreement relating to such property or asset.
“Entity”
means any corporation (including any non-profit corporation), joint stock company, partnership, limited liability company, limited
liability partnership, joint venture, estate, association, trust or other entity or organization.
“Environmental
Laws” means all Applicable Laws relating to (a) the control of any potential pollutant or protection of the air, water
or land, (b) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal or transportation, and (c) exposure
to hazardous, toxic or other substances alleged to be harmful, and includes, (i) the terms and conditions of any license,
permit, approval, or other authorization by any Governmental Authority, and (ii) judicial, administrative, or other regulatory
decrees, judgments, and orders of any Governmental Authority. The term “Environmental Laws” shall include, but not
be limited to the following statutes and the regulations promulgated thereunder: the Clean Air Act, 42 U.S.C. § 7401 et
seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., RCRA, the Superfund Amendments and Reauthorization Act,
42 U.S.C. § 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Water
Pollution Control Act, 33 U.S.C. § 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et
seq., CERCLA, the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. § 1801 et seq., and any state, county, or local regulations similar thereto.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA
Plans” has the meaning specified in Section 6.14(a).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Exchange
Agent” has the meaning set forth in Section 3.2(a).
“Exchange
Ratio” has the meaning set forth in Section 3.1(b).
“FINRA”
has the meaning set forth in Section 4.1(f).
“FLSA”
has the meaning specified in Section 6.13(g).
“Fraud”
means fraud, fraudulent inducement, misappropriation or intentional misrepresentation or concealment
“GAAP”
means generally accepted accounting principles in the United States in effect on the date on which they are to be applied pursuant
to this Agreement, applied consistently throughout the relevant periods.
“Governmental
Approval” means any: (a) permit, license, certificate, concession, approval, consent, ratification, permission,
clearance, confirmation, exemption, waiver, franchise, certification, designation, rating, registration, variance, qualification,
accreditation or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Legal Requirement; or (b) right under any Contract with any Governmental Authority.
“Governmental
Authority” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental
or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch,
office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and
any court or other tribunal); (d) multinational organization or body; or (e) individual, Entity or body exercising,
or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing or arbitral
authority or power of any nature.
“Hazardous
Materials” means any (a) toxic or hazardous materials or substances; (b) solid wastes, including asbestos, polychlorinated
biphenyls, mercury, flammable or explosive materials; (c) radioactive materials; (d) petroleum or petroleum products (including
crude oil); and (e) any other chemical, pollutant, contaminant, substance or waste that is regulated by any Governmental Authority
under any Environmental Law.
“HealthDatix
Florida” means HealthDatix, Inc., a Florida corporation.
“HealthDatix
Florida Management Team” has the meaning set forth in Section 8.6.
“HIPAA”
has the meaning specified in Section 6.15(b).
“Intellectual
Property” means, collectively, all technology, inventions, know how, customer lists, supplier lists, methods, proprietary
processes and formulae, works of authorship, databases and other compilations and collections of data, software source code and
object code, algorithms, architectures, structures, screen displays, photographs, images, development tools, designs, blueprints,
specifications, technical drawings (or similar information in electronic format), domain names, proprietary and confidential information,
and all documentation and media constituting, describing or relating to the foregoing, including manuals, programmers’ notes,
memoranda and records.
“Intellectual
Property Rights” means any or all rights in and to Intellectual Property and intangible industrial property rights,
including (i) Patents, Trade Secrets, Copyrights, Trademarks and (ii) any rights similar, corresponding or equivalent
to any of the foregoing anywhere in the world, including social media rights (such as Facebook).
“iGambit”
has the meaning set forth in the Preamble.
“iGambit
Assets” means all assets, properties, business and goodwill, owned, held or used in or arising from or related to the
conduct of the iGambit Business by iGambit or any of its Subsidiaries as the same shall exist as of the Closing Date.
“iGambit
ERISA Affiliate” has the meaning specified in Section 6.14(a).
“iGambit
Board” has the meaning set forth in the Recitals.
“iGambit
Business” means the business conducted by iGambit and its Subsidiaries as of the Closing Date.
“iGambit
Certificate of Incorporation” means the Certificate of Incorporation of iGambit filed with the Secretary of State of
the State of Delaware.
“iGambit
Common Stock” has the meaning set forth in the Recitals.
“iGambit
Disclosure Schedule” has the meaning specified in the first paragraph of ARTICLE 6.
“iGambit
Facilities” has the meaning specified in Section 6.11(a).
“iGambit
Facility Leases” has the meaning specified in Section 6.11(a).
“iGambit
Financial Statements” has the meaning specified in Section 6.6(a).
“iGambit
Intellectual Property” means all Intellectual Property and Intellectual Property Rights used, held for use, or contemplated
to be used in connection with the iGambit Business, any iGambit Products, whether owned or controlled, licensed, owned or controlled
by or for, licensed to, or otherwise held by or for the benefit of iGambit or any of its Subsidiaries, including the iGambit (or
any of its Affiliates) Registered Intellectual Property Rights.
“iGambit
Interim Balance Sheet” has the meaning set forth in Section 6.7.
“iGambit
Material Adverse Effect” means any event, change or effect that, when taken individually or together with all other
adverse events, changes and effects, is or is reasonably likely (i) to be materially adverse to the financial condition,
properties, assets (including the iGambit Assets), liabilities, business, operations or results of operations of iGambit, its
Subsidiaries, the iGambit Assets or the iGambit Business or (ii) to prevent or materially delay consummation of the Merger
or otherwise to prevent iGambit from performing its obligations under this Agreement;
“iGambit
Material Contracts” has the meaning specified in Section 6.9(a).
“iGambit
Option Shares” has the meaning set forth in Section 3.3(a).
“iGambit
Plans” has the meaning specified in Section 6.14(a).
“iGambit
Products” means all products and services that iGambit or any of its Subsidiaries has made commercially available and
for which iGambit or any of its Subsidiaries currently receives revenue and all products and services under development as of
the Signing Date by iGambit or any of its Subsidiaries that iGambit or any of its Subsidiaries intends to make commercially available.
“iGambit
Registered Intellectual Property Rights” has the meaning specified in Section 6.12(a).
“iGambit
Warrant Shares” has the meaning set forth in Section 3.3(b).
“IRS”
means the Internal Revenue Service.
“Knowledge”
An individual shall be deemed to have “Knowledge” of a particular fact or other matter if: (a) such individual
is actually aware of such fact or other matter or (b) (except when Knowledge is stated to be “actual Knowledge”)
a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting
a reasonable inquiry concerning the truth or existence of such fact or other matter. iGambit and Clinigence shall be deemed to
have “Knowledge” of a particular fact or other matter if any of their respective Subsidiaries or any of their or their
respective Subsidiaries’ directors, managers, officers or Service Providers with the authority to establish policy for the
respective party has actual knowledge of such fact or other matter after reasonable inquiry.
“Legal
Requirement” means any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle
of common law, resolution, ordinance, code, Order, edict, decree, proclamation, treaty, convention, rule, regulation, permit,
ruling, directive, pronouncement, requirement (licensing or otherwise), specification, determination, decision, opinion or interpretation
that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise
put into effect by or under the authority of any Governmental Authority.
“Liability”
means any Debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether
such Debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP
and regardless of whether such Debt, obligation, duty or liability is immediately due and payable.
“Merger”
has the meaning set forth in Section 2.1.
“Merger
Consideration” has the meaning set forth in Section 3.1(b).
“Merger
Sub” has the meaning set forth in the Preamble.
“Merger
Sub Board” has the meaning set forth in the Recitals.
“Nondisclosure
Agreement” means that certain Master Mutual Non-Disclosure Agreement dated as of May 31, 2019, between iGambit and Clinigence.
“Open
Source Software” has the meaning specified in Section 6.12(m).
“Order”
means any: (a) temporary, preliminary or permanent order, judgment, injunction, edict, decree, ruling, pronouncement, determination,
decision, opinion, verdict, sentence, stipulation, subpoena, writ or award that is or has been issued, made, entered, rendered
or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Authority; or
(b) Contract with any Governmental Authority that is or has been entered into in connection with any Proceeding.
“Patents”
means all United States and foreign patents and utility models and applications therefor and all reissues, divisions, re-examinations,
renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere
in the world in inventions and discoveries.
“Permitted
Encumbrances” means:
(a)
mechanics’, carriers’, workmen’s, repairmen’s or other similar liens arising or incurred in the ordinary
course of business;
(b)
conditional sales contracts (covering personalty and equipment, but not real property) and equipment leases entered into in the
ordinary course of business; and
(c)
Encumbrances for Taxes, assessments and other governmental charges which are not due and payable or which may thereafter be paid
without penalty.
“Person”
means an individual, Entity or Governmental Authority.
“Personally
Identifiable Information” means any information that can be used to identify a specific individual as defined by Applicable
Laws in the relevant jurisdictions, such as the individual’s name, address, telephone number, fax number, email address,
credit card or financial or bank account number, medical information, or health insurance information.
“Pre-Closing
Period” means any taxable period ending on or before the close of business on the Closing Date or, in the case of any
taxable period which includes, but does not end on, the Closing Date, the portion of such period up to and including the Closing
Date.
“Proceeding”
means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in
the future be commenced, brought, conducted or heard at law or in equity or before any Governmental Authority or any arbitrator
or arbitration panel.
“PTO”
has the meaning specified in Section 6.12(d).
“Receivables”
means all bona fide accounts and notes receivable, deposits in transit, checks and negotiable instruments arising out of or relating
to the iGambit Business.
“Registered
Intellectual Property Rights” means all United States, international and foreign: (i) Patents, (ii) registered
Trademarks, applications to register Trademarks, including intent-to-use applications, or other registrations or applications
related to Trademarks, (iii) Copyright registrations and applications to register Copyrights and (iv) any other Intellectual
Property Rights that is the subject of an application, certificate, filing, registration or other document issued by, filed with,
or recorded by, any state, government or other public legal authority at any time.
“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment.
“Representatives”
of a Person means the officers, managers, directors, Service Providers, attorneys, accountants, advisors, agents, distributors,
licensees, members, stockholders, subsidiaries and lenders of such Person.
“Luqman
Employment Agreement” has the meaning specified in Section 5.1(a).
“SEC”
means the U.S. Securities and Exchange Commission.
“SEC
Reports” has the meaning set forth in Section 6.23(c).
“Securities
Act” means the Securities Act of 1933, as amended.
“Service
Provider” of a Person means an employee, independent contractor, consultant, officer, director, advisory board member,
manager, general partner or other service provider (including any Service Provider Entity and any individuals providing services
through, to, for or on behalf of a Service Provider Entity) to such Person.
“Service
Provider Entity” means an Entity engaged by a Person to provide services to or on behalf of such Person. For the avoidance
of doubt, a Service Provider Entity can include a consulting firm, temporary placement agency, staffing agency, professional employer
organization (PEO), “umbrella company,” “pass through” employment agency, employee leasing firm or agency,
an organization that provides outsourced human resources services or an Entity formed by an individual and through which an individual
provides services to third parties.
“Signing
Date” has the meaning set forth in the Preamble.
“Signing
Stockholder” has the meaning set forth in the Preamble.
“Specified
Clinigence Contract” has the meaning specified in Section 9.1(h).
“Specified
iGambit Contract” has the meaning specified in Section 9.1(g).
“Subsidiary”
means, with respect to any Person, any corporation, limited liability company, partnership, association, trust or other entity,
the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements
if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company,
partnership, association, trust or other entity, of which securities or other ownership interests representing more than fifty
percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power (or, in the case of a partnership, more
than fifty percent (50%) of the general partnership interests) are, as of such date, owned by such Person or one (1) or more Subsidiaries
of such Person or by such Person and one (1) or more Subsidiaries of such Person.
“Superior
Offer” means an unsolicited, bona fide written offer to enter into an Acquisition Transaction (a) which the iGambit
Board in good faith determines in its reasonable judgment includes consideration payable to the iGambit Stockholders in an amount
greater than the aggregate consideration payable to iGambit Stockholders in connection with the Merger and otherwise is on terms
that the iGambit Board has determined in its good faith judgment (after consultation with its financial advisors and outside counsel
and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects
of the proposal) are more favorable to the iGambit Stockholders from a financial point of view than this Agreement, and (b) with
respect to which the iGambit Board has determined in good faith (after consultation with its financial advisors and outside counsel
and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects
of the proposal) is reasonably likely to be consummated (if accepted).
“Surviving
Corporation” has the meaning set forth in Section 2.1.
“Tax”
(and, with correlative meaning, “Taxes” and “Taxable”) means any net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other assessment or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount and any interest on such penalty, addition to tax or additional amount, imposed by any Tax
Authority.
“Tax
Authority” means Governmental Authority responsible for the imposition, assessment or collection of any Tax (domestic
or foreign).
“Tax
Return” means any return, statement, declaration, notice, certificate or other document that is or has been filed with
or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance
with any Legal Requirement related to any Tax.
“Trade
Secrets” means all trade secrets under Applicable Law and other rights in know-how and confidential or proprietary information,
processing, manufacturing or marketing information, including new developments, inventions, processes, ideas or other proprietary
information that provide a Person with advantages over competitors who do not know or use it and documentation thereof (including
related papers, blueprints, drawings, chemical compositions, formulae, diaries, notebooks, specifications, designs, methods of
manufacture and data processing software, compilations of information) and all claims and rights related thereto.
“Trademarks”
means all trademarks, service marks, trade names, corporate names, service names, brand names, trade dress, logos, designs, artwork
or variants thereof, promotional materials, Internet domain names, IP addresses, email addresses, fictitious and other business
names, personal names, identities, privacy rights, and general intangibles of like nature, together with the goodwill associated
with any of the foregoing, and all applications, ITU Applications, registrations and renewals thereof.
“Transmittal
Letter” has the meaning set forth in Section 3.2(b).
“Transaction
Documents” means this Agreement and all other agreements, certificates, instruments, documents and writings delivered
by iGambit, Merger Sub, the Signing Stockholder or Clinigence in connection with the Merger, excluding the Luqman Employment Agreement.
“Treasury
Regulations” means the income Tax regulations, including temporary regulations, promulgated under the Code, as those
regulations may be amended from time to time. Any reference herein to a specific section of the Treasury Regulations shall include
any corresponding provisions of any succeeding, similar, substitute, proposed or final Treasury Regulation.
SCHEDULE
2.6
Directors and Officers
Post-Closing
directors of Clinigence Holdings, Inc.:
Warren
Hosseinion (chairman)
Kobi
Margolin
Larry
Schimmel
Martin
Breslin
Mitch
Creem
Mark
Fawcett
David
Meiri
John
Waters
Elisa
Luqman
John
Salerno shall be an observer to the board of directors in accordance with Section 8.5
Post-Closing
officers of Clinigence Holdings, Inc.:
Kobi
Margolin – Chief Executive Officer
Elisa
Luqman – Chief Financial Officer and General Counsel
Larry
Schimmel – Chief Medical Officer
Charles
Kandzierski – Chief Operating and Information Officer
SCHEDULE
4.1
Conversion of iGambit Deferred Compensation
Service
Provider
|
|
Percentage
of Deferred Compensation to be Converted to Shares of iGambit Common Stock
|
Elisa
Luqman
|
|
|
66.67
|
%
|
Kathleen
Shepherd
|
|
|
50
|
%
|
MJ
Robinson
|
|
|
50
|
%
|
Jerry
Robinson
|
|
|
50
|
%
|
John
Salerno
|
|
|
0
|
%
|
SCHEDULE
9.1(g)
Specified iGambit Contracts
|
1.
|
Jerry
Robinson, President HealthDatix Inc. Employment Agreement dated April 1, 2017.
|
|
2.
|
Mary-Jo
Robinson, VP of Business Development HealthDatix Inc. Employment Agreement dated April
1, 2017.
|
|
3.
|
Kathleen
Shepherd, Vice President of Operations, HealthDatix Inc. Employment Agreement dated April
1, 2017.
|
SCHEDULE
9.1(h)
Specified Clinigence Contracts
Financing
Agreement, by and between Clinigence LLC and Lighter Capital, dated 6/29/2017
HMS
|
Notification
of change of control
|
Need
acceptance
|
Gateway
|
Notification
of change of control
|
|
Cal-ACO
|
Notification
of change of control
|
|
PHPNI
|
Notification
of change of control
|
|
ProviDrs
Care
|
Notification
of change of control
|
|
Salubris
|
Notification
of change of control
|
|
Health
Trio/TakeCare
|
Notification
of change of control
|
|
Varmed
|
Notification
of change of control
|
|
Nivano
|
Notification
of change of control
|
|
Buffalo
|
Clinigence
|
|
Goshen
|
Clinigence
|
|
ApolloMed
|
Clinigence
|
|
Sunshine
|
Clinigence
|
|
Medvision
|
Notification
of change of control
|
|
Sendero
|
Notification
of change of control
|
|
DST/JHU
ACGs
|
Notification
of change of control
|
|
ANNEX
A – 1 Clinigence LLC 2017 and 2018 Audited Financials
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors and Stockholders of
Clinigence,
LLC
Opinion
on the Financial Statements
We
have audited the accompanying balance sheets of Clinigence, LLC and subsidiaries (the "Company") as of December 31,
2018 and 2017, the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two
years in the period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended
December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Emphasis
of Matter Regarding Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net working capital
deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion
/s/Hall
& Company
We
have served as the Company’s auditor since 2019
Irvine,
CA
August
2, 2019
CONSOLIDATED
BALANCE SHEETS
|
As
of December 31,
|
|
|
2018
|
|
2017
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
119,267
|
|
|
$
|
11,709
|
|
Accounts
receivable, net
|
|
|
186,150
|
|
|
|
104,061
|
|
TOTAL
CURRENT ASSETS
|
|
|
305,417
|
|
|
|
115,770
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
7,612
|
|
|
|
8,134
|
|
Other
receivable
|
|
|
116,964
|
|
|
|
—
|
|
Other
assets
|
|
|
19,435
|
|
|
|
10,264
|
|
TOTAL
NON-CURRENT ASSETS
|
|
|
144,011
|
|
|
|
18,398
|
|
TOTAL
ASSETS
|
|
$
|
449,428
|
|
|
$
|
134,168
|
|
LIABILITIES
AND MEMBERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
567,006
|
|
|
$
|
164,759
|
|
Current
portion of convertible notes payable
|
|
|
300,000
|
|
|
|
50,000
|
|
Current
portion of notes payable
|
|
|
177,055
|
|
|
|
37,233
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
1,044,061
|
|
|
|
251,992
|
|
NON-CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Convertible
notes payable, net of current portion
|
|
$
|
299,996
|
|
|
$
|
200,000
|
|
Notes
payable, net of current portion and discounts
|
|
|
602,724
|
|
|
|
752,586
|
|
TOTAL
NON-CURRENT LIABILITIES
|
|
|
902,720
|
|
|
|
952,586
|
|
TOTAL
LIABILITIES
|
|
|
1,946,781
|
|
|
|
1,204,578
|
|
MEMBERS'
DEFICIT:
|
|
|
|
|
|
|
|
|
Preferred
member units capital contributions
|
|
|
2,876,000
|
|
|
|
2,876,000
|
|
Members'
capital contributions
|
|
|
1,078,922
|
|
|
|
555,736
|
|
Members'
deficit
|
|
|
(5,452,275
|
)
|
|
|
(4,502,146
|
)
|
TOTAL
MEMBERS' DEFICIT
|
|
|
(1,497,353
|
)
|
|
|
(1,070,410
|
)
|
TOTAL
LIABILITIES AND MEMBERS' DEFICIT
|
|
$
|
449,428
|
|
|
$
|
134,168
|
|
See
accompanying notes to financial statements
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
For
the Years Ended December 31,
|
|
|
2018
|
|
2017
|
REVENUES
|
|
$
|
1,366,996
|
|
|
$
|
1,872,827
|
|
COST
OF SALES
|
|
|
|
|
|
|
|
|
Service
Hosting Costs
|
|
|
185,521
|
|
|
|
289,874
|
|
Direct
Labor Costs
|
|
|
189,003
|
|
|
|
272,126
|
|
Third
Party License Fees
|
|
|
133,116
|
|
|
|
96,017
|
|
TOTAL
COST OF SALES
|
|
|
507,640
|
|
|
|
658,017
|
|
GROSS
PROFIT
|
|
|
859,356
|
|
|
|
1,214,810
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
Research
and Development
|
|
|
545,223
|
|
|
|
871,171
|
|
Sales
and Marketing
|
|
|
208,924
|
|
|
|
482,695
|
|
General
and Administrative
|
|
|
945,607
|
|
|
|
675,834
|
|
TOTAL
OPERATING EXPENSES
|
|
|
1,699,754
|
|
|
|
2,029,700
|
|
LOSS
FROM OPERATIONS
|
|
|
(840,398
|
)
|
|
|
(814,890
|
)
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(109,799
|
)
|
|
|
(129,363
|
)
|
Interest
income
|
|
|
68
|
|
|
|
729
|
|
TOTAL
OTHER EXPENSE, NET
|
|
|
(109,731
|
)
|
|
|
(128,634
|
)
|
LOSS
BEFORE PROVISION FOR TAXES
|
|
|
(950,129
|
)
|
|
|
(943,524
|
)
|
PROVISION
FOR INCOME TAXES
|
|
|
—
|
|
|
|
—
|
|
NET
LOSS
|
|
$
|
(950,129
|
)
|
|
|
(943,524
|
)
|
LOSS
PER MEMBER UNIT
|
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
WEIGHTED
AVERAGE MEMBER UNITS OUTANDING - BASIC AND DILUTED
|
|
|
14,185,259
|
|
|
|
14,185,259
|
|
See
accompanying notes to financial statements
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
For
the Years Ended December 31,
|
|
|
2018
|
|
2017
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(950,129
|
)
|
|
$
|
(943,524
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
522
|
|
|
|
—
|
|
Stock
based compensation
|
|
|
155,886
|
|
|
|
61,916
|
|
Amortization
of debt issuance costs
|
|
|
2,685
|
|
|
|
20,377
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(82,089
|
)
|
|
|
591
|
|
Accounts
payable and accrued liabilities
|
|
|
402,247
|
|
|
|
58,250
|
|
Prepaid
expenses
|
|
|
—
|
|
|
|
—
|
|
Other
assets
|
|
|
(9,171
|
)
|
|
|
—
|
|
Net
cash used in operating activities
|
|
|
(480,049
|
)
|
|
|
(802,390
|
)
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Advance
to acquisition target
|
|
|
(116,964
|
)
|
|
|
—
|
|
Purchases
of property and equipment
|
|
|
—
|
|
|
|
(4,757
|
)
|
Net
cash used in investing activities
|
|
|
(116,964
|
)
|
|
|
(4,757
|
)
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from subsidiary contributions, net
|
|
|
367,300
|
|
|
|
—
|
|
Proceeds
from issuance of notes and convertible notes payable
|
|
|
404,997
|
|
|
|
537,607
|
|
Proceeds
from issuance of related party notes payable
|
|
|
144,000
|
|
|
|
—
|
|
Payments
on notes and convertible notes payable
|
|
|
(156,726
|
)
|
|
|
—
|
|
Payments
on related party notes payable
|
|
|
(55,000
|
)
|
|
|
(87,777
|
)
|
Net
cash provided by financing activities
|
|
|
704,571
|
|
|
|
449,830
|
|
Net
change in cash and cash equivalents
|
|
|
107,558
|
|
|
|
(357,317
|
)
|
Cash
and cash equivalents, beginning of year
|
|
|
11,709
|
|
|
|
369,026
|
|
Cash
and cash equivalents, end of year
|
|
$
|
119,267
|
|
|
$
|
11,709
|
|
SUPPLEMENTARY
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
93,012
|
|
|
$
|
49,810
|
|
Income
taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
See
accompanying notes to financial statements
CONSOLIDATED
STATEMENTS OF MEMBERS’ DEFICIT
For
the Years Ended December 31, 2018 and 2017
|
|
Series
A Preferred Member Units
|
|
Amount
|
|
Common
Member Units
|
|
Member
Capital
|
|
Accumulated
Deficit
|
|
Total
|
Balance
- December 31, 2016
|
|
|
12,216,509
|
|
|
|
2,876,000
|
|
|
|
1,968,750
|
|
|
|
493,820
|
|
|
|
(3,558,622
|
)
|
|
|
(188,802
|
)
|
Stock
based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,916
|
|
|
|
—
|
|
|
|
61,916
|
|
Net
(loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(943,524
|
)
|
|
|
(943,524
|
)
|
Balance
- December 31,2017
|
|
|
12,216,509
|
|
|
|
2,876,000
|
|
|
|
1,968,750
|
|
|
|
555,736
|
|
|
|
(4,502,146
|
)
|
|
|
(1,070,410
|
)
|
Stock
based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
155,886
|
|
|
|
|
|
|
|
155,886
|
|
Subsidiary
contributions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
367,300
|
|
|
|
—
|
|
|
|
367,300
|
|
Net
(loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(950,129
|
)
|
|
|
(950,129
|
)
|
Balance
- December 31,2018
|
|
|
12,216,509
|
|
|
|
2,876,000
|
|
|
|
1,968,750
|
|
|
|
1,078,922
|
|
|
|
(5,452,275
|
)
|
|
|
(1,497,353
|
)
|
See
accompanying notes to financial statements
NOTE
1 - ORGANIZATION AND NATURE OF BUSINESS
Clinigence,
LLC (the “LLC”) was organized as a Georgia Limited Liability Company on March 19, 2010. Together with its subsidiary
Clinigence Holdings, Inc. (“CLI”; with an inception date of October 2018); and its wholly owned subsidiary Clinigence
India. The Company is a population health analytics company that provides turnkey SaaS solutions that enable connected intelligence
across the care continuum by transforming massive amounts of data into actionable insights. The Company’s solutions help
healthcare organizations throughout the United States improve the quality and cost-effectiveness of care, enhance population health
management and optimize provider networks. The Company enables risk-bearing healthcare organizations achieve their objectives
on the path to value-based care. The Company’s platform automatically extracts and delivers targeted data insights from
its cloud-based analytics engine directly to the workflows and technologies of its customers. This enhances end-user workflows
with actionable analytics, seamlessly delivers data from disparate sources to the point of engagement, automates the delivery
of data to ensure on-time access, and reduces dependency on non-essential applications from the end-user’s workflow. All
of this allows the healthcare organization to enable population health management, manage cost and utilization, improve quality,
identify gaps in care, risk stratify and target patients, increase collaboration among providers and to optimize network provider
performance.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Preparation
The
preparation of these consolidated financial statements (the “financial statements”) in conformity with accounting
principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect
the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.
Principles
of Consolidation
The
Company consolidates the assets, liabilities, and operating results of its wholly-owned subsidiaries, Clinigence Holdings, Inc.
and Clinigence India. All intercompany accounts and transactions have been eliminated in consolidation.
Revenue
Recognition
Revenue
is generated primarily by software licenses, training, and consulting. Software licenses are provided as SaaS-based subscriptions
that grants access to proprietary online databases and data management solutions. Training and consulting are project based and
billable to customers on a monthly-basis or task-basis.
Revenue
from training and consulting are generally recognized upon delivery of training or completion of the consulting project. The duration
of training and consulting projects are typically a few weeks or months and last no longer than 12 months.
SaaS-based
subscriptions are generally marketed under multi-year agreements with annual, semi-annual, quarterly, or month-to-month renewals
and revenue is recognized ratably over the renewal period with the unearned amounts received recorded as deferred revenue.
Deferred
revenue is recorded as accrued expenses in the accompanying consolidated balance sheet and was not significant at December 31,
2018 and 2017. For multiple- element arrangements accounted for in accordance with specific software accounting guidance, multiple
deliverables are segregated into units of accounting which are delivered items that have value to a customer on a standalone basis.
Cost
of Sales
The
Company’s costs of sales primarily consist of cloud computing and storage costs, datasets, and contracted and internal labor
costs.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management
include, among others, provisions for doubtful accounts, and valuation of stock-based compensation. Actual results could materially
differ from those estimates.
Cash
Cash
and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date
of purchase. The Company does not have any cash equivalents as of December 31, 2018 and 2017. The Company is exposed to credit
risk in the event of default by the financial institutions to the extent the amounts on deposit or invested are in excess of amounts
that are insured.
Accounts
Receivable
Accounts
receivable represent valid claims against debtors for sales arising on or before the balance sheet date and are reduced to their
estimated net realizable value. Accounts receivable are periodically evaluated for collectability based on past credit history
with customers and their current financial condition. Amounts are written-off only after all reasonable collection efforts have
been made. The Company did not have a material allowance for accounts of December 31, 2018 and 2017.
Concentration
of Credit Risk
The
Company grants credit to its customers during the normal course of business. The Company performs ongoing credit evaluations of
its customers’ financial condition and generally requires no collateral.
Property
and Equipment
Property
and equipment, consisting of computers and other office equipment, is recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets ranging from three to five years. Maintenance and repairs are charged to
expense as incurred. Renewals and improvements of a major nature are capitalized.
At
the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation or amortization are
removed from the accounts and any resulting gains or losses are reflected in the accompanying statements of operations.
Long-Lived
Assets
Long-lived
assets include property and equipment. These assets are recorded at cost and depreciated or amortized over their estimated useful
lives. For purposes of determining whether there are any impairment losses, management evaluates the carrying value of the Company’s
identifiable long-lived assets, including their useful lives, when indicators of impairment are present, considering whether the
undiscounted lowest identifiable cash flows are sufficient to recover the carrying amount of the applicable asset or asset group.
If an impairment is indicated, the Company computes the impairment based on the fair value of the asset, as compared to the carrying
value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review
of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated
useful lives are more appropriate.
Income
Taxes
The
Company is a limited liability company. As such, profits and losses of the Company are allocated and taxed on an individual member
holder basis without impact to the Company on an asset and liability basis. In late 2018, the LLC formed Clinigence Holdings,
Inc. (“CLI”), a C-Corporation. As of, and for the year ended December 31, 2018, CLI had immaterial assets and operations.
The
Company recognizes interest and penalties associated with uncertain tax positions as a component of income tax expense. The Company
does not have any unrecognized tax benefits or a liability for uncertain tax positions at December 31, 2018 and 2017. The Company
does not expect to have any unrecognized tax benefits within the next twelve months. The Company recognizes accrued interest and
penalties associated with uncertain tax positions, if any, as part of income tax expense. There were no tax related interest and
penalties recorded for 2018 and 2017. Since the Company incurred net operating losses in every tax year since inception, all of
its income tax returns are subject to examination and adjustments by the IRS for at least three years following the year in which
the tax attributes are utilized.
Fair
Value Measurement
The
Company applies fair value accounting for all financial assets and liabilities and non- financial assets and liabilities that
are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as
the price that would be received from selling an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for
assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous
market in which the Company would transact and the market-based risk measurements or assumptions that market participants would
use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk.
Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three
levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the
fair value measurement:
Level
1 Inputs: Quoted prices in active markets for identical assets or liabilities.
Level
2 Inputs: Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for
identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities.
Level
3 Inputs: Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market
participants would use in pricing the asset or liability.
The
fair value of certain of the Company’s financial instruments carried at cost, including cash, accounts receivable, accounts
payable, and notes payable approximate the carrying amounts presented in the balance sheet due to the short-term nature of these
instruments.
Stock-based
Compensation
Stock-based
compensation costs for eligible employees and directors are measured at fair value on the date of grant and are expensed over
the requisite service period using a straight- line attribution method for the entire award that are subject to only service vesting
conditions
Debt
Issuance Costs
Debt
issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over
the terms of the related debt agreements using the effective interest method.
NOTE
3 - GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. Since inception, the Company has
not generated sufficient cash flows from its operations to fund the Company’s on-going obligations as they arise. Additionally,
the Company has a working capital deficit at December 31, 2018. In the future, the Company may require sources of capital in addition
to cash on hand to continue operations and to implement its strategy.
As
further discussed in Note 8, the Company has raised $4,015,000 since December 31, 2018 through its wholly-owned subsidiary, CLI,
and has entered into a capital contribution agreement to acquire Qualmetrix, Inc.
The
Company may be forced to seek credit line facilities from financial institutions, equity investments or debt arrangements. No
assurances can be given that the Company will be successful in obtaining such additional financing on reasonable terms, or at
all. If adequate funds are not available on acceptable terms, or at all, the Company may be unable to adequately fund its business
plan. This raises substantial doubt about the Company’s ability to continue as a going concern. These financials do not
include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification
of liabilities that might result from this uncertainty.
NOTE
4 - RELATED PARTY TRANSACTIONS
In
the fourth quarter of 2018, the Company loaned Qualmetrix, Inc. $116,964 included in other assets in the accompanying balance
sheets. In March 2019, and further discussed in Note 8, the Company, through its wholly-owned subsidiary Clinigence Holdings,
Inc., acquired the assets and operations and assumed the liabilities of Qualmetrix, Inc. During the years ended December 31, 2018
and 2017, the Company entered into service contracts with Qualmetrix whereby it compensated Qualmetrix $90,000 per year.
In
2018, the Company received convertible debt proceeds totaling $548,997, from related parties. The terms of the convertible debt
are discussed in more detail in Note 5.
NOTE
5 - NOTES AND CONVERTIBLE NOTES PAYABLE
Notes
Payable
Notes
payable consisted of the following at December 31:
Note
Description
|
|
2018
|
|
2017
|
Notes
Payable:
|
|
|
|
|
Notes
Payable with maturities between sixmonths and twelve months from the date of issuance with annual percentage interest rates
between 24% and 29%
|
|
$
|
63,448
|
|
|
$
|
—
|
|
Note
payable issued
in May
2013 with
a maturity date of May 2023
and interest
rate of Prime
+ 2% (7.5%
and 6.5%
at December
31,
2018 and 2017, respectively)
|
|
|
267,137
|
|
|
|
317,951
|
|
Note
payable issued in June 2017 with a maturity date of June 2022 and effective interest rate of 10.66%
|
|
|
449,194
|
|
|
|
486,328
|
|
Total
Notes payable
|
|
$
|
779,779
|
|
|
$
|
804,279
|
|
Unamortized
discounts
|
|
|
—
|
|
|
|
(14,460
|
)
|
Current
portion
|
|
|
(177,055
|
)
|
|
|
(37,233
|
)
|
Total
Notes payable, net
|
|
$
|
602,724
|
|
|
$
|
752,586
|
|
Beginning
in April 2018, the Company entered into a series of short-term note with interest rates ranging from 24 to 29% per annum. Throughout
the year ended December 31, 2018 the Company made average monthly principal and interest payments approximating
$12,000
per month. The final payment under these short-term note arrangements was paid in July 2019.
In
June 2017, the Company entered into a Revenue Loan Investment for net working capital proceeds of $500,000. The Company is required
to make monthly principal and interest payment on the Revenue Loan based on it net cash receipts from operations in the following
3 tiers:
•
|
|
Tier
1 – Payments at a rate of 6.0% of the net cash receipts from the immediate month
prior until cumulative loan payments are based on $2,500,000 of net cash receipts.
|
•
|
|
Tier
2 – After achieving loan payments based on $2,500,000 of net cash receipts in a
loan year, additional payments are based on 3.0% of amounts in excess of the Tier 1 Cap.
|
•
|
|
Tier
3 – Payments at a rate of 0.5% of net cash receipts in excess of $3.200,000 in
a loan year.
|
From
the inception of the Revenue Loan in June 2017 through December 31, 2018 the Company has paid its monthly principal and interest
payments based on the Tier 1 net cash receipts.
In
May 2013, the Company entered into a note agreement with a financial institution whereby it received net working capital proceeds
of $500,000. The Company makes monthly principal and interest payments approximating $6,000 per month as of December 31, 2018
based on a variable interest rate of Prime plus 2% (7.5% as of December 31, 2018).
Convertible
Notes
Convertible
notes payable consisted of the following at December 31:
Note
Description
|
|
2018
|
|
2017
|
Convertible
Notes Payable:
|
|
|
|
|
Notes
payable convertible into Member Units at $0.44 per Unit; nominal interest rate of 5%; and maturity date in April 2018
|
|
|
—
|
|
|
|
50,000
|
|
Notes
payable convertible into Member Units at $0.44 per Unit; nominal interest rate of 5%; and maturity date in January 2019
|
|
|
200,000
|
|
|
|
200,000
|
|
Notes
payable convertible into Member Units at $0.59 per Unit; nominal interest rate of 12%; and maturity date in August 2019
|
|
|
100,000
|
|
|
|
—
|
|
Notes
payable convertible into Member Units at $0.59 per Unit; nominal interest rate of 12%; and maturity dates in March, April
and August 2021
|
|
|
299,996
|
|
|
|
—
|
|
Total
Convertible notes payable
|
|
$
|
599,996
|
|
|
$
|
250,000
|
|
Current
portion
|
|
|
(300,000
|
)
|
|
|
(50,000
|
)
|
Total
convertible and other notes payable, net
|
|
$
|
299,996
|
|
|
$
|
200,000
|
|
Beginning
in April 2018, and through August 2018, the Company entered into 12% convertible note agreements for aggregate proceeds of $417,000
with investors at an initial conversion price of $0.59 per share and convertible into common or preferred member units at the
option of the holder and maturing on the three-year anniversary date of issuance. No payments are due until maturity. The notes
carry a mandatory conversion feature in the event the Company receives a Qualified Financing defined as an equity financing involving
one or more third party institutional or venture capital investors independent of the existing note and equity holders in excess
of $1,00,000. In the event of a qualified financing the convertible notes will be converted at 65% of initial stated conversion
price. Through December 31, 2018, no qualified financing has been achieved. The Company determined that the discounted conversion
price based on the receipt of a qualified financing resulted in the notes containing a beneficial conversion feature. Since the
contingency has not been met, the Company has not recognized the accounting impacts of the beneficial conversion feature in the
accompanying consolidated balance sheets and statements of operations.
In
2014 and 2015, the Company entered into 5% convertible note agreements for aggregate proceeds of $250,000 with investors at an
initial conversion price of $0.44 per share and convertible into common or preferred member units at the option of the holder
and maturing on the three-year anniversary date of issuance. No payments are due until maturity. The notes carry a mandatory conversion
feature in the event the Company receives a Qualified Financing defined as an equity financing involving one or more third party
institutional or venture capital investors independent of the existing note and equity holders in excess of $1,00,000. In the
event of a qualified financing the convertible notes will be converted at 80% of initial stated conversion price. Through December
31, 2018, no qualified financing has been achieved. The Company determined that the discounted conversion price based on the receipt
of a qualified financing resulted in the notes containing a beneficial conversion feature. Since the contingency has not been
met, the Company has not recognized the accounting impacts of the beneficial conversion feature in the accompanying consolidated
balance sheets and statements of operations.
As
part of the 2014 note issuance, the Company issued the note holder warrants convertible into 402,062 common or preferred member
units at a rate of $0.44 per unit at the option of the holder. The warrants, with an estimated value of $90,000 on the grant date,
were valued using a Black-Scholes model and were fully amortized as of December 31, 2016. In the event of a qualified financing
the convertible notes will be converted at 80% of initial stated conversion price. Through December 31, 2018, no qualified financing
has been achieved. The warrants will expire in January 2021 if not exercised.
In
April 2018, the Company settled the 5% convertible notes totaling approximately $58,000 representing $50,000 of principal and
approximately $8,000 of previously accrued interest.
The
following table illustrates the Company’s payment obligations on its notes payable and convertible notes payable:
Year
|
|
Amount
|
2019
|
|
$
|
477,055
|
|
2020
|
|
|
124,085
|
|
2021
|
|
|
435,522
|
|
2022
|
|
|
311,093
|
|
2023
|
|
|
32,020
|
|
Thereafter
|
|
|
—
|
|
Total
|
|
$
|
1,379,775
|
|
NOTE
6 - MEMBERS’ EQUITY
As
of December 31, 2018, the Company is authorized to issue member units totaling 21,814,179. The member units consist of three classes:
i) Series A preferred, 14,488,003 units authorized and 12,216,509 issued and outstanding; ii) common units, 3,841,216 authorized
and 1,968,750 issued and outstanding; and iii) incentive units, 3,793,081 authorized and 2,102,590 vested at December 31, 2018.
Series
A Preferred Member Units
As
of December 31, 2018 and 2017, the Company had 12,216,509 Series A member units outstanding and received cash proceeds of $2,876,000:
Voting
Rights - Each Series A Member unit is entitled to the number of votes equal to the number of common units. Holders of
the Series A units are entitled to vote together with the holders of common units and not as a separate class on all matters submitted
to vote of the unit holders.
Net
Profit and Loss Allocations – Net profits and losses are allocated to the Series A members in proportion
to their share of net profit or loss considering the total common and preferred member units outstanding.
Preemptive
Rights - Each Series A Member and Common Member (the “Eligible Members”) shall have a preemptive right
to purchase all (or any portion) of its pro rata share of any and all new Units (including securities or debt convertible into
or exercisable or exchangeable for Units), that the Company may, from time to time, propose to sell and issue to any Person (each,
a “Proposed Issuance”). For purposes of calculating the eligible pre-emptive rights, an Eligible Member’s pro
rata share shall equal the percentage represented by (x) the number of outstanding Units (of each class) held by such Eligible
Member, divided by (y) the total number of outstanding Units (of each class) held by all Eligible Members.
Common
Member Units
As
of December 31, 2018 and 2017, the Company had 1,968,750 common member units issued and outstanding. The common member units were
issued to the founding members of the Company on an in-kind basis at the Company’s inception in 2010.
Voting
Rights - Each common member unit is entitled to the number of votes equal to the number of common units. Holders of common
units are entitled to vote together with the holders of Series A units and not as a separate class on all matters submitted to
vote of the unit holders.
Net
Profit and Loss Allocations – Net profits and losses are allocated to the common members in proportion to
their share of net profit or loss considering the total common and preferred member units outstanding.
Preemptive
Rights - Each Common Member (the “Eligible Members”) shall have a preemptive right to purchase all
(or any portion) of its pro rata share of any and all new Units (including securities or debt convertible into or exercisable
or exchangeable for Units), that the Company may, from time to time, propose to sell and issue to any Person (each, a “Proposed
Issuance”). For purposes of calculating the eligible pre-emptive rights, an Eligible Member’s pro rata share shall
equal the percentage represented by (x) the number of outstanding Units (of each class) held by such Eligible Member, divided
by (y) the total number of outstanding Units (of each class) held by all Eligible Members.
Incentive
Units
As
of December 31, 2018 and 2017 the Company had 3,793,081 and 2,397,364 incentive units
issued
with 2,466,894 and 1,994, vested at December 31, 2018 and 2017, respectively. Both vested and non-vested incentive units are not
subject to proportionate allocations of net profits and losses and do not have any voting rights.
A
summary of the incentive unit activity is as follows:
|
|
Units
|
|
Grant
Date Fair Value
|
Outstanding
at January 1, 2018
|
|
|
2,397,364
|
|
|
$
|
0.25
|
|
Units
granted
|
|
|
1,395,717
|
|
|
|
0.34
|
|
Forfeited
and cancelled
|
|
|
—
|
|
|
|
—
|
|
Outstanding
at December 31, 2018
|
|
|
3,793,081
|
|
|
|
0.28
|
|
Vested
at December 31, 2018
|
|
|
2,466,894
|
|
|
|
0.25
|
|
Stock-based
compensation expense associated with incentive units totaled $155,886 and
$61,916
for the years ended December 31, 2018 and 2017, respectively. The Company expects to recognize unrecognized compensation cost
associated with unvested incentive unit totaling approximately $542,000 over the weighted average remaining requisite service
period of approximately 3.5 years.
Subsidiary
Equity – Clinigence Holdings, Inc.
In
October 2018, the Company formed Clinigence Holdings, Inc. which is authorized to issue 100,000,000 shares of common stock with
a par value of $0.00001. In the fourth quarter of 2018 the Company issued 360,000 shares of common stock in Clinigence Holdings,
Inc. for gross cash proceeds totaling $450,000 and incurred capital raising costs of $82,700. The issuance of the Clinigence Holdings,
Inc. common stock was in contemplation of the expected Contribution Agreement as more fully discussed in Note 8.
NOTE
7 - COMMITMENTS AND CONTINGENCIES
The
Company leases its office space under a 64-month non-cancellable lease arrangement that began on January 1, 2019 and expires on
in April 2024. The lease payments escalate at a rate of three percent per annum and begin with base monthly lease payments of
$5,477. Lease expense approximated $65,000 in each of the two years ended December 31, 2018 and 2017.
The
following table provides the lease payments due by year under the Company’s non- cancellable lease agreement:
Year
|
|
Amount
|
2019
|
|
$
|
65,728
|
|
2020
|
|
|
67,700
|
|
2021
|
|
|
69,731
|
|
2022
|
|
|
71,823
|
|
2023
|
|
|
73,978
|
|
Thereafter
|
|
|
25,399
|
|
Total
|
|
$
|
374,359
|
|
From
time to time, the Company is involved in lawsuits, claims, investigations and proceedings that arise in the ordinary course of
business. The Company is not a named party in any other pending or threatened litigation that we expect to have a material adverse
impact on our business, results of operations, financial condition or cash flows.
NOTE
8 - SUBSEQUENT EVENTS
The
Company evaluated its financial statements for subsequent events through July 23, 2019, the date these financial statements were
available to be issued.
Through
June 2019, the Company issued 3,212,000 shares of Clinigence Holdings, Inc. common stock for cash proceeds totaling $4,015,000.
On
March 1, 2019, the Company entered into a Contribution Agreement by and among Clinigence Holdings, Inc. (“Holdings”),
Qualmetrix, Inc., and the Members of Clinigence, LLC (“Agreement”) whereby Clinigence Holdings, Inc. acquired all
of the assets and operations and assumed all of the liabilities of Qualmetrix, Inc. Pursuant to the Agreement, all of the outstanding
Series A and Series B Preferred Stock and Common Stock of Qualmetrix, Inc. totaling 34,726,659 shares were exchanged for 5,021,951
common shares of Clinigence Holdings, Inc. All outstanding shares of Qualmetrix, Inc. immediately preceding the exchange were
treated as one class. On the date of the transaction, the total consideration for the acquisition of Qualmetrix, Inc. had an estimated
fair value of approximately
$6,277,439
and is expected to primarily be allocated to identifiable intangible assets. The Company has not yet completed its purchase price
allocation.
As
part of the Contribution Agreement, 15,978,062 issued and outstanding member units of Clinigence LLC were exchanged for 7,533,000
shares of common stock of common stock of Clinigence Holdings, Inc. All outstanding preferred member units, common units, and
incentive units of Clinigence LLC immediately preceding the exchange were treated as one class. In addition, and in conjunction
with the Contribution Agreement, the Company agreed to adopt an equity incentive plan. As part of the adoption, the Company agreed
to issue two of its key employees a total of 945,000 restricted shares of common stock of Clinigence Holdings, Inc. in the event
the Company’s shares are listed on a public exchange prior to December 31, 2019.
Upon
closing the Contribution Agreement, any convertible Debt of Clinigence LLC or QualMetrix
that is not repaid in full at Closing and holders of such Debt elect to convert such Debt and any holders of warrants issued by
Clinigence LLC or QualMetrix elect to exercise such warrants, Clinigence Holdings shall, to the extent permissible under applicable
federal and state securities laws as reasonably determined by Clinigence Holdings, issue Clinigence Holdings Shares to the holders
of such warrants and such Debt in satisfaction thereof (or, in the case of
holders of convertible Debt or
warrants of QualMetrix, issue Clinigence Holdings Shares to QualMetrix as part of the QualMetrix Closing Shares for issuance to
such holders upon the liquidation of QualMetrix).
The
Company did not incur material acquisition costs associated with the Contribution Agreement.
ANNEX
A – 2 QualMetrix Inc. 2017 and 2018 Audited Financials
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors and Stockholders of
Qualmetrix,
Inc.
Opinion
on the Financial Statements
We
have audited the accompanying balance sheets of Qualmetrix, Inc. and subsidiaries (the "Company") as of December 31,
2018 and 2017, the related statements of operations, stockholders’ deficit and cash flows for each of the two years in the
period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December
31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Emphasis
of Matter Regarding Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/
Hall & Company
Hall
& Company
We
have served as the Company’s auditor since 2019
Irvine,
CA
July
19, 2019
BALANCE
SHEETS
|
As
of December 31,
|
|
|
|
2018
|
|
2017
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
4,029
|
|
|
$
|
9,154
|
|
Accounts
receivable, net
|
|
|
14,500
|
|
|
|
28,972
|
|
TOTAL
CURRENT ASSETS
|
|
|
18,529
|
|
|
|
38,126
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
5,870
|
|
|
|
12,266
|
|
Other
assets
|
|
|
1,650
|
|
|
|
1,650
|
|
TOTAL
NON-CURRENT ASSETS
|
|
|
7,520
|
|
|
|
13,916
|
|
TOTAL
ASSETS
|
|
$
|
26,049
|
|
|
$
|
52,042
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
384,062
|
|
|
$
|
254,559
|
|
Related
party notes payable
|
|
|
204,037
|
|
|
|
101,252
|
|
Deferred
compensation
|
|
|
163,778
|
|
|
|
13,483
|
|
Deferred
revenues
|
|
|
46,438
|
|
|
|
146,692
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
798,315
|
|
|
|
515,986
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT:
|
|
|
|
|
|
|
|
|
Preferred
stock; $0.00001 par value; 20,179,600 shares authorized; 7,902,800 Series A and 12,276,800 Series B shares issued and outstanding,
respectively
|
|
|
202
|
|
|
|
202
|
|
Common
stock; $0.00001 par value; 40,512,800 shares authorized; 14,547,059 shares issued and outstanding
|
|
|
145
|
|
|
|
145
|
|
APIC
|
|
|
9,031,279
|
|
|
|
9,024,371
|
|
Accumulated
deficit
|
|
|
(9,803,892
|
)
|
|
|
(9,488,662
|
)
|
TOTAL
STOCKHOLDERS' DEFICIT
|
|
|
(772,266
|
)
|
|
|
(463,944
|
)
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
26,049
|
|
|
$
|
52,042
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial statements
|
STATEMENTS
OF OPERATIONS
|
For
the years ended December 31,
|
|
|
2018
|
|
2017
|
REVENUES
– Software Licenses
|
|
$
|
859,411
|
|
|
$
|
988,827
|
|
|
|
|
|
|
|
|
|
|
COST
OF SALES
|
|
|
|
|
|
|
|
|
Service
Hosting Costs
|
|
|
145,701
|
|
|
|
234,860
|
|
Third
Party License Fees
|
|
|
111,073
|
|
|
|
120,214
|
|
TOTAL
COST OF SALES
|
|
|
256,774
|
|
|
|
355,074
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
602,637
|
|
|
|
633,753
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
R&D
|
|
|
327,481
|
|
|
|
659,420
|
|
Sales
and Marketing
|
|
|
153,872
|
|
|
|
725,011
|
|
G&A
|
|
|
416,029
|
|
|
|
444,064
|
|
Depreciation
& Amortization
|
|
|
9,700
|
|
|
|
11,248
|
|
TOTAL
OPERATING EXPENSES
|
|
|
907,082
|
|
|
|
1,839,743
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(304,445
|
)
|
|
|
(1,205,990
|
)
|
OTHER
INCOME AND (EXPENSE)
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(10,785
|
)
|
|
|
(1,250
|
)
|
Other
income
|
|
|
—
|
|
|
|
1,921
|
|
TOTAL
OTHER EXPENSE, NET
|
|
|
(10,785
|
)
|
|
|
671
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE PROVISION FOR INCOME TAXES
|
|
|
(315,230
|
)
|
|
|
(1,205,319
|
)
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(315,230
|
)
|
|
$
|
(1,205,319
|
)
|
Loss
per share - basic & diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.08
|
)
|
Weighted
average shares of common stock outstanding- basic & diluted
|
|
|
14,547,059
|
|
|
|
14,547,059
|
|
The
accompanying notes are an integral part of these consolidated financial statements
STATEMENTS
OF STOCKHOLDERS’ DEFICIT
|
For
the Years Ended December 31, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
APIC
|
|
|
|
Accumulated
Deficit
|
|
|
|
Total
|
|
Balance
- 12/31/2016
|
|
|
20,179,600
|
|
|
|
202
|
|
|
|
14,547,059
|
|
|
|
145
|
|
|
|
9,017,990
|
|
|
|
(8,283,343
|
)
|
|
|
734,994
|
|
Net
(loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,205,319
|
)
|
|
|
(1,205,319
|
)
|
Stock
grant compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,381
|
|
|
|
—
|
|
|
|
6,381
|
|
Balance
– 12/31/2017
|
|
|
20,179,600
|
|
|
|
202
|
|
|
|
14,547,059
|
|
|
|
145
|
|
|
|
9,024,371
|
|
|
|
(9,488,662
|
)
|
|
|
(463,944
|
)
|
Net
(loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(315,230
|
)
|
|
|
(315,230
|
)
|
Stock
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,908
|
|
|
|
—
|
|
|
|
6,908
|
|
Balance
- 12/31/2018
|
|
|
20,179,600
|
|
|
|
202
|
|
|
|
14,547,059
|
|
|
|
145
|
|
|
|
9,031,279
|
|
|
|
(9,803,892
|
)
|
|
|
(772,266
|
)
|
The
accompanying notes are an integral part of these consolidated financial statements
STATEMENTS
OF CASH FLOWS
|
|
|
|
For The Years Ended December
31,
|
|
|
2018
|
|
2017
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
($
|
315,230
|
)
|
|
($
|
1,205,319
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
9,700
|
|
|
|
11,248
|
|
Stock
based compensation
|
|
|
6,908
|
|
|
|
6,381
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
14,471
|
|
|
|
17,358
|
|
Accounts
payable and accrued liabilities
|
|
|
129,503
|
|
|
|
110,450
|
|
Prepaid
Expenses
|
|
|
—
|
|
|
|
3,700
|
|
Deferred
Revenue
|
|
|
(100,254
|
)
|
|
|
37,107
|
|
Deferred
Compensation
|
|
|
150,295
|
|
|
|
13,333
|
|
Net
cash (used in) provided by operating activities
|
|
|
(104,607
|
)
|
|
|
(1,005,742
|
)
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Proceed
from Retirement of Fixed Assets
|
|
|
—
|
|
|
|
4,500
|
|
Property
and equipment acquired
|
|
|
(3,304
|
)
|
|
|
—
|
|
Net
cash used in investing activities
|
|
|
(3,304
|
)
|
|
|
4,500
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceed
from related party notes payable
|
|
|
102,785
|
|
|
|
101,252
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
|
102,785
|
|
|
|
101,252
|
|
Net
change in cash and cash equivalents
|
|
|
(5,126
|
)
|
|
|
(899,990
|
)
|
Cash
and cash equivalents, beginning of year
|
|
|
9,154
|
|
|
|
909,144
|
|
Cash
and cash equivalents, end of year
|
|
$
|
4,029
|
|
|
$
|
9,154
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
|
14,495
|
|
|
|
1,250
|
|
Income
taxes paid
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial statements
|
NOTE
1 - ORGANIZATION AND NATURE OF BUSINESS
Organization
Qualmetrix,
Inc. (the “Company”) was organized as a Delaware Corporation on July 19, 2013.
Nature
of Business
QualMetrix,
Inc., founded in 2013 and based in Miramar, Florida, is a population health analytics company that provides turnkey SaaS solutions
that enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights.
The company’s solutions help healthcare organizations improve the quality and cost-effectiveness of care, enhance population
health management and optimize provider networks. The company enables risk-bearing healthcare organizations to achieve their objectives
on the path to value-based care. The Company’s platform automatically extracts and delivers targeted data insights from
its cloud-based analytics engine directly to the workflows and technologies of its customers. This enhances end-user workflows
with actionable analytics, seamlessly delivers data from disparate sources to the point of engagement, automates the delivery
of data to ensure on-time access, and reduces dependency on non-essential applications from the end-user’s workflow. All
of this allows the healthcare organization to enable population health management, manage cost and utilization, improve quality,
identify gaps in care, risk stratify and target patients, increase collaboration among providers and to optimize network provider
performance.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Preparation
The
preparation of these financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”)
requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
Going
Concern
The
Company had net loss of approximately $250,000 and $1,200,000 for the years ended December 31, 2018 and 2017, respectively. The
Company had a working capital deficit of approximately $715,000 and $480,000 for each year end, respectively.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
These
factors raise significant doubt as to the Company’s ability to pursue its operations without additional capital sources
or continue as a going concern. As part of management’s plans, and described in more detail in Note 8, the Company entered
into a Contribution Agreement with Clinigence Holdings, Inc. whereby Clinigence Holdings will acquire the assets and operations
and assume the liabilities of the Company.
Revenue
Recognition
Revenue
is generated primarily by software licenses, maintenance support on software licenses, and training and consulting. Software licenses,
including maintenance support, are provided as SaaS-based subscriptions that grants access to proprietary online databases and
data management solutions. Training and consulting are project based and billable to customers on a monthly-basis or task-basis.
Revenue
from training and consulting are generally recognized upon delivery of training or completion of the consulting project. The duration
of training and consulting projects are typically a few weeks or months and last no longer than 12 months.
SaaS-based
subscriptions, including maintenance support, are generally marketed under multi-year agreements with annual, semi-annual, quarterly,
or month-to-month renewals and revenue is recognized ratably over the renewal period with the unearned amounts received recorded
as deferred revenue. SaaS-based subscriptions are considered multiple-element arrangements because of the multiple deliverables
which includes access to the software platform and the related maintenance support. For multiple- element arrangements accounted
for in accordance with specific software accounting guidance, multiple deliverables are segregated into units of accounting which
are delivered items that have value to a customer on a standalone basis. The maintenance support provides technical support to
the customer when the customer has access to the SaaS-based software platform. Absent of a subscription to the SaaS-base software
platform, a customer does not receive maintenance support from the Company nor can the customer purchase maintenance support from
a third-party provider. As such, maintenance support is not considered a deliverable item that is standalone or separate from
the SaaS-based software platform.
Cost
of Sales
The
Company’s costs of sales primarily consist of cloud computing and storage costs, datasets, and contracted and internal labor
costs.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management
include, among others, provisions for doubtful accounts, software amounts eligible for capitalization and useful lives and recoverability
of long-lived assets. Actual results could materially differ from those estimates.
Cash
Cash
and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date
of purchase. The Company does not have any cash equivalents as of December 31, 2018 and 2017.
Accounts
Receivable
Accounts
receivable represent valid claims against debtors for sales arising on or before the balance sheet date and are reduced to their
estimated net realizable value. Accounts receivable are periodically evaluated for collectability based on past credit history
with customers and their current financial condition. Amounts are written-off only after all reasonable collection efforts have
been made. The Company did not have a material allowance for doubtful accounts at December 31, 2018 and 2017.
Concentration
of Credit Risk
The
Company grants credit to its customers during the normal course of business. The Company performs ongoing credit evaluations of
its customers’ financial condition and generally requires no collateral.
During
the years ended December 31, 2018 and 2017, the Company had sales to one and two customers that approximated 11% and 35% of total
sales, respectively. At December 31, 2018 and 2017, the Company had amounts receivable from one and three customers that approximated
97% and 96%, respectively.
Property
and Equipment
Property
and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets
ranging from three to five years. Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major
nature are capitalized.
At
the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation or amortization are
removed from the accounts and any resulting gains or losses are reflected in the accompanying statements of operations.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Advertising
The
Company expenses advertising as incurred. Advertising expense for the year ended December 31, 2018 and 2017 was not material.
Income
Taxes
Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and
liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. Valuation allowances are established when necessary in order
to reduce deferred tax assets to the amounts expected to be recovered.
The
Company has established a valuation allowance for its deferred tax assets that are not recoverable from taxable temporary differences
because the Company is unable to conclude that future utilization of a portion of its net operating loss carryforwards and other
deferred tax assets is more likely than not.
The
calculation of the Company’s tax positions involves dealing with uncertainties in the application of complex tax regulations
in several different state tax jurisdictions. The Company is periodically reviewed by tax authorities regarding the amount of
taxes due. These reviews include inquiries regarding the timing and amount of deductions and the allocation of income
among various tax jurisdictions. The Company records estimated reserves for exposures associated with positions that
it takes on its income tax returns that do not meet the more likely than not standards.
Fair
Value Measurement
The
Company applies fair value accounting for all financial assets and liabilities and non- financial assets and liabilities that
are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as
the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required
to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact
and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such
as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following
hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy
upon the lowest level of input that is available and significant to the fair value measurement:
Level
1 Inputs: Quoted prices in active markets for identical assets or liabilities.
Level
2 Inputs: Observable inputs other than quoted prices in active markets for identical
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
assets
and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level
3 Inputs: Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market
participants would use in pricing the asset or liability.
The
fair value of certain of the Company’s financial instruments carried at cost, including cash, accounts receivable, accounts
payable, accrued expenses and related party payable approximate the carrying amounts presented in the balance sheet due to the
short-term nature of these instruments.
Long-Lived
Assets
Long-lived
assets include property and equipment. These assets are recorded at cost and depreciated or amortized over their estimated useful
lives. For purposes of determining whether there are any impairment losses, management evaluates the carrying value of the Company’s
identifiable long-lived assets, including their useful lives, when indicators of impairment are present, considering whether the
undiscounted lowest identifiable cash flows are sufficient to recover the carrying amount of the applicable asset or asset group.
If an impairment is indicated, the Company computes the impairment based on the fair value of the asset, as compared to the carrying
value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review
of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated
useful lives are more appropriate. There was no impairment at December 31, 2018 and 2017.
RECENT
ACCOUNTING PRONOUNCEMENTS
In
May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).
ASU 2014-09 and other subsequent revisions amend the guidance for revenue recognition to replace numerous, industry specific requirements
and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step
process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards.
The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows
from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring
the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized
before contingencies are resolved in certain circumstances. Entities can transition to the standard either retrospectively or
as a cumulative-effect adjustment as of the date of adoption. The Company adopted ASU 2014-09 on January 1, 2018.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Topic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 addresses certain aspects of recognition,
measurement, presentation and disclosures of financial instruments including the requirement to measure certain equity investments
at fair value with changes in fair value recognized in net income. The Company adopted ASU 2016-01 on January 1, 2018. The adoption
of ASU 2016-01 did not have a material impact on the Company’s financial statements.
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), which amends the existing accounting
standards for leases. The new standard requires lessees to record a right-of-use (“ROU”) asset and a corresponding
lease liability on the balance sheet (with the exception of short-term leases), whereas under current accounting standards the
Company’s lease portfolio consists primarily of operating leases and is not recognized on its balance sheets. The new standard
also requires expanded disclosures regarding leasing arrangements. The new standard is effective for the Company beginning January
1, 2019. In July 2018, the FASB issued ASU No. 2018- 11, Leases (Topic 842): Targeted Improvements, which provides an alternative
modified transition method. Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is
recognized on the date of adoption with prior periods not restated.
The
Company adopted ASC 842 as of January 1, 2019, using the alternative modified transition method and will record a cumulative-effect
adjustment to the opening balance of retained earnings as of that date. Prior periods will not be restated. In preparation of
adopting ASC 842, the Company is implementing additional internal controls to enable future preparation of financial information
in accordance with ASC 842. The Company has
also
substantially completed its evaluation of the impact on the Company’s lease portfolio. The Company believes the largest
impact will be on the balance sheets for the accounting of facilities-related leases, which represents a majority of its operating
leases it has entered into as a lessee. These leases will be recognized under the new standard as ROU assets and operating lease
liabilities. The Company will also provide expanded disclosures for its leasing arrangements.
The
new standard provides a number of optional practical expedients in transition. The Company expects to elect: (1) the “package
of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification,
lease classification, and initial direct costs, and (2) the use-of-hindsight in determining the lease term and in assessing impairment
of ROU assets. In addition, the new standard provides practical expedients for an entity’s ongoing accounting that the Company
anticipates making, comprised of the following: (1) the election for classes of underlying asset to not separate non- lease components
from lease components, and (2) the election for short-term lease recognition exemption for all leases that qualify.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The
Company will finalize its accounting assessment and quantitative impact of the adoption during fiscal year 2019. As the Company
completes its evaluation of this new standard, new information may arise that could change the Company’s current understanding
of the impact to leases. Additionally, the Company will continue to monitor industry activities and any additional guidance provided
by regulators, standards setters, or the accounting profession, and adjust the Company’s assessment and implementation plans
accordingly.
In
June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses
on Financial Instruments” (“ASU 2016-13”). The new standard requires entities to measure all expected credit
losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable
forecasts. ASU 2016-13 will become effective for fiscal years beginning after December 15, 2019, with early adoption permitted.
The Company is currently evaluating the impact ASU 2016-13 will have on the financial statements.
In
August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash
Receipts and Cash Payments” (“ASU 2016-15”). This ASU provides clarification regarding how certain cash receipts
and cash payments are presented and classified in the statement of cash flows. This ASU addresses eight specific cash flow issues
with the objective of reducing the existing diversity in practice. The issues addressed in this ASU that will affect the Company
are classifying debt prepayments or debt extinguishment costs and contingent consideration payments made after a business combination.
This update is effective for annual and interim periods beginning after December 15, 2017, and interim periods within that reporting
period. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the
Company’s financial statements.
In
May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting”
(“ASU 2017-09”), to clarify which changes to the terms or conditions of a share-based payment award require an entity
to apply modification accounting in Topic 718. This ASU is effective for annual periods beginning after December 15, 2017. ASU
2017-09 will be applied prospectively when changes to the terms or conditions of a share- based payment award occur. The Company
adopted ASU 2017-01 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impact on the Company’s financial
statements.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260): Distinguishing Liabilities from Equity (Topic
480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part
II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and
Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). The amendments
in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features)
with down round features. When determining whether certain financial instruments should be classified as liabilities or equity
instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to
an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The
amendments in Part 1 of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. Early adoption is permitted, including adoption in any interim period. If an entity early adopts the amendments
in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
The Company adopted ASU 2017-11 on January 1, 2018.
NOTE
3 - PROPERTY AND EQUIPMENT
Property
and equipment consist of the following:
|
|
As
of December 31,
|
|
|
2018
|
|
2017
|
Furniture
and equipment
|
|
$
|
54,314
|
|
|
$
|
51,010
|
|
Less:
Accumulated Depreciation
|
|
|
(48,444
|
)
|
|
|
(38,744
|
)
|
Furniture
and equipment, net
|
|
$
|
5,870
|
|
|
$
|
12,266
|
|
During
the years ended December 31, 2018 and 2017 depreciation expense on property and equipment totaled approximately $9,700 and $11,248,
respectively.
NOTE
4 - NOTES PAYABLE -RELATED PARTIES
Notes
and payable consist of the following:
|
|
As
of December 31,
|
|
|
2018
|
|
2017
|
Demand
notes payable to officers, including interest at 8% per annum
|
|
$
|
204,037
|
|
|
$
|
101,252
|
|
In October 2017, the Company entered into demand notes with its former Chief Executive Officer totaling $100,000. The notes matured
in October 2018 and remain outstanding.
In
January through April 2018, the Company issued additional note to its former Chief Executive Officer totaling $92,000 maturing
one year from the date of issuance.
During
the years ended December 31, 2018 and 2017, the Company recognized interest expense of $10,785 and $1,250, respectively. As of
December 31, 2018, all of the interest recognized remains unpaid and outstanding.
NOTE
5 - INCOME TAXES
The
Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based
on the temporary differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect
currently.
The
Company recognizes reductions in its deferred tax assets by a valuation allowance if, based on the weight of available evidence,
it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it
is uncertain whether it will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly,
a valuation allowance equal to the deferred tax asset has been recorded.
NOTE
5 - INCOME TAXES (CONTINUED)
The
Company’s deferred tax assets by period are as follows:
|
|
December
31,
|
|
December
31,
|
|
|
2018
|
|
2017
|
Deferred
Tax Asset
|
|
$
|
2,431,000
|
|
|
$
|
2,351,000
|
|
Valuation
Allowance
|
|
|
(2,431,000
|
)
|
|
|
(2,351,000
|
)
|
Net
Deferred Tax Asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The
components of income tax expense for the years ended December 31, 2018 and 2017, respectively, are as follows:
|
|
December
31,
|
|
December
31,
|
|
|
2018
|
|
2017
|
Change
in Net Operating Loss
|
|
$
|
80,000
|
|
|
$
|
678,000
|
)
|
Change
in Valuation Allowance
|
|
|
(80,000
|
)
|
|
|
(678,000
|
)
|
Income
Tax Expense
|
|
$
|
—
|
|
|
$
|
—
|
|
The
differences between the statutory income tax rates computed at the U.S. federal statutory rate and our effective rate were the
following:
|
|
December
31,
|
|
December
31,
|
|
|
2018
|
|
2017
|
Federal
Statutory Rate
|
|
|
21
|
%
|
|
|
21
|
%
|
State
Statutory Rate, net of Federal Benefit
|
|
|
4.345
|
%
|
|
|
4.345
|
%
|
Valuation
Allowance
|
|
|
(25.345)
|
%
|
|
|
(25.345)
|
%
|
Net
Rate
|
|
|
0
|
%
|
|
|
0
|
%
|
NOTE
5 - INCOME TAXES (CONTINUED)
On
December 22, 2017, the President signed into law Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (TCJA),
following its passage by the United States Congress. The TCJA makes significant changes to the U.S. federal income tax laws including
among other changes a federal corporate tax rate reduction from 35% to 21% for tax years beginning after December 31, 2017, repeal
of the corporate AMT tax system, and immediate expensing of certain types of business assets placed in service after September
27, 2017. Due to the impact of the Company’s full valuation allowance on net deferred tax assets, the TCJA had minimal impact
on the Company’s provision for income taxes. As a result of the reduction in the federal corporate tax rate, the Company
recorded additional tax expense of $1,313,000 and $1,140,000 with a corresponding reduction in the valuation allowance during
the year ended December 31, 2018 and 2017, respectively.
As
of December 31, 2018, the Company had net operating loss carryforwards totaling approximately $9,432,000. The Company does not
believe that it has any uncertain tax positions, correspondingly, no estimated accruals for interest and penalties have been made
in the accompanying financial statements.
At
the end of 2018 and 2017, the Company had net deferred tax assets of approximately $2,351,000 and $2,431 against which a valuation
allowance of $2,351,000 and $2,431,000 has been provided.
This
asset is related to federal and state net operating losses that expire beginning in the year ended December 31, 2033.
NOTE
6 - COMMITMENTS AND CONTINGENCIES
From
time to time, the Company enters into certain types of contracts that contingently require the Company to indemnify parties against
third-party claims. These contracts primarily relate to (i) certain leases, under which the Company may be required to indemnify
property owners for liabilities and other claims arising from the Company’s use of the applicable premises; (ii) certain
agreements with the Company’s officers and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship; and (iii) pursuant to the asset purchase agreement, under which
the Company shall indemnify, defend and save and hold harmless the seller, its affiliates, from and against any and all claims,
losses, costs, expenses or liabilities incurred in connection with, arising out of, resulting from or relating to any breach of
any covenant or agreement or any claim of fraud of intentional misrepresentation. The terms of such obligations vary by contract
and, in most instances; a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts
cannot be reasonably estimated until a specific claim is asserted. No claims have been asserted and no liabilities have been recorded
for these indemnities on the Company’s balance sheet.
NOTE
6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
In
the ordinary course of business, the Company may face various claims brought by third parties and may, from time to time, make
claims or take legal actions to assert its rights, including intellectual property disputes, contractual disputes and other commercial
disputes. Any of these claims could subject the Company to litigation. As of December 31, 2018 and 2017, the Company did not have
any pending litigation that is believed to have material impact on its financial position, results of operations, or cash flows.
NOTE
7 - STOCKHOLDERS’ EQUITY
As
of December 31, 2018 and 2017, the Company was authorized to issue 40,512,800, shares of common stock and 20,179,600 shares
of preferred stock, each with a par value of $0.00001. The Company had 14,547,059 shares of common stock; 7,902,800 shares of
Series A preferred stock; and 12,276,800 shares of Series B preferred stock issued and outstanding at December 31, 2018 and
2017. The terms of each series of preferred stock was defined by the Company’s Board of Directors and stockholders prior
to issuance.
Series
B Preferred Stock
During
the year ended December 31, 2015, the Company issued a total of 12,276,800 shares of Series B preferred stock (“Preferred”)
at a price of $0.41 per share for total gross cash proceeds of approximately $5,000,000. Each share of Series B Preferred
has the following rights:
Voting
Rights - Each share of Series B preferred stock is entitled to the number of votes equal to the number of common shares
into which such Class B preferred shares could be converted. Except as provided by law or by the other provisions of the
Company’s Certificate of Incorporation, holders of Series A Preferred Stock and the holders of Series B Preferred Stock
shall vote together with the holders of Common Stock as a single class.
Dividend
Rights - Each share of Series B preferred stock is entitled to receive legally available funds for cash dividends
at a rate of 8% of the original issue price of $0.41 per share, prior and in preference to any dividend declared on the Company’s
Series A preferred stock and common stock, when and if dividends are declared by the Board of Directors. Such dividends are non-cumulative.
No dividend was declared during the years ended December 31, 2018 and 2017.
Liquidation
Rights - Upon any liquidation transaction, the holders of Series B Preferred Stock shall be entitled to receive,
prior to any distribution of any assets of the Company to holders of Common Stock and Series A Preferred Stock, an amount per
share equal to the original issue price ($0.41) for each share of Series B Preferred Stock then held by them plus all declared
or undeclared and unpaid dividends. If, upon any such Liquidation Transaction, the assets of the Company shall be insufficient
to make payment in full of all applicable preferential amounts to all holders of Preferred Stock, then the assets and funds legally
available for distribution shall be distributed ratably among the holders of Preferred Stock in proportion to the preferential
amount to which each holder of Preferred Stock would otherwise be respectively entitled. The liquidation preference was waived
in connection with the merger subsequent to year end (see Note 8).
NOTE
7 - STOCKHOLDERS’ EQUITY (CONTINUED)
After
the payment of the full liquidation preference of all preferred stock, the remaining assets of the Company legally available for
distribution in such Liquidation Transaction, if any, shall be distributed ratably, first to the Series A preferred holders with
any remaining assets to the holders of common stock.
Mandatory
Conversion – Upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least
three (3) times the Series B Original Issue Price (subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public
offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50,000,000
(fifty million dollars) of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified
by vote or written consent of the Requisite Holders (the time of such closing or the date and time specified or the time of the
event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i)
all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective conversion
rate.
Deemed
Liquidation - A "Liquidation Transaction" shall be deemed to occur, unless the holders of at least a
majority of the outstanding shares of Series B Preferred Stock elect otherwise by written notice sent to the Corporation at least
10 days prior to the effective date of any such event, if the Corporation shall (a) merge or consolidate in which the Corporation
is a constituent party or a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital
stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation or a subsidiary
in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue
to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger
or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or
(2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger
or consolidation, the parent corporation of such surviving or resulting corporation; or (b) the sale, lease, transfer, exclusive
license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary
of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale
or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation if substantially
all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except
where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
NOTE
7 - STOCKHOLDERS’ EQUITY (CONTINUED)
Holder
Conversion Rights– The holders of Series B Preferred Stock shall be entitled to the following conversion
rights:
Each
share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance
of such share, and without payment of additional consideration by the holder, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Series B Original Issue Price of $0.41 (as adjusted for any stock splits,
stock dividends, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Stock) in the
case of the Series B Preferred Stock, by the Conversion Price applicable to such shares (such quotient is referred to herein as
the "Conversion Rate"), determined as hereafter provided, in effect on the date of conversion.
In
the event the Company issues additional equity, and/or equity-linked instrument at a price less than the then effective conversion
price, the conversion price shall be reduced by the quotient of the pre issuance diluted common stock outstanding (including the
conversion of the Series B preferred outstanding and the post-issuance common shares outstanding; multiplied by the effective
conversion in effect immediately prior to such issuance.
Series
A Preferred Stock
Prior
to December 31, 2015, the Company issued a total of 7,902,800 shares of Series A Preferred Stock (“Preferred”)
at a price of $0.50 per share for total consideration of $3,928,000. Each share of Series A preferred stock carries substantively
the same features as the Series B preferred stock except for its liquidation preference and initial conversion price being $0.50.
Common
Stock
As
of December 31, 2018 and 2017, the Company had 14,547,059 shares of common stock issued and outstanding.
Stock
Options
In
2015, the Company’s Board of Directors approved the 2015 Stock Incentive Plan (“Plan”) providing for the issuance
of 5,064,000 shares of common stock on a one for one basis underlying each stock option granted. Stock options granted under the
Plan generally vest equally over a 3 to 4-year period beginning on the grant date. The exercise price for each stock option award
approximates the fair value of the underlying common stock on the date of grant and, in most cases, expire ten years from the
date of grant. The Plan terminates no later than the tenth anniversary of the approval of the incentive plans by the Company’s
Board of Directors. As of December 31, 2018, the Company had 4,376,797 options available for future issuance under the Equity
Incentive Plan.
NOTE
7 - STOCKHOLDERS’ EQUITY (CONTINUED)
The
Company’s Board of Directors administers the discretionary option grant and stock issuance programs. The Board determines
which eligible individuals are to receive option grants under the Plan, the time or times when the grants are to be made, the
number of shares subject to each grant, the status of any granted option as either an incentive stock option or a non-statutory
stock option under the federal tax laws, the vesting schedule to be in effect for the option grant and the maximum term for which
any granted option is to remain outstanding.
The
Company utilizes a Black-Scholes pricing model to estimate the grant date fair value for all stock option awards. The Company
estimates the expected term for new grants based upon the Company’s best estimate. The Company’s expected volatility
for the expected term of the option is based upon the historical volatility experienced in the Company’s stock price. The
risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The
Company determined the fair value of non-vested shares using the precedent transaction method. The Company did not grant any options
during the year ended December 31, 2018. The following table illustrates the assumptions used for all awards granted during the
year ended December 31, 2017:
Expected
volatility
|
|
|
51.3
|
%
|
Expected
dividends
|
|
|
—
|
|
Expected
term (years)
|
|
|
6.25
|
|
Risk-free
rate
|
|
|
1.50
|
%
|
A
summary of the stock option activity is as follows:
|
|
Options
|
|
Weighted
Average
Excise Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
Outstanding
at January 1, 2017
|
|
|
360,564
|
|
|
$
|
0.04
|
|
|
|
9.08
|
|
Options
granted
|
|
|
326,639
|
|
|
|
0.04
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Forfeited,
cancelled or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Outstanding
at December 31, 2017
|
|
|
687,203
|
|
|
|
0.04
|
|
|
|
8.60
|
|
Options
granted
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Forfeited,
cancelled or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Outstanding
at December 31, 2018
|
|
|
687,203
|
|
|
$
|
0.04
|
|
|
|
7.60
|
|
Exercisable
at December 31, 2018
|
|
|
687,203
|
|
|
|
0.04
|
|
|
|
7.60
|
|
NOTE
7 - STOCKHOLDERS’ EQUITY (CONTINUED)
During
the year ended December 31, 2017, the aggregate grant date fair value of the stock options issued was approximately $0.04
per share. Stock-based compensation expense associated with stock options for the periods presented was approximately $7,000 and
$6,500 during the years ended December 31, 2018 and 2017, respectively. Total unearned compensation cost approximated $14,000
at December 31, 2018.
NOTE
8 - SUBSEQUENT EVENTS
On
March 1, 2019, the Company entered into a Contribution Agreement by and among Clinigence Holdings, Inc. (“Holdings”),
Clinigence LLC, LLC, and the Members of Clinigence, LLC (“Agreement”) whereby Clinigence Holdings, Inc. acquired all
of the assets and operations and assumed all of the liabilities of the Company. Pursuant to the Agreement, all of the outstanding
Series A and Series B Preferred Stock, Common Stock and stock options of the Company totaling 34,726,659 shares were exchanged
for 5,021,951 shares of Holdings. All outstanding shares and stock options of the Company immediately preceding the exchange were
treated as one class.
QualMetrix,
Inc. currently has 18 customers, including 9 HMOs/health plans, 6 ACOs (4 overlap with Clinigence, LLC), 2 MSOs and 2 medical
groups, with almost 2 million patients (100,000 overlap with Clinigence, LLC) on the platform. Customers include the University
of Miami Health System, Sendero Health Plans, Colorado Choice Health Plans and BlueCross BlueShield of Puerto Rico.
Clinigence,
LLC was a customer of the Company during 2017 and 2018. During the years ended December 31, 2018 and 2017, the Company earned
revenues of approximately $90,000 each year. At December 31, 2018 and 2017, approximately $9,000 and $0 was due to the Company,
respectively.
ANNEX
B CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE
OF INCORPORATION
OF
IGAMBIT
INC.
The
corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, in accordance
with the provisions of Section 242 of Title 8 of the Delaware Code does hereby certify:
FIRST:
That at a meeting of the Board of Directors of iGambit Inc., resolutions were duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the
stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendments is as follows:
RESOLVED,
that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “FIRST”
so that, as amended, said Article shall be and read as follows:
“The
name of the corporation is Clinigence Holdings, Inc.”
RESOLVED
FURTHER, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “FOURTH”
so that, as amended, said Article shall be and read as follows:
“The
total number of shares of stock which the Corporation shall have authority to issue is nine hundred million (900,000,000) shares
consisting of eight hundred million (800,000,000) shares of Common Stock with a par value of one tenth of one cent ($.001) per
share, and one hundred million (100,000,000) shares of Preferred Stock par value of one tenth of one cent ($.001) per share, having
such designations, preferences, relative and other rights as the Board of Directors shall, in its discretion, so designate.
Reverse
Stock Split. Effective at 12:01 a.m. on [ ], 2019 (the “Effective Time”), every [ ] shares of common stock issued
and outstanding immediately prior to the Effective the holder thereof, into one (1) validly issued, fully paid and non-assessable
share of common stock (“New Common Stock”), subject to the treatment of fractional share interests as described
below (the “Reverse Stock Split”). No fractional shares of common stock shall be issued in connection with the
Reverse Stock Split. No stockholder of the Corporation shall transfer any fractional shares of common stock. The Corporation
shall not recognize on its stock record books any purported transfer of any fractional share of common stock. A holder
of Old Common Stock who otherwise would be entitled to receive fractional shares of New Common Stock because they hold a number
of shares of Old Common Stock not evenly divisible by the Reverse Stock Split ratio will receive the fractional share
of Old Common Stock rounded up to the next whole share of New Common Stock. Each certificate that immediately prior to the
Effective Time represented shares of Old Common Stock (“Old Certificates”), shall thereafter represent that
number of shares of New Common Stock into which the shares of Old Common Stock represented by the Old Certificate
shall have been combined.”
SECOND:
That thereafter, in accordance with Section 228 of the General Corporation Law
of the State of Delaware, a majority of the outstanding stock entitled to vote thereon, and a majority of the outstanding stock
of each class entitled to vote thereon as a class, approved the foregoing amendment.
THIRD:
That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN
WITNESS WHEREOF, said corporation has caused this certificate to be signed this [ ] day of _______________, 2019 A.D.
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By:
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Elisa
Luqman, Secretary
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ANNEX
C IGAMBIT INC. 2019 OMNIBUS EQUITY INCENTIVE PLAN
iGAMBIT,
INC.
2019
OMNIBUS EQUITY INCENTIVE PLAN
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Page
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SECTION 1. Establishment and Purpose.
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C-3
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(a) Purpose
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C-3
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(b) Adoption and Term
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C-3
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SECTION 2. Definitions.
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C-3
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SECTION 3. Administration.
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C-8
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(a) Committee of the Board of Directors
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C-8
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(b) Authority
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C-8
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(c) Exchange Program
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C-9
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(d) Delegation by the Committee
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C-9
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(e) Indemnification
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C-9
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SECTION 4. Eligibility and Award Limitations.
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C-9
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(a) Award Eligibility
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C-9
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(b) Award Limitations
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C-9
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SECTION 5. Stock Subject To The Plan.
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C-9
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(a) Shares Subject to the Plan
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C-9
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(b) Lapsed Awards
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C-10
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SECTION 6. Terms And Conditions Of Stock Options.
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C-10
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(a) Power to Grant Options
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C-10
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(b) Optionee to Have No Rights as a Stockholder
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C-10
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(c) Award Agreements
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C-10
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(d) Vesting
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C-11
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(e) Exercise Price and Procedures.
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C-11
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(f) Effect of Termination of Service
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C-12
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(g) Limited Transferability of Options
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C-12
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(h) Acceleration of Exercise Vesting
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C-12
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(i) Modification, Extension, Cancellation and Regrant
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C-12
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(j) Term of Option
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C-13
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(k) Special Rules For Incentive Stock Options (“ISOs”)
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C-13
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(l) Shareholder Rights
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C-12
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SECTION 7. Restricted Stock.
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C-14
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(a) Grant of Restricted Stock
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C-14
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(b) Establishment of Performance Criteria and Restrictions
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C-14
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(c) Share Certificates and Transfer Restrictions
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C-14
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(d) Voting and Dividend Rights
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C-15
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(e) Award Agreements
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C-15
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(f) Time Vesting
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C-15
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(g) Acceleration of Vesting
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C-16
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SECTION 8. Restricted Stock Units
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C-16
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(a) Grant
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C-16
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(b) Vesting Criteria and Other Terms
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C-16
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(c) Earning of Restricted Stock Units
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C-16
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(d) Dividend Equivalents
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C-16
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(e) Form and Timing of Payment
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C-16
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(f) Cancellation
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C-16
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SECTION 9. Stock Appreciation Rights.
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C-17
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(a) Grant
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C-17
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(b) Exercise and Payment
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C-17
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SECTION 10. Performance Units and Performance Shares.
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C-17
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(a) Grant of Performance Units/Shares
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C-17
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(b) Value of Performance Units/Shares
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C-17
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(c) Performance Objectives and Other Terms
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C-18
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(d) Measurement of Performance Goals
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C-18
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(e) Earning of Performance Units/Shares
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C-19
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(f) Form and Timing of Payment of Performance Units/Shares
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C-19
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(g) Cancellation of Performance Units/Shares
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C-19
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(h) Non-transferability
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C-19
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SECTION 11. Tax Withholding.
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C-20
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(a) Tax Withholding for Options
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C-20
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(b) Tax Withholding for Restricted Stock and Other Awards
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C-20
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SECTION 12. Adjustment of Shares and Representations.
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C-20
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(a) General
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C-20
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(b) Mergers and Consolidations
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C-21
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(c) Reservation of Rights
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C-21
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SECTION 13. Miscellaneous.
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C-22
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(a) Regulatory Approvals
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C-22
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(b) Strict Construction
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C-22
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(c) Choice of Law
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C-22
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(d) Compliance With Code Section 409A
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C-22
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(e) Date of Grant
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C-22
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(f) Conditions Upon Issuance of Shares.
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C-22
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(g) Stockholder Approval
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C-23
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SECTION 14. No Employment or Service Retention Rights.
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C-23
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SECTION 15. Duration and Amendments.
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C-23
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(a) Term of the Plan
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C-23
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(b) Right to Amend or Terminate the Plan
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C-23
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(c) Effect of Amendment or Termination
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C-23
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SECTION 16. Execution.
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C-23
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iGAMBIT,
INC.
2019
OMNIBUS EQUITY INCENTIVE PLAN
SECTION
1. Establishment and Purpose.
(a)
Purpose. The purpose of the Plan is to promote the interests of iGambit, Inc., a Delaware corporation (the “Corporation”),
and its stockholders by providing eligible employees, directors and consultants with additional incentives to remain with the
Corporation and its subsidiaries, to increase their efforts to make the Corporation more successful, to reward such persons by
providing an opportunity to acquire shares of Common Stock on favorable terms and to attract and retain the best available personnel
to participate in the ongoing business operations of the Corporation.
The
Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, Performance Units and Performance Shares.
(b)
Adoption and Term. The Plan has been approved by the Board of Directors of the Corporation, and subject to the approval
of a majority of the voting power of the stockholders of the Corporation, is effective ___________, 2019. The Plan will remain
in effect until terminated or abandoned by action of the Board of Directors except as otherwise provided in Section 15. The Plan
replaces and supercedes any prior stock option or stock incentive plan maintained by the Corporation.
SECTION
2. Definitions.
(a)
“Applicable Laws" means the requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common
Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted
under the Plan.
(b)
“Award” means the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, Performance Units or Performance Shares made pursuant to the Plan.
(c)
“Award Agreement” means an agreement entered into by the Corporation and the Participant setting forth
the terms applicable to an Award granted to the Participant under the Plan.
(d)
“Board of Directors” means the Board of Directors of the Corporation, as constituted from time to time.
(e)
“Cause” means (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other
crime that causes the Corporation public disgrace or disrepute, or adversely affects the Corporation's operations, condition (financial
or otherwise), prospects or interests, (ii) gross negligence or willful misconduct with respect to the Corporation, including,
without limitation fraud, embezzlement, theft or dishonesty in the course of his or her employment; (iii) alcohol abuse or use
of controlled drugs other than in accordance with a physician's prescription; (iv) refusal, failure or inability to perform any
material obligation or fulfill any duty (other than any duty or obligation of the type described in clause (6) below) to the Corporation
(other than due to a disability), which failure, refusal or inability is not cured within 10 days after delivery of notice thereof;
(v) material breach of any agreement with or duty owed to the Corporation; or (vi) any breach of any obligation or duty to the
Corporation (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition, nonsolicitation
or proprietary rights. Notwithstanding the foregoing, if a Participant and the Corporation have entered into an employment agreement,
consulting agreement or other similar agreement that specifically defines "Cause," then with respect to such Participant,
"Cause" shall have the meaning defined in that employment agreement, consulting agreement or other agreement.
(f)
“Change of Control” means the occurrence of any of the following, in one transaction or a series of related
transactions: (i) any person (as such term is used in Section 13(d) and 14(d) of the Exchange Act) becoming a "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Corporation representing
more than 50% of the voting power of the Corporation's then outstanding capital stock; (ii) a consolidation, share exchange, reorganization
or merger of the Corporation resulting in the stockholders of the Corporation immediately prior to such event not owning at least
a majority of the voting power of the resulting entity's securities outstanding immediately following such event or, if the resulting
entity is a direct or indirect subsidiary of the entity whose securities are issued in such transaction(s), the voting power of
such issuing entity's securities outstanding immediately following such event; (iii) the sale or other disposition of all or substantially
all the assets of the Corporation (other than a transfer of financial assets made in the ordinary course of business for the purpose
of securitization or any similar purpose); (iv) a change in the effective control of the Company which occurs on the date
that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; (v) a liquidation
or dissolution of the Corporation; or (vi) any similar event deemed by the Committee to constitute a Change in Control for purposes
of the Plan. For the avoidance of doubt, a transaction or a series of related transactions will not constitute a Change in Control
if such transaction(s) result(s) in the Corporation, any successor to the Corporation, or any successor to the Corporation's business,
being controlled, directly or indirectly, by the same person or persons who controlled the Corporation, directly or indirectly,
immediately before such transaction(s).
(g)
“Code” means the Internal Revenue Code of 1986, as amended.
(h)
“Committee” means the Compensation Committee of the Board of Directors or such other committee or individuals
satisfying Applicable Laws appointed by the Board in accordance with Section 3 hereof.
(i)
“Common Stock” means the common stock of the Corporation.
(j)
“Consultant” means any person other than an Employee, engaged by the Corporation or Subsidiary to render
services to such entity.
(k)
“Corporation” means iGambit, Inc., a Delaware corporation and where applicable, its Subsidiaries.
(l)
“Date of Grant” means the date on which the Committee grants an Award pursuant to the Plan.
(m)
“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code,
provided that in the case of Awards other than Incentive Stock Options, the Committee in its discretion may determine whether
a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Committee from
time to time.
(n)
“Effective Date” means ______________, 2019.
(o)
“Employee” means any individual who is a common-law employee of the Corporation or a Subsidiary.
(p)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q)
“Exchange Program” means a program established by the Committee under which outstanding Awards are amended
to provide for a lower Exercise Price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price,
(ii) a different type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination
of (i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program does not include any (i) action
described in Section 12 or any action taken in connection with a Change in Control transaction or (ii) transfer or other
disposition permitted under Section 12. For the purpose of clarity, each of the actions described in the prior sentence,
none of which constitute an Exchange Program, may be undertaken (or authorized) by the Committee in its sole discretion without
approval by the Corporation's shareholders.
(r)
“Exercise Price” with respect to an Option, means the price per share
at which an Optionee may exercise his Option to acquire all or a portion of the shares of Common Stock that are the subject of
such Option, as determined by the Committee on the Date of Grant. In no event shall the Exercise Price of any Common Stock made
the subject of an Option, be less than the Fair Market Value on the Date of Grant.
(s)
“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the
New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq
Stock Market, its Fair Market Value will be the closing sale price for such stock (or the closing bid, if no sales were reported)
as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;
(ii)
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, or if the Common
Stock is quoted on the Over-the-Counter (OTC) market, be that the OTCQB, OTCBB or Pink Sheets, the Fair Market Value of a Share
will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The
Wall Street Journal, the OTC, or such other source as the Committee deems reliable;
(iii)
For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as
set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Corporation's Common Stock; or
(iv)
In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Board
of Directors after taking into account such factors as the Board shall deem appropriate
(t)
“Incentive Stock Option” or “ISO” means a stock option intended to satisfy the requirements
of Section 422(b) of the Code.
(u)
“Nonstatutory Option” means a stock option not intended to satisfy the requirements of Section 422(b) of
the Code.
(v)
“Officer” means a person who is an officer of the Corporation within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder.
(w)
“Option” means an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase
shares of Common Stock.
(x)
“Option Stock” means those shares of Common Stock made the subject of an Option granted pursuant to the
Plan.
(y)
“Optionee” means an individual who is granted an Option.
(z)
“Outside Director” means a member of the Board of Directors who is not an Employee.
(aa)
“Participant” means a person who has an outstanding Award under the Plan. The term Participant also refers
to an Optionee.
(bb)
“Performance Goal” means a performance goal established by the Committee pursuant to Section 10(c) of
the Plan.
(cc)
“Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment
of Performance Goals or other vesting criteria as the Committee may determine pursuant to Section 10.
(dd)
“Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance
Goals or other vesting criteria as the Committee may determine and which may be settled for cash, Shares or other securities or
a combination of the foregoing pursuant to Section 10.
(ee)
“Plan” means this iGambit, Inc. 2019 Omnibus Equity Incentive Plan.
(ff)
"Registration Date" means the effective date of the first registration statement that is filed by the Corporation
and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Corporation's
securities.
(gg)
“Restricted Stock” means those shares of Common Stock made the subject of an Award granted under
the Plan.
(hh)
“Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value
of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation
of the Corporation.
(ii)
“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
(jj)
“Section 16(b)” means Section 16(b) of the Exchange Act.
(kk)
“Service” means service as an Employee, Consultant or Outside Director.
(ll)
“Share” means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.
(mm)
“Stock Appreciation Right” or “SAR” means a right awarded to a Participant pursuant to Section 9
of the Plan, which shall entitle the Participant to receive cash, Common Stock, other property or a combination thereof, as determined
by the Committee, in an amount equal to or otherwise based on the excess of (a) the Fair Market Value of a share of Common
Stock at the time of exercise over (b) the exercise price of the right, as established by the Committee on the date the award
is granted..
(nn)
“Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary
commencing as of such date.
SECTION
3. Administration.
(a)
Committee of the Board of Directors. The Plan may be administered by the Compensation Committee of the Board of Directors
or such other Committee or individuals as appointed by the Board to administer the Plan. Each Committee shall have such authority
and be responsible for such functions as the Board of Directors has assigned to it. Members of the Committee shall serve for such
period of time as the Board of Directors may determine and shall be subject to removal by the Board of Directors at any time.
The Board of Directors may also at any time terminate the functions of the Committee and reassume all powers and authorities previously
delegated to the Committee. If no Committee has been appointed, the entire Board of Directors shall administer the Plan.
To
the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under Rule 16b-3.
(b)
Authority. Subject to the terms and conditions of the Plan, the Committee shall have the sole discretionary authority:
(i)
to authorize the granting of Awards under the Plan;
(ii)
to select the Employees, Consultants or Outside Directors who are to be granted Awards under the Plan and to determine the
conditions subject to such Awards;
(iii)
to construe and interpret the Plan;
(iv)
to determine Fair Market Value;
(v)
to establish and modify administrative rules for the Plan;
(vi)
to impose such conditions and restrictions with respect to the Awards, not inconsistent with the terms of the Plan, as it
determines appropriate;
(vii)
to execute or cause to be executed Award Agreements; and
(viii)
generally, to exercise such power and perform such other acts in connection with the Plan and the Awards, and to make all
determinations under the Plan as it may deem necessary or advisable or as required, provided or contemplated hereunder.
Any
person delegated or designated by the Committee shall be subject to the same obligations and requirements imposed on the Committee
and its members under the Plan.
(c)
Exchange Program. Notwithstanding anything in this Section 3, the Committee shall not implement an Exchange
Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to
vote at any annual or special meeting of Corporation's shareholders.
(d)
Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may
provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Corporation;
provided, however, that the Committee may not delegate its authority and powers (a) with respect to an Officer or (b) in
any way which would jeopardize the Plan's qualification under Code Section 162(m), if applicable, or Rule 16b-3.
(e)
Indemnification. To the maximum extent permitted by law, the Corporation shall indemnify each member of the Committee,
the Board, and any Employee with duties under the Plan, against all liabilities and expenses (including any amount paid in settlement
or in satisfaction of a judgment) reasonably incurred by the individual in connection with any claims against the individual by
reason of the performance of the individual's duties under the Plan. This indemnity shall not apply, however, if: (i) it is determined
in the action, lawsuit, or proceeding that the individual is guilty of gross negligence or intentional misconduct in the performance
of those duties; or (ii) the individual fails to assist the Corporation in defending against any such claim. The Corporation shall
have the right to select counsel and to control the prosecution or defense of the suit. The Corporation shall not be obligated
to indemnify any individual for any amount incurred through any settlement or compromise of any action unless the Corporation
consents in writing to the settlement or compromise.
SECTION
4. Eligibility and Award Limitations.
(a)
Award Eligibility. Employees, Consultants and Outside Directors shall be eligible for the grant of Awards under the
Plan. Only Employees shall be eligible for the grant of Incentive Stock Options.
(b)
Award Limitations. The Corporation may apply limits on the grant of Awards during any fiscal year or any particular
type or amount of Award.
SECTION
5. Stock Subject To The Plan.
(a)
Shares Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number
of Shares that may be issued under the Plan is _________ Shares (the "Initial Share Reserve"). The Shares may
be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing and, subject to adjustment as provided
in Section 12, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the
aggregate Share number stated in this Section 5(a), plus, to the extent allowable under Section 422 of the Code and
the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section
5(b).
(b)
Lapsed Awards. To the extent an Award expires, is surrendered pursuant to an Exchange Program or becomes unexercisable
without having been exercised or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares,
is forfeited to or repurchased by the Corporation due to failure to vest, the unpurchased Shares (or for Awards other than Options
or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future
grant or sale under the Plan (unless the Plan has terminated). Notwithstanding the foregoing (and except with respect to
Shares of Restricted Stock that are forfeited rather than vested), Shares that have actually been issued under the Plan under
any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however,
that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units
are repurchased by the Corporation or are forfeited to the Corporation, such Shares will become available for future grant under
the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an
Award will become available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather
than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.
SECTION
6. Terms And Conditions Of Stock Options.
(a)
Power to Grant Options. Subject to the maximum per person share limitation in Section 4, the Committee may grant to
such Employees or persons as the Committee may select, Options entitling the Optionee to purchase shares of Common Stock from
the Corporation in such quantity, and on such terms and subject to such conditions not inconsistent with the terms of the Plan,
as may be established by the Committee at the time of grant or pursuant to applicable resolution of the Committee, and as set
forth in the Participant’s Option Award Agreement. Options granted under the Plan may be Nonstatutory Stock Options or Incentive
Stock Options.
(b)
Optionee to Have No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a
stockholder of the Corporation with respect to the shares of Common Stock made subject to an Option unless and until such Optionee
exercises such Option and is issued the shares purchased thereby. No adjustments shall be made for distributions, dividends, allocations,
or other rights with respect to any shares of Common Stock prior to the exercise of such Option.
(c)
Award Agreements. The terms of any Option shall be set forth in an Award Agreement in such form as the Committee shall
from time to time determine. Each Award Agreement shall comply with and be subject to the terms and conditions of the Plan and
such other terms and conditions as the Committee may deem appropriate. In the event that any provision of an Option granted under
the Plan shall conflict with any term in the Plan as constituted on the Date of Grant of such Option, the term in the Plan constituted
on the Date of Grant of such Option shall control. No person shall have any rights under any Option granted under the Plan unless
and until the Corporation and the Optionee have executed an Award Agreement setting forth the grant and the terms and conditions
of the Option.
(d)
Vesting. Unless a different vesting schedule is listed in an individual Award Agreement, the Shares subject to an Option
granted under the Plan shall vest and become exercisable in accordance with the following schedule:
|
Completed
Years of Employment/Service From Date of Grant
|
|
|
|
Cumulative
Vesting Percentage
|
|
|
1
|
|
|
|
25
|
%
|
|
2
|
|
|
|
50
|
%
|
|
3
|
|
|
|
75
|
%
|
|
4
Years or more
|
|
|
|
100
|
%
|
(e)
Exercise Price and Procedures.
(1)
Exercise Price. The Exercise Price means the price per share at which an Optionee may exercise his Option to acquire all
or a portion of the shares of Common Stock that are the subject of such Option. Notwithstanding the foregoing, in no event shall
the Exercise Price of any Common Stock made the subject of an Option be less than the Fair Market Value of such Common Stock,
determined as of the Date of Grant.
(2)
Exercise Procedures. Each Option granted under the Plan shall be exercised by providing
written notice to the Committee, together with payment of the Exercise Price, which notice and payment must be received by the
Committee on or before the earlier of (i) the date such Option expires, and (ii) the last date on which such Option may be exercised
as provided in paragraph (f) below.
(3)
Payment of Exercise Price. The Exercise Price times the number of the shares to be
purchased upon exercise of an Option granted under the Plan shall be paid in full at the time of exercise. The Committee will
determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of
an Incentive Stock Option, the Committee will determine the acceptable form of consideration at the time of grant. Such
consideration for both types of Options may consist entirely of: (i) cash; (ii) check; (iii) promissory note, to
the extent permitted by Applicable Laws, (iv) other Shares, provided that such Shares have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting
such Shares will not result in any adverse accounting consequences to the Corporation, as the Committee determines in its sole
discretion; (v) consideration received by the Corporation under a broker-assisted (or other) cashless exercise program (whether
through a broker or otherwise) implemented by the Corporation in connection with the Plan; (vi) by net exercise; (vii) such
other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (viii) any
combination of the foregoing methods of payment.
(f)
Effect of Termination of Service. Subject to paragraph (k) below regarding Special Rules for Incentive Stock Options,
the following provisions shall govern the exercise of any Options granted to an Optionee that are vested and outstanding at the
time Optionee’s Service ceases:
(1)
Termination of Employment for Reasons Other than Death, Disability or a Termination for Cause. Should Optionee’s
Service with the Corporation cease for any reason other than death, Disability or a termination for Cause (as determined by the
Committee), then each Option shall remain exercisable until the close of business on the earlier of (i) 3 months following the
date Optionee’s Service ceased or (ii) the expiration date of the Option.
(2)
Termination of Employment Due to Death or Disability. Should Optionee’s Service cease due to death or Disability,
then each Option shall remain exercisable until the close of business on the earlier of (i) the 12 month anniversary of the date
Optionee’s Service ceased, or (ii) the expiration date of the Option.
(3)
Termination for Cause. Should Optionee’s Service be terminated for Cause while his Option remains outstanding, each
outstanding Option granted to Optionee (whether vested or unvested) shall terminate immediately and Optionee shall forfeit all
rights with respect to such Award.
(g)
Limited Transferability of Options. An Option shall be exercisable only by the Optionee during his lifetime and shall
not be assignable or transferable other than by will or by the laws of inheritance following Optionee’s death.
(h)
Acceleration of Exercise Vesting. Notwithstanding anything to the contrary in the Plan, the Committee, in its discretion,
may allow the exercise in whole or in part, at any time after the Date of Grant, any Option held by an Optionee, which Option
has not previously become exercisable. In the event of a Change of Control of the Corporation, the Committee, in its discretion
may provide that Options shall become 100% vested and exercisable on the date of the Change of Control. Options shall also become
100% vested in the event Optionee dies or becomes Disabled while employed.
(i)
Modification, Extension, Cancellation and Regrant. Within the limitations of the Plan and after taking into account
any possible adverse tax or accounting consequences, the Committee may modify, or extend outstanding Options or may accept the
cancellation of outstanding Options (whether granted by the Corporation or another issuer) in return for the grant of new Options
for the same or a different number of shares and at the same or a different Exercise Price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s
obligations under such Option or cause a violation of Code Section 409A.
(j)
Term of Option. No Option shall have a term in excess of ten (10) years measured from the date that the Option is granted.
(k)
Special Rules For Incentive Stock Options (“ISOs”). In addition to the provisions of this Section 6, the
terms specified below shall be applicable to all Incentive Stock Options granted under the Plan. Except as modified by the provisions
of this paragraph (k), all of the provisions of the Plan shall be applicable to Incentive Stock Options. Options that are specifically
designated as Nonstatutory Options are not subject to the terms of this paragraph (k).
(1)
Eligibility. Incentive Options may only be granted to Employees.
(2)
Dollar Limitation. The aggregate Fair Market Value of the shares of Common stock (determined as of the Date of Grant) for
which one or more Incentive Options granted to any Employee pursuant to the Plan may for the first time become exercisable as
Incentive Options during any one calendar year shall not exceed $100,000. To the extent that an Optionee’s Options exceed
that limit, they will be treated as Nonstatutory Options (but all of the other provisions of the Option shall remain applicable),
with the first Options that were awarded to Optionee to be treated as Incentive Stock Options.
(3)
Restrictions on Sale of Shares. Shares issued pursuant to the exercise of an Incentive Stock Option may not be sold by
the Employee until the expiration of 12 months after exercise and 24 months from the Date of Grant. Shares that do not satisfy
these restrictions shall be treated as a grant of Nonstatutory Options.
(4)
Special Rules for Incentive Stock Options Granted to 10% Stockholder.
a.
Exercise Price. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, the Exercise Price of
the Incentive Stock Option must be at least 110% of the Fair Market Value of the Corporation’s Common Stock.
b.
Term of Option. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, then the Option term
shall not exceed five years measured from the date the Incentive Stock Option is granted.
c.
Definition of 10% Stockholder. For purposes of the Plan, an Employee is deemed to be a “10% Stockholder” if
he owns more than 10% of the Corporation or any Subsidiary.
(5)
Special Rules for Exercise of Incentive Stock Options Following Termination of Employment.
a.
Death or Disability. In order to preserve tax treatment as an Incentive Stock Option, Options granted to an Optionee who
dies or becomes Disabled while employed must be exercised by the Optionee or his executor or beneficiary no later than (i) 12
months following the date of death or Disability, or (ii) the expiration date of the Incentive Stock Option, if earlier.
b.
Termination For Reason Other Than Death or Disability. In order to preserve tax treatment as an Incentive Stock Option,
an Optionee must exercise any vested and outstanding Incentive Stock Options no later than: (i) three (3) months following the
date the Optionee terminates employment for any reason other than death or Disability; or (ii) the expiration date of the Incentive
Stock Option if earlier.
(6)
Miscellaneous. With respect to Incentive Stock Options, if this Plan does not contain any provision required to be included
herein under Section 422 of the Code, such provision shall be deemed to be incorporated herein with the same force and effect
as if such provision had been set out at length herein. To the extent any Option that is intended to qualify as an Incentive Stock
Option cannot so qualify, such Option, to that extent, shall be deemed to be a Nonstatutory Stock Option for all purposes of this
Plan.
(l)
Shareholder Rights. Until the Shares covered by an Option are issued (as evidenced by the appropriate entry on the
books of the Corporation or of a duly authorized transfer agent of the Corporation), no right to vote or receive dividends or
any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of
the Option. The Corporation will issue (or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 12 of the Plan.
SECTION
7. Restricted Stock.
(a)
Grant of Restricted Stock. The Committee may cause the Corporation to issue shares of Restricted Stock under the Plan,
subject to such restrictions, conditions and other terms as the Committee may determine in addition to those set forth herein.
(b)
Establishment of Performance Criteria and Restrictions. Restricted Stock Awards will be subject to time vesting under
paragraph (f) of this Section 7. The Committee may, in its sole discretion, at the time a grant is made, prescribe restrictions
in addition to or other than time vesting, including the satisfaction of corporate or individual performance objectives, which
shall be applicable to all or any portion of the Restricted Stock. Corporate or individual performance criteria include, but are
not limited to, designated levels or changes in total shareholder return, net income, total asset return, or such other financial
measures or performance criteria as the Committee may select. Such restrictions shall be set forth in the Participant’s
Restricted Stock Agreement.
(c)
Share Certificates and Transfer Restrictions. Restricted Stock awarded to a Participant may be held under the Participant’s
name in a book entry account maintained by or on behalf of the Corporation. Upon vesting of the Restricted Stock, the Corporation
will establish procedures regarding the delivery of share certificates or the transfer of shares in book entry form. None of the
Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of prior to the date on which
such Restricted Stock vests in accordance with the Plan.
(d)
Voting and Dividend Rights. Except as otherwise determined by the Committee either at the time Restricted Stock is
awarded or at any time thereafter prior to the lapse of the restrictions, holders of Restricted Stock shall not have the right
to vote such shares or the right to receive any dividends with respect to such shares, until such shares are vested. All distributions,
if any, received by the Participant with respect to Restricted Stock as a result of any stock split, stock distributions, combination
of shares, or other similar transaction shall be subject to the restrictions of the Plan.
(e)
Award Agreements. The terms of the Restricted Stock granted under the Plan shall be as set forth in an Award Agreement
in such form as the Committee shall from time to time determine. Each Award Agreement shall comply with and be subject to the
terms and conditions of the Plan and such other terms and conditions as the Committee may deem appropriate. No Person shall have
any rights under the Plan unless and until the Corporation and the Participant have executed an Award Agreement setting forth
the grant and the terms and conditions of the Restricted Stock. The terms of the Plan shall govern all Restricted Stock granted
under the Plan. In the event that any provision of an Award Agreement shall conflict with any term in the Plan as constituted
on the Date of Grant, the term in the Plan shall control.
(f)
Time Vesting. Except as otherwise provided in a Participant’s Award Agreement, the Restricted Stock granted under
the Plan will vest in accordance with the following schedule:
Completed
Years of Employment/Service From Date of Grant
|
|
Cumulative
Vesting Percentage
|
|
1
|
|
|
|
25
|
%
|
|
2
|
|
|
|
50
|
%
|
|
3
|
|
|
|
75
|
%
|
|
4
Years or more
|
|
|
|
100
|
%
|
In
the event a Participant terminates employment prior to 100% vesting, any Shares of Restricted Stock which are not vested shall
be forfeited immediately and permanently. However, a Participant shall be 100% vested in his Restricted Stock in the event he
terminates employment by reason of death or Disability. A Participant shall also be 100% vested in his Restricted Stock on the
date of a Change of Control. If a Participant’s Service is terminated for Cause as determined in the sole discretion of
the Committee, his or her Restricted Stock Award (whether vested or unvested) shall be forfeited immediately. The Committee may
approve Restricted Stock grants that provide alternate vesting schedules. Fractional shares shall be rounded down.
(g)
Acceleration of Vesting. Notwithstanding anything to the contrary in the Plan, the Board of Directors, in its discretion,
may accelerate, in whole or in part, the vesting schedule applicable to a grant of Restricted Stock.
SECTION
8. Restricted Stock Units
(a)
Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Committee.
After the Committee determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an
Award Agreement of the terms, conditions, and restrictions (if any) related to the grant, including the number of Restricted Stock
Units.
(b)
Vesting Criteria and Other Terms. The Committee will set vesting criteria in its discretion, which, depending
on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the
Participant. The Committee may set vesting criteria based upon the achievement of Corporation-wide, business unit, or individual
goals (including, but not limited to, continued employment), or any other basis (including the passage of time) determined by
the Committee in its discretion. Unless a different vesting schedule is set forth in the Award Agreement, the following time vesting
schedule will apply:
Completed
Years of Employment/Service From Date of Grant
|
|
Cumulative
Vesting Percentage
|
|
1
|
|
|
|
25
|
%
|
|
2
|
|
|
|
50
|
%
|
|
3
|
|
|
|
75
|
%
|
|
4
Years or more
|
|
|
|
100
|
%
|
(c)
Earning of Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled
to receive a payout as determined by the Committee and as set forth in the Award Agreement on the Date of Grant. Notwithstanding
the foregoing, at any time after the grant of Restricted Stock Units, the Committee, in its sole discretion, may reduce or waive
any vesting criteria that must be met to receive a payout as long as such reduction or waiver does not violate Code Section 409A.
(d)
Dividend Equivalents. The Committee may, in its sole discretion, award dividend equivalents in connection with
the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof.
(e)
Form and Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined
by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned Restricted
Stock Units in cash, Shares, or a combination of both. Timing and payment of Restricted Stock Units will be subject to and structured
to comply with the rules of Code Section 409A and the treasury regulations thereunder.
(f)
Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited
to the Corporation.
SECTION
9. Stock Appreciation Rights.
(a)
Grant. A Participant may be granted one or more Stock Appreciation Rights under the Plan and such SARs shall be subject
to such terms and conditions, consistent with the other provisions of the Plan, as shall be determined by the Committee in its
sole discretion. A SAR may relate to a particular Stock Option and may be granted simultaneously with or subsequent to the Stock
Option to which it relates. Except to the extent otherwise modified in the grant, (i) SARs not related to a Stock Option shall
be granted subject to the same terms and conditions applicable to Stock Options as set forth in Section 6, and (ii) all SARs related
to Stock Options granted under the Plan shall be granted subject to the same restrictions and conditions and shall have the same
vesting, exercisability, forfeiture and termination provisions as the Stock Options to which they relate. SARs may be subject
to additional restrictions and conditions. The per-share base price for exercise or settlement of SARs shall be determined by
the Committee, but shall be a price that is equal to or greater than the Fair Market Value of such shares. Other than as adjusted
pursuant to Section 12, the base price of SARs may not be reduced without shareholder approval (including canceling previously
awarded SARs and regranting them with a lower base price).
(b)
Exercise and Payment. To the extent a SAR relates to a Stock Option, the SAR may be exercised only when the related
Stock Option could be exercised and only when the Fair Market Value of the shares subject to the Stock Option exceed the exercise
price of the Stock Option. When a Participant exercises such SARs, the Stock Options related to such SARs shall automatically
be cancelled with respect to an equal number of underlying shares. Unless the Committee decides otherwise (in its sole discretion),
SARs shall only be paid in cash or in shares of Common Stock. For purposes of determining the number of shares available under
the Plan, each Stock Appreciation Right shall count as one share of Common Stock, without regard to the number of shares, if any,
that are issued upon the exercise of the Stock Appreciation Right and upon such payment. Shares issuable in connection with a
SAR are subject to the transfer restrictions under the Plan.
SECTION
10. Performance Units and Performance Shares.
(a)
Grant of Performance Units/Shares. Subject to the terms of the Plan, Performance Units and Performance Shares may be
granted to eligible Employees, Consultants or Outside Directors at any time and from time to time, as shall be determined by the
Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant.
(b)
Value of Performance Units/Shares. Each Performance Unit shall have an initial value that is established by the Committee
at the time of the grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the
date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met,
will determine the number and/or value of Performance Units/Shares that will be paid out to the Participants. The time period
during which the performance goals must be met shall be called a “Performance Period.”
(c)
Performance Objectives and Other Terms. The Committee will set Performance Goals or other vesting provisions (including,
without limitation, continued status as an Employee, Consultant or Outside Director) in its discretion which, depending on the
extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to an Employee,
Consultant or Outside Director. The time period during which the performance objectives or other vesting provisions must
be met will be called the "Performance Period." Each Award of Performance Units/Shares will be evidenced by an
Award Agreement that will specify the Performance Period, and such other terms and conditions as the Committee, in its sole discretion,
will determine. The Committee may set performance objectives based upon the achievement of Corporation-wide, divisional,
or individual goals, applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.
(d)
Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets
to be attained ("Performance Targets") with respect to one or more measures of business or financial performance (each,
a "Performance Measure"), subject to the following:
(i)
Performance Measures. For each Performance Period, the Committee shall establish and set forth in writing the Performance
Measures, if any, and any particulars, components and adjustments relating thereto, applicable to each Participant. The
Performance Measures, if any, will be objectively measurable and will be based upon the achievement of a specified percentage
or level in one or more objectively defined and non-discretionary factors preestablished by the Committee. Performance Measures
may be one or more of the following, as determined by the Committee: (i) sales or non-sales revenue; (ii) return
on revenues; (iii) operating income; (iv) income or earnings including operating income; (v) net income; (vi) pre-tax
income or after-tax income; (vii) net income excluding amortization of intangible assets, depreciation and impairment of
goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (viii) raising
of financing or fundraising; (ix) project financing; (x) revenue backlog; (xi) power purchase agreement backlog;
(xii) gross margin; (xiii) operating margin or profit margin; (xiv) capital expenditures, cost targets, reductions
and savings and expense management; (xv) return on assets (gross or net), return on investment, return on capital, or return
on shareholder equity; (xvi) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, or cash flow in excess of cost of capital; (xvii) performance warranty and/or guarantee claims; (xviii) stock
price or total stockholder return; (xix) earnings or book value per share (basic or diluted); (xx) economic value created;
(xxi) pre-tax profit or after-tax profit; (xxii) strategic business criteria, consisting of one or more objectives based
on meeting specified market penetration or market share, geographic business expansion, objective customer satisfaction or information
technology goals; (xxiii) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions;
(xxiv) construction projects consisting of one or more objectives based upon meeting project completion timing milestones,
project budget, site acquisition, site development, or site equipment functionality; (xxv) objective goals relating to staff
management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or
injury rates, headcount, performance management, completion of critical staff training initiatives; (xxvi) objective goals
relating to projects, including project completion timing milestones, project budget; (xxvii) key regulatory objectives;
and (xxviii) enterprise resource planning.
(ii)
Committee Discretion on Performance Measures. As determined in the discretion of the Committee, the Performance
Measures for any Performance Period may (a) differ from Participant to Participant and from Award to Award, (b) be based
on the performance of the Corporation as a whole or the performance of a specific Participant or one or more Subsidiaries, divisions,
departments, regions, stores, segments, products, functions or business units of the Corporation, (c) be measured on a per
share, per capita, per unit, per square foot, per employee, per branch basis, and/or other objective basis (d) be measured
on a pre-tax or after-tax basis, and (e) be measured on an absolute basis or in relative terms (including, but not limited
to, the passage of time and/or against other companies, financial metrics and/or an index). Without limiting the foregoing,
the Committee shall adjust any performance criteria, Performance Measures or other feature of an Award that relates to or is wholly
or partially based on the number of, or the value of, any stock of the Corporation, to reflect any stock dividend or split, repurchase,
recapitalization, combination, or exchange of shares or other similar changes in such stock.
(e)
Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares
shall be entitled to receive a payout of the number of Performance Unit/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved. Notwithstanding
the preceding sentence, after the grant of a Performance Unit/Share, and subject to restrictions under Applicable Laws such as
Code Section 409A, the Committee, in its sole discretion, may waive the achievement of any performance goals for such Performance
Unit/Share.
(f)
Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares shall be made in
a single lump sum, within 90 calendar days following the close of the applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate fair market value
equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in combination
thereof. Prior to the beginning of each Performance Period, Participants may, if so permitted by the Corporation, elect to defer
the receipt of any Performance Unit/Share payout upon such terms as the Committee shall determine.
(g)
Cancellation of Performance Units/Shares. Subject to the applicable Award Agreement, upon the earlier of (a) the
Participant's termination of employment, or (b) the date set forth in the Award Agreement, all remaining Performance Units/Shares
shall be forfeited by the Participant to the Corporation, the Shares subject thereto shall again be available for grant under
the Plan.
(h)
Non-transferability. Performance Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution. Further a Participant's rights under the Plan
shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative.
SECTION
11. Tax Withholding.
(a)
Tax Withholding for Options. The Corporation shall be entitled, if the Committee deems it necessary or desirable, to
withhold (or secure payment in cash in United States dollars from an Optionee or beneficiary in lieu of withholding) the amount
of any withholding or other tax required by law to be withheld or paid by the Corporation with respect to any amount payable and/or
shares of Common Stock issuable under such Optionee's Option, and the Corporation may defer payment or issuance of the shares
of Common Stock upon such Optionee's exercise of an Option unless indemnified to its satisfaction against any liability for such
tax. The amount of any such withholding shall be determined by the Corporation.
(b)
Tax Withholding for Restricted Stock and Other Awards. When a Participant incurs tax liability in connection with the
vesting, lapse of a restriction or distribution of Restricted Stock or other Award, and the Participant is obligated to pay an
amount required to be withheld under applicable tax laws, the Committee shall establish procedures to satisfy the withholding
tax obligation. The Participant also has the option to make payment in cash in United States dollars pursuant to procedures established
by the Corporation. The amount of any such withholding shall be determined by the Corporation.
SECTION
12. Adjustment of Shares and Representations.
(a)
General. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, the Committee shall make appropriate adjustments to (i) the maximum
number and/or class of securities issuable pursuant to the Plan, (ii) the number and/or class of securities and the Exercise Price
per share in effect for each outstanding Option in order to prevent the dilution or enlargement of benefits, (iii) the number
of shares of Restricted Stock granted; or (iv) the number of Performance Shares awarded, if applicable. As a condition to the
exercise of an Award, the Corporation may require the person exercising such Option to make such representations and warranties
at the time of any such exercise as the Corporation may at that time determine, including without limitation, representations
and warranties that (i) the Shares are being purchased only for investment and without any present intention to sell or distribute
such Shares in violation of applicable federal or state securities laws, and (ii) such person is knowledgeable and experienced
in financial and business matters and is capable of evaluating the merits and the risks associated with purchasing the Shares.
The
inability of the Corporation to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any Shares under this Plan, shall relieve the Corporation
of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
(b)
Mergers and Consolidations. In the event that the Corporation is a party to a Change of Control, outstanding Awards
that are not yet vested shall be subject to the agreement of merger or consolidation or asset sale. Such agreement, without the
Participant’s consent, may provide for:
(i)
The continuation of such outstanding Awards by the Corporation (if the Corporation is the surviving Corporation);
(ii)
The assumption of the Plan and such outstanding Awards by the surviving Corporation;
(iii)
The substitution by the surviving Corporation of options with substantially the same terms for such outstanding Awards;
(iv)
Such other action as the Board of Directors determines.
Each
Option that is assumed or otherwise continued in effect in connection with a Change of Control shall be appropriately adjusted,
immediately after such Change of Control, to apply to the number and class of securities which would have been issuable to the
Optionee in connection with the consummation of such Change of Control, had the Option been exercised immediately prior to such
Change of Control.
(c)
Reservation of Rights. Except as provided in this Section 12, a Participant shall have no Shareholder rights by
reason of (i) any subdivision or consolidation of shares of stock of any class, or (ii) any other increase or decrease in the
number of shares of stock of any class. Any issuance by the Corporation of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number
or Exercise Price of shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.
SECTION
13. Miscellaneous.
(a)
Regulatory Approvals. The implementation of the Plan, the granting of any Options, Restricted Stock or Performance
Unit/Performance Share Awards under the Plan, and the issuance of any shares of Common Stock upon the exercise of any Option,
lapse of restrictions on Restricted Stock, or payout of Performance Share Award shall be subject to the Corporation’s procurement
of all approvals and permits required by regulatory authorities, if any, including applicable securities laws having jurisdiction
over the Plan, the Options or Restricted Stock granted, and the shares of Common Stock issued pursuant to it.
(b)
Strict Construction. No rule of strict construction shall be implied against the Committee, the Corporation or Subsidiary
or any other person in the interpretation of any of the terms of the Plan, any Award granted under the Plan or any rule or procedure
established by the Committee.
(c)
Choice of Law. All determinations made and actions taken pursuant to the Plan shall be governed by the internal laws
of the State of Delaware and construed in accordance therewith.
(d)
Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt
from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or
deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Plan and each
Award Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption therefrom)
and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of
the Committee. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A,
the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A (or
an exemption therefrom), such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest
applicable under Code Section 409A. In no event will the Corporation be responsible for or reimburse a Participant
for any taxes or other penalties incurred as a result of applicable of Code Section 409A.
(e)
Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Committee makes the determination
granting such Award, or such other later date as is determined by the Committee. Notice of the determination will be provided
to each Participant within a reasonable time after the date of such grant.
(f)
Conditions Upon Issuance of Shares.
(i)
Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award
and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel
for the Corporation with respect to such compliance.
(ii)
Investment Representations. As a condition to the exercise of an Award, the Corporation may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation
is required.
(g)
Stockholder Approval. The Plan will be subject to approval by the stockholders of the Corporation within twelve
(12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and
to the degree required under Applicable Laws.
SECTION
14. No Employment or Service Retention Rights.
Nothing
in the Plan or in any Award granted under the Plan shall confer upon the Participant any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Subsidiary
employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.
SECTION
15. Duration and Amendments.
(a)
Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of
Directors, subject to the approval of the Corporation’s stockholders. In the event that the stockholders fail to approve
the Plan within 12 months after its adoption by the Board of Directors, any grants of Awards that have already occurred for
which shareholder approval is a prerequisite for the granting of such Awards, shall be rescinded, and no such additional grants
or awards shall be made thereafter under the Plan. The Plan shall terminate automatically ten (10) years after its adoption only
with respect to the Corporation’s ability to grant ISOs under the Plan and may be terminated at any date by the Board of
Directors pursuant to paragraph (b) below.
(b)
Right to Amend or Terminate the Plan. The Committee may amend, suspend or terminate the Plan at any time and for any
reason; provided, however, that certain amendments, including amendments that increase the number of Shares of Common Stock available
for issuance under the Plan (except as provided in Section 12) or change the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Corporation’s stockholders. The Corporation will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c)
Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the
rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be
in writing and signed by the Participant and the Corporation. No Shares of Common Stock shall be issued or sold under the Plan
after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan,
or any amendment thereof, shall not affect any shares of Restricted Stock or Performance Shares previously issued or any Option
previously granted under the Plan.
SECTION
16. Execution.
To
record the adoption of the Plan by the Board of Directors, the Corporation has caused its authorized officer to execute the same.
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iGAMBIT,
INC.
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By:
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Title:
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Date:
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ANNEX
D AMENDED AND RESTATED BY LAWS
AMENDED
AND RESTATED BYLAWS OF
iGambit
Inc. (formerly Bigvault.com Inc).
Effective
[ ,2019]
ARTICLE
I — CORPORATE OFFICES
1.1 REGISTERED
OFFICE
The
registered office shall be fixed in the corporation’s certificate of incorporation. References in these bylaws to the certificate
of incorporation shall mean the certificate of incorporation of the corporation, as amended from time to time, including the terms
of any certificate of designations of any series of Preferred Stock.
1.2 OTHER
OFFICES
The
corporation’s board of directors may at any time establish other offices at any place or places where the corporation is
qualified to do business.
ARTICLE
II — MEETINGS OF STOCKHOLDERS
2.1 PLACE
OF MEETINGS
Meetings
of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The
board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may
instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law
of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’
meetings shall be held at the corporation’s then-principal executive office.
2.2 ANNUAL
MEETING
The
annual meeting of stockholders shall be held on such date, at such time, and at such place (if any) within or without the State
of Delaware, as the board of directors shall designate from time to time and stated in the corporation’s notice of the meeting.
At the annual meeting, directors shall be elected and any other proper business, brought in accordance with Section 2.4 of these
bylaws, may be transacted.
2.3 SPECIAL
MEETING
(i) A
special meeting of the stockholders, other than those required by statute, may be called at any time only by (A) the affirmative
vote of a majority of the Whole Board, (B) the chairperson of the board of directors, (C) the chief executive officer, or (D)
the president (in the absence of a chief executive officer). A special meeting of the stockholders may not be called by any other
person or persons. The board of directors, by the affirmative vote of a majority of the Whole Board, may cancel, postpone or reschedule
any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.
For purposes of these Bylaws, the term “Whole Board” will mean the total number of authorized directors whether
or not there exist any vacancies in previously authorized directorships.
(ii) The
notice of a special meeting shall include the purpose for which the meeting is called. Only such business shall be conducted at
a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the board of directors
acting by the affirmative vote of a majority of the Whole Board, the chairperson of the board of directors, the chief executive
officer or the president (in the absence of a chief executive officer).
2.4 ADVANCE
NOTICE PROCEDURES
(i) Advance
Notice of Stockholder Business at Annual Meeting. At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business
must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B) by or at
the direction of the board of directors, or (C) by a stockholder who (1) is a stockholder of record at the time of the
giving of the notice required by this Section 2.4(i) and on the record date for the determination of stockholders entitled
to vote at the annual meeting and (2) has timely complied in proper written form with the notice procedures set forth in
this Section 2.4(i). In addition, for business to be properly brought by a stockholder before an annual meeting, such business
must be a proper matter for stockholder action pursuant to these bylaws and applicable law. Except for proposals properly made
in accordance with Rule 14a-8 under the Securities and Exchange Act of 1934, and the rules and regulations thereunder (as so amended
and inclusive of such rules and regulations), clause (C) above shall be the exclusive means for a stockholder to bring business
before an annual meeting of stockholders.
(a) To
comply with clause (C) of Section 2.4(i), above, a stockholder’s notice must set forth all information required
under this Section 2.4(i) and must be timely received by the secretary of the corporation. To be timely, a stockholder’s
notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor
earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials
or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however,
that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more
than 30 days prior to or delayed by more than 30 days after the one-year anniversary of the date of the previous year’s
annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the
close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the
90th day prior to such annual meeting, or (ii) the tenth day following the day on which Public Announcement (as defined below)
of the date of such annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the
announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section 2.4(i)(a).
“Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor thereto
(the “1934 Act”).
(b) To
be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder
intends to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the
corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below),
(3) the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder
or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder
Associated Person as of the date of delivery of such notice, (4) whether and the extent to which any hedging or other transaction
or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with
respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including
any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage
the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder
Associated Person with respect to any securities of the corporation, (5) any material interest of the stockholder or a Stockholder
Associated Person in such business, and (6) a statement whether either such stockholder or any Stockholder Associated Person
will deliver a proxy statement and form of proxy to holders of at least the percentage of the voting power of the corporation’s
voting shares required under applicable law to carry the proposal (such information provided and statements made as required by
clauses (1) through (6), a “Business Solicitation Statement”). In addition, to be in proper written form, a
stockholder’s notice to the secretary must be supplemented not later than ten days following the record date for notice
of the meeting to disclose the information contained in clauses (3) and (4) above as of the record date for notice of the meeting.
For purposes of this Section 2.4, a “Stockholder Associated Person” of any stockholder shall mean (i) any
person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares
of stock of the corporation owned of record or beneficially by such stockholder and on whose behalf the proposal or nomination,
as the case may be, is being made, or (iii) any person controlling, controlled by or under common control with such person
referred to in the preceding clauses (i) and (ii).
(c) Without
exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.4(i)
and, if applicable, Section 2.4(ii). In addition, business proposed to be brought by a stockholder may not be brought before
the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations
made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to
such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements
therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual
meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section 2.4(i),
and, if the chairperson should so determine, he or she shall so declare at the annual meeting that any such business not properly
brought before the annual meeting shall not be conducted.
(ii) Advance
Notice of Director Nominations at Annual Meetings. Notwithstanding anything in these bylaws to the contrary, only persons
who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible for election or re-election
as directors at an annual meeting of stockholders. Nominations of persons for election or re-election to the board of directors
of the corporation shall be made at an annual meeting of stockholders only (A) by or at the direction of the board of directors
or (B) by a stockholder who (1) was a stockholder of record at the time of the giving of the notice required by this
Section 2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has
complied with the notice procedures set forth in this Section 2.4(ii). In addition to any other applicable requirements,
for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to
the secretary of the corporation.
(a) To
comply with clause (B) of Section 2.4(ii) above, a nomination to be made by a stockholder must set forth all information
required under this Section 2.4(ii) and must be received by the secretary at the then-principal executive offices of the
corporation at the time set forth in, and in accordance with, the final three sentences of Section 2.4(i)(a), above; provided
additionally, however, that in the event that the number of directors to be elected to the board of directors is increased and
there is no Public Announcement naming all of the nominees for director or specifying the size of the increased board made by
the corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination pursuant to the foregoing
provisions, a stockholder’s notice required by this Section 2.4(ii) shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it shall be received by the secretary at the principal executive
offices of the corporation not later than the close of business on the tenth day following the day on which such Public Announcement
is first made by the corporation.
(b) To
be in proper written form, such stockholder’s notice to the secretary must set forth:
(1) as
to each person whom the stockholder proposes to nominate for election or re-election as a director (a “nominee”):
(A) the name, age, business address and residence address of the nominee, (B) the principal occupation or employment
of the nominee, (C) the class and number of shares of the corporation that are held of record or are beneficially owned by
the nominee and any derivative positions held or beneficially held by the nominee, (D) whether and the extent to which any
hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any
securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position
or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit
of share price changes for, or to increase or decrease the voting power of the nominee, (E) a description of all arrangements
or understandings between or among the stockholder and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder or concerning the nominee’s potential service on the
board of directors, (F) a written statement executed by the nominee acknowledging that as a director of the corporation,
the nominee will owe fiduciary duties under Delaware law with respect to the corporation and its stockholders, and (G) any
other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited
for the election or re-election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation
14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected or re-elected, as the case may be); and
(2) as
to such stockholder giving notice, (A) the information required to be provided pursuant to clauses (2) through (5) of
Section 2.4(i)(b), above, and the supplement referenced in the second sentence of Section 2.4(i)(b) above (except that
the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this
paragraph), and (B) a statement whether either such stockholder or Stockholder Associated Person will deliver a proxy statement
and form of proxy to holders of at least the percentage of the voting power of the corporation’s voting shares reasonably
believed by such stockholder or Stockholder Associated Person to be necessary to elect or re-elect such nominee(s) (such information
provided and statements made as required by clauses (A) and (B) above, a “Nominee Solicitation Statement”).
(c) At
the request of the board of directors, any person nominated by a stockholder for election or re-election as a director must furnish
to the secretary (1) that information required to be set forth in the stockholder’s notice of nomination of such person
as a director as of a date subsequent to the date on which the notice of such person’s nomination was given and (2) such
other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve
as an independent director or audit committee financial expert of the corporation under applicable law, securities exchange rule
or regulation, or any publicly disclosed corporate governance guideline or committee charter of the corporation and (3) such other
information that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of
such nominee; in the absence of the furnishing of any such information of the kind specified in this Section 2.4(ii)(c) if requested,
such stockholder’s nomination shall not be considered in proper form pursuant to this Section 2.4(ii).
(d) Without
exception, no person shall be eligible for election or re-election as a director of the corporation at an annual meeting of stockholders
unless nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be
eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to
the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement
applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare
at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the
chairperson should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.
(iii) Advance
Notice of Director Nominations for Special Meetings.
(a) For
a special meeting of stockholders at which directors are to be elected or re-elected, nominations of persons for election or re-election
to the board of directors shall be made only (1) by or at the direction of the board of directors or (2) by any stockholder
who (A) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(iii) and on
the record date for the determination of stockholders entitled to vote at the special meeting and (B) delivers a timely written
notice of the nomination to the secretary that includes the information set forth in Sections 2.4(ii)(b) and (ii)(c) above.
To be timely, such notice must be received by the secretary at the then-principal executive offices of the corporation not later
than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which
Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to
be elected or re-elected at such meeting. A person shall not be eligible for election or re-election as a director at a special
meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii) by a stockholder
in accordance with the notice procedures set forth in this Section 2.4(iii). In addition, a nominee shall not be eligible
for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations
made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such
nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein
not misleading. Any person nominated in accordance with this Section 2.4(iii) is subject to, and must comply with, the provisions
of Section 2.4(ii)(c).
(b) The
chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business
was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she
shall so declare at the meeting, and the defective nomination or business shall be disregarded.
(iv) Other
Requirements and Rights. In addition to the foregoing provisions of this Section 2.4, a stockholder must also comply
with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.4. Nothing in this Section 2.4 shall be deemed to affect any rights of:
(a) a
stockholder to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor
provision) under the 1934 Act; or
(b) the
corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision)
under the 1934 Act.
2.5 NOTICE
OF STOCKHOLDERS’ MEETINGS
Whenever
stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall
state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy
holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled
to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the
meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided
in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given
not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as
of the record date for determining the stockholders entitled to notice of the meeting.
2.6 QUORUM
The
holders of a majority of the voting power of the stock issued, outstanding and entitled to vote, and present in person or represented
by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders, unless otherwise required
by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange. Where a separate vote by
a class or series or classes or series is required, a majority of the voting power of the then-issued and outstanding shares of
such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter, except as otherwise required by law, the certificate of incorporation, these
bylaws or the rules of any applicable stock exchange.
If
a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting,
or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented.
The chairperson of the meeting shall have the authority to adjourn a meeting of the stockholders in all other events. At such
adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted
at the original meeting.
2.7 ADJOURNED
MEETING; NOTICE
When
a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned
meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders
may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment
is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. If, after the adjournment, a new record date for stockholders entitled to vote is fixed
for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting in accordance
with Section 213(a) of the DGCL and Section 2.11 of these bylaws, and shall give notice of the adjourned meeting to each stockholder
of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
2.8 CONDUCT
OF BUSINESS
The
chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of business. The chairperson of any meeting of stockholders shall be designated
by the board of directors; in the absence of such designation, the chairperson of the board, if any, the chief executive officer
(in the absence of the chairperson) or the president (in the absence of the chairperson of the board and the chief executive officer),
or in their absence any other executive officer of the corporation, shall serve as chairperson of the stockholder meeting.
2.9 VOTING
The
stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11
of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and
Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except
as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder.
Except
as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, in
all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present
in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders.
Except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange,
directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Where a separate vote by a class or series or classes or series is required,
in all matters other than the election of directors, the affirmative vote of the majority of the voting power of shares of such
class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or
series or classes or series, except as otherwise provided by law, the certificate of incorporation, these bylaws or the rules
of any applicable stock exchange.
2.10 STOCKHOLDER
ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Except
as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, any
action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote,
if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in writing.
2.11 RECORD
DATES
In
order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment
thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting. If the board of directors so fixes a date, such date shall also be the record date for determining
the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date,
that a later date on or before the date of the meeting shall be the date for making such determination.
If
no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote
at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
A
determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new record date for determination of
stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled
to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote
in accordance with the provisions of Section 213 of the DGCL and this Section 2.11 at the adjourned meeting.
In
order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60
days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
2.12 PROXIES
Each
stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder
by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established
for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for
a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions
of Section 212 of the DGCL. A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission
which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means
of electronic transmission was authorized by the stockholder.
2.13 LIST
OF STOCKHOLDERS ENTITLED TO VOTE
The
officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the
record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall
reflect the stockholders entitled to vote as of the tenth day before the meeting date. The stockholder list shall be arranged
in alphabetical order and show the address of each stockholder and the number of shares registered in the name of each stockholder.
The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list.
Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least
ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required
to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s
then-principal place of business. In the event that the corporation determines to make the list available on an electronic network,
the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation.
If the meeting is to be held at a place (as opposed to solely by means of remote communication), then the list shall be produced
and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present.
If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to
access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by each of them.
2.14 INSPECTORS
OF ELECTION
Before
any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting
or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails
to appear or fails or refuses to act, then the chairperson of the meeting shall appoint a person to fill that vacancy.
Each
inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties
of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed
and designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of
each share, (ii) determine the shares of capital stock of the corporation represented at the meeting and the validity of proxies
and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition
of any challenges made to any determination by the inspectors, (v) certify their determination of the number of shares of capital
stock of the corporation represented at the meeting and such inspector or inspectors’ count of all votes and ballots, (vi)
determine the result; and (vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.
In
determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspector
or inspectors may consider such information as is permitted by applicable law. If there are three (3) inspectors of election,
the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report
or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
ARTICLE
III — DIRECTORS
3.1 POWERS
The
business and affairs of the corporation shall be managed by or under the direction of the board of directors, except as may be
otherwise provided in the DGCL or the certificate of incorporation.
3.2 NUMBER
OF DIRECTORS
The
board of directors shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation
fixes the number of directors, the number of directors shall be determined from time to time solely by resolution of the board
of directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s
term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except
as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office
until the expiration of the term for which elected and until such director’s successor is elected and qualified or until
such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate
of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.
If so provided in the certificate of incorporation, the directors of the corporation shall be divided into classes.
3.4 RESIGNATION
AND VACANCIES
Any
director may resign at any time upon notice given in writing or by electronic transmission to the corporation; provided,
however, that if such notice is given by electronic transmission, such electronic transmission must either set forth or be
submitted with information from which it can be determined that the electronic transmission was authorized by the director. A
resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective
date determined upon the happening of an event or events. Acceptance of such resignation shall not be necessary to make it effective.
A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide
that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors
resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
Unless
otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class
shall be filled only by a majority of the directors then-in office, although less than a quorum, or by a sole remaining director.
If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created
directorship shall hold office until the next election of the class for which such director shall have been chosen and until his
or her successor shall have been duly elected and qualified.
3.5 PLACE
OF MEETINGS; MEETINGS BY TELEPHONE
The
board of directors may hold meetings, both regular and special, either within or outside the State of Delaware
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference
telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in person at the meeting.
3.6 REGULAR
MEETINGS
Regular
meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined
by the board of directors.
3.7 SPECIAL
MEETINGS; NOTICE
Special
meetings of the board of directors for any purpose or purposes may be called at any time by the chairperson of the board of directors,
the chief executive officer, the president, the secretary or a majority of the authorized number of directors, at such times and
places as he or she or they shall designate.
Notice
of the time and place of special meetings shall be:
(i)
delivered personally by hand, by courier or by telephone;
(ii) sent
by United States first-class mail, postage prepaid;
(iii) sent
by facsimile; or
(iv) sent
by electronic mail,
directed
to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case
may be, as shown on the corporation’s records.
If
the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic
mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by
United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.
Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to
be held at the corporation’s principal executive office) nor the purpose of the meeting.
3.8 QUORUM;
VOTING
At
all meetings of the board of directors, a majority of the total authorized number of directors shall constitute a quorum for the
transaction of business. If a quorum is not present at any meeting of the board of directors, then the directors present thereat
may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
The
vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors,
except as may be otherwise specifically provided by the DGCL, the certificate of incorporation or these bylaws.
If
the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any
matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other
proportion of the votes of such directors.
3.9 BOARD
ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless
otherwise restricted by the certificate of incorporation, these bylaws or DGCL, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board
of directors or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings
or electronic transmission or transmissions are filed with the minutes of proceedings of the board of directors or committee.
Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes
are maintained in electronic form.
3.10 FEES
AND COMPENSATION OF DIRECTORS
Unless
otherwise restricted by the certificate of incorporation, these bylaws or DCGL, the board of directors shall have the authority
to fix the compensation of directors.
3.11 REMOVAL
OF DIRECTORS
A
director may be removed from office by the stockholders of the corporation only for cause.
No
reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such
director’s term of office.
ARTICLE
IV — COMMITTEES
4.1 COMMITTEES
OF DIRECTORS
The
board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation.
The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent
or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws,
shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such
committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter
(other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval,
or (ii) adopt, amend or repeal any bylaw of the corporation.
4.2 COMMITTEE
MINUTES
Each
committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
4.3 MEETINGS
AND ACTION OF COMMITTEES
Meetings
and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5
(place of meetings and meetings by telephone);
(ii) Section 3.6
(regular meetings);
(iii) Section 3.7
(special meetings; notice);
(iv) Section 3.8
(quorum; voting);
(v) Section 3.9
(action without a meeting); and
(vi) Section 7.5
(waiver of notice)
with
such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors
and its members. However:
(i) the
time of regular meetings of committees may be determined by resolution of the committee;
(ii) special
meetings of committees may also be called by resolution of the committee; and
(iii) notice
of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings
of the committee. The board of directors or a committee may adopt rules for the government of any committee not inconsistent with
the provisions of these bylaws.
Any
provision in the certificate of incorporation providing that one or more directors shall have more or less than one vote per director
on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the certificate of incorporation
or these bylaws.
4.4 SUBCOMMITTEES
Unless
otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the board of directors designating
the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee,
and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE
V — OFFICERS
5.1 OFFICERS
The
officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board
of directors, a chairperson of the board of directors, a vice chairperson of the board of directors, a chief executive officer,
a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant
treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions
of these bylaws. Any number of offices may be held by the same person.
5.2 APPOINTMENT
OF OFFICERS
The
board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with
the provisions of Section 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.
A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner
prescribed in this Section 5 for the regular election to such office.
5.3 SUBORDINATE
OFFICERS
The
board of directors may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president,
to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall
hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors
may from time to time determine.
5.4 REMOVAL
AND RESIGNATION OF OFFICERS
Subject
to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause,
by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board of directors.
Any such officer, except in the case of an officer chosen by the board of directors, may also be removed by an officer upon whom
such power of removal may be conferred by the board of directors.
Any
officer may resign at any time by giving written or electronic notice to the corporation; provided, however, that
if such notice is given by electronic transmission, such electronic transmission must either set forth or be submitted with information
from which it can be determined that the electronic transmission was authorized by the officer. Any resignation shall take effect
at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice
of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice
to the rights, if any, of the corporation under any contract to which the officer is a party.
5.5 VACANCIES
IN OFFICES
Any
vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.3.
5.6 REPRESENTATION
OF SHARES OF OTHER CORPORATIONS
The
chairperson of the board of directors, the president, any vice president, the treasurer, the secretary or assistant secretary
of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized
to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 AUTHORITY
AND DUTIES OF OFFICERS
All
officers of the corporation shall respectively have such authority and perform such duties in the management of the business of
the corporation as may be designated from time to time by the board of directors and, to the extent not so provided, as generally
pertain to their respective offices, subject to the control of the board of directors.
5.8 THE
CHAIRPERSON OF THE BOARD
The
chairperson of the board shall have the powers and duties customarily and usually associated with the office of the chairperson
of the board. The chairperson of the board shall preside at meetings of the board of directors.
5.9 THE
VICE CHAIRPERSON OF THE BOARD
The
vice chairperson of the board shall have the powers and duties customarily and usually associated with the office of the vice
chairperson of the board. In the case of absence or disability of the chairperson of the board, the vice chairperson of the board
shall perform the duties and exercise the powers of the chairperson of the board.
5.10 THE
CHIEF EXECUTIVE OFFICER
The
chief executive officer shall have, subject to the supervision, direction and control of the board of directors, ultimate authority
for decisions relating to the supervision, direction and management of the affairs and the business of the corporation customarily
and usually associated with the position of chief executive officer, including, without limitation, all powers necessary to direct
and control the organizational and reporting relationships within the corporation. If at any time the office of the chairperson
and vice chairperson of the board shall not be filled, or in the event of the temporary absence or disability of the chairperson
of the board and the vice chairperson of the board, the chief executive officer shall perform the duties and exercise the powers
of the chairperson of the board unless otherwise determined by the board of directors.
5.11 THE
PRESIDENT
The
president shall have, subject to the supervision, direction and control of the board of directors, the general powers and duties
of supervision, direction and management of the affairs and business of the corporation customarily and usually associated with
the position of president. The president shall have such powers and perform such duties as may from time to time be assigned to
him or her by the board of directors, the chairperson of the board or the chief executive officer. In the event of the absence
or disability of the chief executive officer, the president shall perform the duties and exercise the powers of the chief executive
officer unless otherwise determined by the board of directors.
5.12 THE
VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS
Each
vice president and assistant vice president shall have such powers and perform such duties as may from time to time be assigned
to him or her by the board of directors, the chairperson of the board, the chief executive officer or the president.
5.13 THE
SECRETARY AND ASSISTANT SECRETARIES
(i) The
secretary shall attend meetings of the board of directors and meetings of the stockholders and record all votes and minutes of
all such proceedings in a book or books kept for such purpose. The secretary shall have all such further powers and duties as
are customarily and usually associated with the position of secretary or as may from time to time be assigned to him or her by
the board of directors, the chairperson of the board, the chief executive officer or the president.
(ii) Each
assistant secretary shall have such powers and perform such duties as may from time to time be assigned to him or her by the board
of directors, the chairperson of the board, the chief executive officer, the president or the secretary. In the event of the absence,
inability or refusal to act of the secretary, the assistant secretary (or if there shall be more than one, the assistant secretaries
in the order determined by the board of directors) shall perform the duties and exercise the powers of the secretary.
5.14 THE
CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURERS
(i) The
chief financial officer shall be the treasurer of the corporation. The chief financial officer shall have custody of the corporation’s
funds and securities, shall be responsible for maintaining the corporation’s accounting records and statements, shall keep
full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall deposit or cause to
be deposited moneys or other valuable effects in the name and to the credit of the corporation in such depositories as may be
designated by the board of directors. The chief financial officer shall also maintain adequate records of all assets, liabilities
and transactions of the corporation and shall assure that adequate audits thereof are currently and regularly made. The chief
financial officer shall have all such further powers and duties as are customarily and usually associated with the position of
chief financial officer, or as may from time to time be assigned to him or her by the board of directors, the chairperson, the
chief executive officer or the president.
(ii) Each
assistant treasurer shall have such powers and perform such duties as may from time to time be assigned to him or her by the board
of directors, the chief executive officer, the president or the chief financial officer. In the event of the absence, inability
or refusal to act of the chief financial officer, the assistant treasurer (or if there shall be more than one, the assistant treasurers
in the order determined by the board of directors) shall perform the duties and exercise the powers of the chief financial officer.
ARTICLE
VI — STOCK
6.1 STOCK
CERTIFICATES
The
shares of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution
or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder
of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the corporation by the
chairperson of the board of directors or vice-chairperson of the board of directors, or the president or a vice-president, and
by the treasurer or an assistant treasurer, or the secretary or an assistant secretary representing the number of shares registered
in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person
were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate
in bearer form.
6.2 SPECIAL
DESIGNATION ON CERTIFICATES
If
the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the
designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized
on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may
be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock,
a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section 6.2 or Sections 151, 156, 202(a) or 218(a) of the DGCL or with
respect to this section 6.2 a statement that the corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly
provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders
of certificates representing stock of the same class and series shall be identical.
6.3 LOST,
STOLEN OR DESTROYED CERTIFICATES
Except
as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate
unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate
of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and upon the owner’s making of an affidavit of lost, stolen or destroyed certificate, and the corporation
may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation
a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate or uncertificated shares.
6.4 DIVIDENDS
The
board of directors, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and
pay dividends upon the shares of the corporation’s capital stock. Dividends may be paid in cash, in property, or in shares
of the corporation’s capital stock, subject to the provisions of the certificate of incorporation.
The
board of directors may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for
any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing
or maintaining any property of the corporation, and meeting contingencies.
6.5 TRANSFER
OF STOCK
Transfers
of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by an attorney
duly authorized, and, if such stock is certificated, upon the surrender of a certificate or certificates for a like number of
shares, properly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer; provided,
however, that such succession, assignment or authority to transfer is not prohibited by the certificate of incorporation,
these bylaws, applicable law or contract.
6.6 STOCK
TRANSFER AGREEMENTS
The
corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes
of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by
such stockholders in any manner not prohibited by the DGCL.
6.7 REGISTERED
STOCKHOLDERS
The
corporation:
(i)
shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner;
(ii) shall
be entitled (to the fullest extent permitted by applicable law) to hold liable for calls and assessments the person registered
on its books as the owner of shares; and
(iii) shall
not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether
or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE
VII — MANNER OF GIVING NOTICE AND WAIVER
7.1 NOTICE
OF STOCKHOLDERS’ MEETINGS
Notice
of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder’s address as it appears on the corporation’s records. An affidavit of the secretary
or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
7.2
NOTICE BY ELECTRONIC TRANSMISSION
Without
limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of
incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate
of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder
to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any
such consent shall be deemed revoked if:
|
(i)
|
by
electronic mail, when directed the corporation is unable to deliver by electronic transmission
two consecutive notices given by the corporation in accordance with such consent; and
|
|
(ii)
|
such
inability becomes known to the secretary or an assistant secretary or to the transfer
agent, or other person responsible for the giving of notice.
|
However,
the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any
notice given pursuant to the preceding paragraph shall be deemed given:
|
(i)
|
if
by facsimile telecommunication, when directed to a number at which the stockholder has
consented to receive notice;
|
|
(ii)
|
if
by electronic mail, when directed to an electronic mail address at which the stockholder
has consented to receive notice;
|
|
(iii)
|
if
by a posting on an electronic network together with separate notice to the stockholder
of such specific posting, upon the later of (A) such posting and (B) the giving of such
separate notice; and
|
|
(iv)
|
if
by any other form of electronic transmission, when directed to the stockholder.
|
An
affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice
has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of
the facts stated therein.
An
“electronic transmission” means any form of communication, not directly involving the physical transmission
of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly
reproduced in paper form by such a recipient through an automated process.
7.3 NOTICE
TO STOCKHOLDERS SHARING AN ADDRESS
Except
as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders,
any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these
bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders
at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the
corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice
by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written
notice.
7.4 NOTICE
TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
Whenever
notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication
is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or
held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under
the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled
to receive notice except such persons with whom communication is unlawful.
7.5 WAIVER
OF NOTICE
Whenever
notice is required to be given to stockholders, directors or other persons under any provision of the DGCL, the certificate of
incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission
by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the stockholders or the board of directors, as the case may be, need be specified in any written waiver
of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
ARTICLE
VIII — INDEMNIFICATION
8.1 INDEMNIFICATION
OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
Subject
to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL,
as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”)
(other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director of the
corporation or an officer of the corporation, or while a director of the corporation or officer of the corporation is or was serving
at the request of the corporation as a director, officer, employee or agent of a subsidiary or another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
8.2 INDEMNIFICATION
OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
Subject
to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL,
as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director or officer of the corporation, or while a director or officer of the corporation is or was serving
at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
8.3 SUCCESSFUL
DEFENSE
To
the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding described in Section 8.1 or Section 8.2, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred
by such person in connection therewith.
8.4 INDEMNIFICATION
OF OTHERS; ADVANCE PAYMENT TO OTHERS
Subject
to the other provisions of this Article VIII, the corporation shall have power to advance expenses to and indemnify its employees
and its agents to the extent not prohibited by the DGCL or other applicable law. The board of directors shall have the power to
delegate the determination of whether employees or agents shall be indemnified or receive an advancement of expenses to such person
or persons as the board of determines.
8.5 ADVANCE
PAYMENT OF EXPENSES
Expenses
(including attorneys’ fees) incurred by an officer or director of the corporation in defending any Proceeding shall be paid
by the corporation in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together
with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts
if it shall ultimately be determined that the person is not entitled to be indemnified under this Article VIII or the DGCL.
Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be
so paid upon such terms and conditions, if any, as the corporation deems reasonably appropriate and shall be subject to the corporation’s
expense guidelines.
8.6 LIMITATION
ON INDEMNIFICATION
Subject
to the requirements in Section 8.3 and the DGCL, the corporation shall not be obligated to indemnify any person pursuant
to this Article VIII in connection with any Proceeding (or any part of any Proceeding):
(i)
for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision,
vote or otherwise, except with respect to any excess beyond the amount paid;
(ii)
for an accounting or disgorgement of profits pursuant to Section 16(b) of the 1934 Act, or similar provisions
of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement
arrangements);
(iii) for
any reimbursement of the corporation by such person of any bonus or other incentive-based or equity-based compensation or of any
profits realized by such person from the sale of securities of the corporation, as required in each case under the 1934 Act (including
any such reimbursements that arise from an accounting restatement of the corporation pursuant to Section 304 of the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the corporation of profits arising from the purchase
and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable
therefor (including pursuant to any settlement arrangements);
(iv) initiated
by such person against the corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the
board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the corporation
provides the indemnification, in its sole discretion, pursuant to the powers vested in the corporation under applicable law, (c) otherwise
required to be made under Section 8.7 or (d) otherwise required by applicable law; or
(v)
if prohibited by applicable law; provided, however, that if any provision or provisions of this Article VIII
shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability
of the remaining provisions of this Article VIII (including, without limitation, each portion of any paragraph or clause containing
any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VIII
(including, without limitation, each such portion of any paragraph or clause containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal
or unenforcebable.
8.7 DETERMINATION;
CLAIM
If
a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within 90 days after
receipt by the corporation of the written request therefor, the claimant shall be entitled to an adjudication by a court of competent
jurisdiction of his or her entitlement to such indemnification or advancement of expenses. The corporation shall indemnify such
person against any and all expenses that are incurred by such person in connection with any action for indemnification or advancement
of expenses from the corporation under this Article VIII, to the extent such person is successful in such action, and to
the extent not prohibited by law. In any such suit, the corporation shall, to the fullest extent not prohibited by law, have the
burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.
8.8 NON-EXCLUSIVITY
OF RIGHTS
The
indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of
incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action
in such person’s official capacity and as to action in another capacity while holding such office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification
and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
8.9 INSURANCE
The
corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the
power to indemnify such person against such liability under the provisions of the DGCL.
8.10 SURVIVAL
The
rights to indemnification and advancement of expenses conferred by this Article VIII shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
8.11 EFFECT
OF REPEAL OR MODIFICATION
Any
amendment, alteration or repeal of this Article VIII shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to such amendment, alteration or repeal.
8.12 CERTAIN
DEFINITIONS
For
purposes of this Article VIII, references to the “corporation” shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with
respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII, references to “other enterprises”
shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall
include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests
of the corporation” as referred to in this Article VIII.
ARTICLE
IX — GENERAL MATTERS
9.1 EXECUTION
OF CORPORATE CONTRACTS AND INSTRUMENTS
Except
as otherwise provided by law, the certificate of incorporation or these bylaws, the board of directors may authorize any officer
or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf
of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board
of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind
the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
9.2 FISCAL
YEAR
The
fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.
9.3 SEAL
The
corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors. The corporation
may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
9.4 CONSTRUCTION;
DEFINITIONS
Unless
the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction
of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number
includes the singular, and the term “person” includes both an entity and a natural person.
ARTICLE
X — AMENDMENTS
These
bylaws may be adopted, amended or repealed by the affirmative vote of the holders of at least 66⅔% of the total voting power
of outstanding voting securities, voting together as a single class. The board of directors, acting by the affirmative vote of
a majority of the Whole Board, shall also have the power to adopt, amend or repeal bylaws; provided, however, that
a bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall
not be further amended or repealed by the board of directors.