Item
1.01 Entry Into A
Material Definitive Agreement.
On
July 29, 2020, Healthcare Merger Corp., a Delaware corporation (“Parent”) entered into an Agreement and Plan
of Merger (the “Merger Agreement”), by and among Parent, Sabre Merger Sub I, Inc., a Delaware corporation (“First
Merger Sub”), Sabre Merger Sub II, LLC, a Delaware limited liability company (“Second Merger Sub”),
and Specialists on Call, Inc., a Delaware corporation (the “Company”), by which: (a) First Merger Sub will
merge with and into the Company (the “First Merger”), with the Company being the surviving corporation of the
First Merger (such company, in its capacity as the surviving corporation of the First Merger, the “Surviving Corporation”)
and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving
Corporation will merge with and into Second Merger Sub (the “Second Merger” and, together with the First Merger,
the “Mergers”), with Second Merger Sub being the surviving company of the Second Merger. The transactions set
forth in the Merger Agreement, including the Mergers, will constitute a “Business Combination” as contemplated by
Parent’s Amended & Restated Certificate of Incorporation.
The
Merger Agreement and the transactions contemplated thereby were unanimously approved by the Board of Directors of Parent (the
“Board”) on July 28, 2020.
The
Merger Agreement
Merger
Consideration
Pursuant
to the Merger Agreement, the aggregate merger consideration payable to the stockholders of the Company will be paid in a combination
of stock and cash consideration equal to $650,000,000, minus the Company’s net indebtedness as of the closing (including
estimated tax liabilities in excess of $1,000,000) after deducting any cash and cash equivalents of the Company at the closing
(the “Merger Consideration”). The cash consideration will be an amount equal to (a) Parent’s cash and
cash equivalents as of the closing (including proceeds in connection with the Private Placement (as defined below) and the funds
in Parent’s trust account), plus (b) the Company’s cash and cash equivalents as of the closing, minus
(c) the amount of cash required to satisfy Parent stockholder redemptions, minus (d) Parent’s and the Company’s
transaction costs, minus (e) the Company’s indebtedness as of the closing, minus (f) $45,000,000. The remainder
of the Merger Consideration will be paid in a number of shares of newly-issued Parent Class A common stock valued at the redemption
amount payable to Parent’s public stockholders that elect to redeem their shares of Parent Class A common stock in connection
with the closing. In addition, Parent will pay off, or cause to be paid off, on behalf of the Company and in connection
with the closing, the Company’s outstanding indebtedness for borrowed money.
In
connection with the Mergers, each share of the Company’s capital stock (subject to limited exceptions) will be cancelled
and automatically deemed for all purposes to represent the right to receive a portion of the Merger Consideration in accordance
with the Company’s organizational documents.
Each
vested option of the Company (“Company Option”) will be cancelled and converted into the right to receive a
portion of the Merger Consideration in accordance with the terms thereof, net of the exercise price of such vested Company Option,
in each case, without interest. If the exercise price payable in respect of a share of Company common stock under a vested Company
Option exceeds the applicable portion of the Merger Consideration payable in respect of such share of Company common stock, such
vested Company Option shall be cancelled for no consideration. Each unvested Company Option will be converted into an option to
purchase shares of Parent Class A common stock (and shall be equitably adjusted for the terms of the transactions) and will continue
to be governed by substantially the same terms and conditions (including vesting and exercisability terms) as were applicable
to the corresponding former Company Option.
Each
warrant to purchase shares of capital stock of the Company (“Company Warrants”) will be cancelled in exchange
for the right to receive a portion of the Merger Consideration, in accordance with the terms thereof, net of the exercise price
of such Company Warrant, in each case, without interest. If the exercise price payable in respect of a share of Company common
stock under a Company Warrant exceeds the applicable portion of the Merger Consideration payable in respect of such share of Company
common stock, such Company Warrant shall be automatically terminated for no consideration.
Representations,
Warranties and Covenants
The
parties to the Merger Agreement have made representations, warranties and covenants that are customary for transactions of this
nature. The representations and warranties contained in the Merger Agreement will not survive the closing of the transaction,
other than in the event of actual fraud.
The
Merger Agreement contains additional covenants of the parties, including, among others, covenants providing for (a) the parties
to conduct their respective businesses in the ordinary course through the consummation of the Mergers, (b) Parent and the Company
(x) being prohibited from soliciting or negotiating with third parties regarding alternative transactions and agreeing to certain
related restrictions and (y) to cease discussions regarding alternative transactions, (c) Parent and the Company to jointly prepare
(and for Parent to file with the Securities and Exchange Commission (the “SEC”)) a registration statement on
Form S-4 (the “Registration Statement”) for the purpose of registering under the Securities Act the shares
of Parent Class A common stock to be issued to the Company’s stockholders in connection with the Mergers (which Registration
Statement will contain a joint proxy statement/consent solicitation statement/prospectus for the purpose of (i) soliciting proxies
from Parent’s stockholders to vote in favor of adoption and approval of the Merger Agreement, the transactions contemplated
thereby and certain other matters at a special meeting called therefor and (ii) soliciting written consents from the Company’s
stockholders in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby), (d) the
protection of, and access to, confidential information of the parties and (e) the parties to cooperate in obtaining necessary
approvals from governmental agencies.
Conditions
to Consummation of the Mergers
The
consummation of the transactions contemplated by the Merger Agreement is subject to customary closing conditions for special purpose
acquisition companies, including, among others: (a) approval by Parent’s stockholders and the Company’s stockholders,
(b) Parent having at least $5,000,001 of net tangible assets as of the effective time of the consummation of the Mergers, (c)
the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
(d) the listing of the shares of Parent Class A common stock to be issued in connection with the closing of the transactions contemplated
by the Merger Agreement on the Nasdaq Stock Markets (“Nasdaq”) and the effectiveness of the Registration Statement,
and (e) Parent having at least $250,000,000 in available cash (including proceeds in connection with the Private Placement and
the funds in Parent’s trust account) immediately prior to the effective time of the consummation of the Mergers (after taking
into account (x) payments required to satisfy Parent’s stockholder redemptions and (y) Parent’s transaction costs).
Termination
The
Merger Agreement may be terminated under certain customary and limited circumstances prior to the consummation of the Mergers,
including (a) by mutual written consent of the parties, (b) by either Parent or the Company, if the consummation of the Mergers
has not occurred on or prior to January 29, 2021 (the “Outside Date”), (c) by either Parent or the Company
upon a breach by the other party if such breach gives rise to a failure of a closing condition and cannot or has not been cured
within the earlier of 30 days’ notice by the non-breaching party and the Outside Date, (d) by either Parent or the Company
if Parent’s stockholder approval is not obtained, (e) by Parent if (i) the Written Consent Party (as defined below) did
not enter into the Support Agreement (as defined below) within twenty-four (24) hours of the date of the Merger Agreement, or
(ii) the Written Consent Party fails to deliver a written consent constituting the requisite Company stockholder approval within
three (3) business days of the Registration Statement becoming effective or (f) by either Parent or the Company if a governmental
entity has issued a final and nonappealable order or taken any other action, in any case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, including the Mergers.
The
foregoing description of the Merger Agreement and the transactions contemplated thereby, including the Mergers, does not purport
to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached
hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement contains representations, warranties
and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions
embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties
to the Merger Agreement and are subject to important qualifications and limitations agreed to by the contracting parties in connection
with negotiating the Merger Agreement. The Merger Agreement has been attached to provide investors with information regarding
its terms. It is not intended to provide any other factual information about Parent or any other party to the Merger Agreement.
In particular, the representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only
for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the respective parties to the Merger
Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures
made for the purposes of allocating contractual risk between the respective parties to the Merger Agreement instead of establishing
these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from
those applicable to Parent’s investors and security holders. Except as expressly stated therein, Parent’s and the
Company’s investors and security holders are not third-party beneficiaries under the Merger Agreement and should not rely
on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual
state of facts or condition of any party to the Merger Agreement. Moreover, information concerning the subject matter of the representations
and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected
in Parent’s public disclosures.
Private
Placement Subscription Agreements
On
July 29, 2020, Parent entered into Subscription Agreements with certain investors (the “Subscription Agreements”)
pursuant to which the investors have agreed to purchase an aggregate of 16,500,000 shares of Parent Class A common stock in a
private placement for $10.00 per share (the “Private Placement”). The proceeds from the Private Placement will
be used to partially fund the cash consideration to be paid to the stockholders of the Company at the closing of the transactions
contemplated by the Merger Agreement and for general working capital purposes following the closing.
Each
Subscription Agreement will terminate upon the earlier to occur of (a) the termination of the Merger Agreement in accordance
with its terms, (b) the mutual written agreement of the parties to such Subscription Agreement and (c) February 5, 2021. As of
the date hereof, the shares of Parent Class A common stock to be issued in connection with the Subscription Agreements have not
been registered under the Securities Act of 1933, as amended (the “Securities Act”). Parent will, within 30
days after the consummation of the transactions contemplated by the Merger Agreement, file with the SEC a registration statement
registering the resale of such shares of Parent Class A common stock and will use its commercially reasonable efforts to have
such registration statement declared effective as soon as practicable after the filing thereof. A copy of the Subscription Agreement,
in substantially the same form as entered into with such investors, is attached hereto as Exhibit 10.1, and is incorporated herein
by reference, and the foregoing description of the Private Placement is qualified in its entirety by reference thereto.
Support
Agreement
Concurrently
with the execution of the Merger Agreement, Parent and SOC Holdings LLC (the “Written Consent Party”), which
holds (a) at least a majority of the outstanding voting power of the Company’s common stock and preferred stock (voting
as a single class and on an as-converted basis) and (b) at least a majority of the shares of the Company’s Series H Preferred
Stock, entered into a Support Agreement (the “Support Agreement”), pursuant to which, among other
things, the Written Consent Party agreed to support the transactions contemplated by the Merger Agreement, including agreeing
to execute a written consent constituting the requisite Company stockholder approval within three (3) days of the Registration
Statement becoming effective. The Support Agreement will terminate upon the earlier to occur of: (i) the effective time of the
Mergers, (ii) the date of the termination of the Merger Agreement in accordance with its terms, and (iii) the effective date of
a written agreement of Parent and the Written Consent Party terminating the Support Agreement. The Support Agreement is attached
as Exhibit 10.2 hereto and is incorporated herein by reference, and the foregoing description of the Support Agreement is qualified
in its entirety by reference thereto.
Sponsor
Agreement
Concurrently
with the execution of the Merger Agreement, HCMC Sponsor LLC (“Sponsor”) and Parent entered into a letter agreement
(the “Sponsor Agreement”), pursuant to which, among other things, Sponsor agreed to (a) waive certain anti-dilution
rights set forth in Section 4.3(b)(ii) of Parent’s Charter that may result from the transactions contemplated by the Merger
Agreement, (b) surrender to Parent, immediately prior to the consummation of the Mergers and for no consideration, up to 1,875,000
shares of Parent’s Class B common stock, par value $0.0001 per share, determined based on a sliding scale of Parent’s
available cash at the closing of the transactions between $250,000,000 and $285,000,000, (c) subject to potential forfeiture 1,875,000
shares of Parent Class A common stock in accordance with the terms of the Merger Agreement, such that such shares will be forfeited
if certain post-closing share price targets are not satisfied prior to the seventh (7th) anniversary of the closing and (d) support
the transactions contemplated by the Merger Agreement, including agreeing to vote in favor of the adoption of the Merger Agreement
at the Special Meeting (as defined below). The Sponsor Agreement is attached as Exhibit 10.3 hereto and is incorporated herein
by reference, and the foregoing description of the Sponsor Agreement is qualified in its entirety by reference thereto.
Amended
and Restated Registration Rights Agreement
At
the consummation of the Mergers, Parent, Sponsor and the Written Consent Party will enter into an Amended and Restated Registration
Rights Agreement (the “Amended and Restated Registration Rights Agreement”) in respect of the shares of Parent
Class A common stock issued to Sponsor and the Written Consent Party in connection with the transactions set forth above. Pursuant
to such agreement, such holders and their permitted transferees will be entitled to certain customary registration rights, including,
among other things, demand, shelf and piggy-back rights, subject to cut-back provisions. Pursuant to the Amended and Restated
Registration Rights Agreement, Sponsor will agree not to sell, transfer, pledge or otherwise dispose of shares of Parent Class
A common stock or other securities exercisable therefor for certain time periods specified therein.
Investor
Rights Agreement
At
the consummation of the Mergers, Parent and the Written Consent Party will enter into an Investor Rights Agreement (the “Investor
Rights Agreement”), pursuant to which, (a) for so long as the Written Consent Party holds at least fifty percent (50%)
of the outstanding shares of Parent Class A common stock, it will have the right to designate up to five (5) directors for election
to the Board, and the size of the Board will be set at nine (9) directors, (b) for so long as the Written Consent Party holds
at least thirty-five percent (35%) but less than fifty percent (50%) of the outstanding shares of Parent Class A common stock,
it will have the right to designate up to three (3) directors for election to the Board, and the size of the Board will be set
at nine (9) directors, (c) for so long as the Written Consent Party holds at least fifteen percent (15%) but less than thirty-five
percent (35%) of the outstanding shares of Parent Class A common stock, it will have the right to designate up to two (2) directors
for election to the Board, and the size of the Board will be set at seven (7) directors and (d) for so long as the Written Consent
Party holds at least five percent (5%) but less than fifteen percent (15%) of the outstanding shares of Parent Class A common
stock, it will have the right to designate one (1) director for election to the Board, and the size of the Board will be set at
seven (7) directors. Pursuant to the Investor Rights Agreement, Parent will take all necessary and desirable actions within its
control such that, as of the effective time of the consummation of the Mergers and from time to time, the size of the Board will
be set at either seven (7) directors or nine (9) directors (in accordance with the terms above), unless the Board takes authorized
action to increase the size of the Board and the Written Consent Party approves such action.