Item 1.01.
Entry into a Material Definitive Agreement.
Overview
On February
22, 2022, Nukkleus Inc., a Delaware corporation (“Nukkleus” or the “Company”), entered into an Agreement
and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”),
by and among Nukkleus and Brilliant Acquisition Corporation, a British Virgin Islands company (“Brilliant”). Upon consummation
of the transactions contemplated by the Merger Agreement, Nukkleus would become the Nasdaq-listed parent company of Brilliant (“PubCo”),
with former Nukkleus stockholders owning approximately 66% and former Brilliant shareholders owning approximately 34% of the ordinary
shares of PubCo issued and outstanding immediately after closing (the “PubCo Shares”), assuming no redemptions from
Brilliant’s trust account.
The
transactions contemplated by the Merger Agreement, are hereinafter referred to as the “Business Combination.” The
Merger Agreement and the transactions contemplated thereby have been approved by the boards of directors of each of Nukkleus and Brilliant.
The
Merger Agreement
The
Business Combination
The
Merger Agreement provides that, promptly following the signing of the Merger Agreement, Nukkleus will form a British Virgin Islands company
and wholly owned subsidiary of Nukkleus (“Merger Sub”), and cause Merger Sub to join the Merger Agreement by executing
a joinder to the Merger Agreement and to assume all of the rights and obligations of Merger Sub under the Merger Agreement. The Merger
Agreement further provides that, subject to satisfaction of certain conditions discussed below, Merger Sub will merge with and into Brilliant
(the “Merger”), and each ordinary share of Merger Sub will be converted into one share of the surviving corporation,
and the shares of Brilliant issued and outstanding immediately prior to the effective time of the Business Combination will be converted
into the right to receive the Applicable Per Share Merger Consideration (as defined in the Merger Agreement). Additionally, the Company
will register certain of its securities for public trading on the Nasdaq Stock Market.
The
Merger Agreement also contemplates that, prior to the effective time of the Merger, the Nukkleus board of directors will submit for approval
by the Nukkleus shareholders an amendment to Nukkleus’s certificate of incorporation to authorize the board of directors to effect
a reverse stock split of all outstanding shares of Nukkleus at a reverse stock split ratio such that 14.0 million shares of Nukkleus common
stock will be outstanding immediately prior to the effective time (currently anticipated to be 1:26.227) or such other ratio as may be
agreed between Nukkleus and Brilliant. Nukkleus has 352,024,371 shares of common stock issued and outstanding, and an additional 15,151,515
shares of common stock are expected to be issued in March 2022 in connection with a Purchase and Sale Agreement, dated as of December
30, 2021, between the Company and the shareholder of Digiclear Ltd. disclosed in the Company’s Quarterly Report on Form 10-Q for
the period ended December 31, 2021, filed with the SEC on February 14, 2022.
The
Business Combination is expected to close in the second quarter of 2022, following the receipt of the required approvals by Nukkleus’s
and Brilliant’s shareholders, respectively, and the fulfillment or waiver of other closing conditions described below.
Business
Combination Consideration
In
accordance with the terms and subject to the conditions of the Merger Agreement,
| ● | each
ordinary share of Brilliant issued and outstanding immediately prior to the time the Merger
becomes effective (the “Effective Time”) (other than Dissenting Shares
(as defined in the Merger Agreement) and shares owned by Brilliant or any of its controlled
entities, which will be cancelled for no consideration) will be converted into the right
to receive the Applicable Per Share Merger Consideration; |
| ● | each
share of ordinary share of Merger Sub issued and outstanding immediately prior to the Effective
Time will be converted into one share of common stock, par value $0.0001 per share, of the
surviving corporation of the Merger; and |
| ● | each
Dissenting Share of Brilliant shall be entitled to rely on such rights as are granted by
the British Virgin Islands Business Companies Act, subject to certain conditions set forth
in the Merger Agreement and in accordance with applicable law. |
Governance
Immediately
after the closing of the Business Combination and Nukkleus’s registration with Nasdaq, PubCo’s board of directors will initially
include Emil Assentato, Jamal Khurshid, Craig Marshak, and such other directors as Nukkleus shall determine in accordance with applicable
law and regulations.
Representations
and Warranties; Covenants
The
Merger Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions
of this type. In addition, Brilliant has agreed to adopt an equity incentive plan effective at the closing of the Business Combination,
substantially in the form attached to the Merger Agreement.
Conditions
to Each Party’s Obligations
The
obligation of Nukkleus, Brilliant, and Merger Sub to consummate the Business Combination is subject to the fulfillment or waiver of certain
closing conditions, including, but not limited to, (i) the approval of Nukkleus’s stockholders, (ii) the approval of Brilliant’s
shareholders, (iii) Nukkleus’s Registration Statement (as defined in the Merger Agreement) becoming effective, (iv) the approval
of Nukkleus’s listing application for the PubCo Shares, and (v) certain other closing conditions as set forth in the Merger
Agreement.
In
addition, the obligation of Nukkleus to consummate the Business Combination is subject to the fulfillment or waiver of other closing
conditions, including, but not limited to, (i) the representations and warranties of Brilliant being true and correct to the standards
applicable to such representations and warranties and each of the covenants of Brilliant having been performed or complied with in all
material respects, (ii) no Material Adverse Effect (as defined in the Merger Agreement) having occurred, (iii) Nukkleus having a gross
amount of no less than $10,000,000 in cash and cash equivalents available to it immediately after the Closing, including the proceeds
from the Trust Fund (prior to the payment of Transaction Costs), (iv) Brilliant remaining listed on Nasdaq, and (v) Brilliant’s
unpaid debt, excluding certain transactions costs, not exceeding a threshold specified in the Merger Agreement.
The
obligation of Brilliant to consummate the Business Combination is also subject to the fulfillment or waiver of other closing conditions,
including, but not limited to, (i) the representations and warranties of Nukkleus being true and correct to the standards applicable
to such representations and warranties and each of the covenants of Nukkleus having been performed or complied with in all material respects,
(ii) no Material Adverse Effect (as defined in the Merger Agreement) having occurred, and (iii) transactions costs of the Business Combination
not exceeding certain thresholds set forth in the Merger Agreement.
Termination
The
Merger Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Business Combination,
including, but not limited to, (i) by either Nukkleus or Brilliant if the Business Combination is not consummated by March 23, 2022,
or, in the event that the life of Brilliant is extended beyond such date in accordance with Brilliant’s organizational documents,
September 23, 2022, (ii) by Brilliant if there is a material breach of the representations and warranties of Nukkleus, subject to a fifteen
(15) day cure period following notice of such breach, and (iii) by Nukkleus upon a material breach of the representations and warranties
of Brilliant, subject to a fifteen (15) day cure period following notice of such breach.
A
copy of the Merger Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1, and is incorporated herein by reference,
and the foregoing description of the Merger Agreement is qualified in its entirety by reference thereto. The Merger Agreement contains
representations, warranties and covenants that the respective parties made to each other as of the date of the Merger 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 and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating
such agreement. The representations, warranties and covenants in the Merger Agreement are also modified in important part by the underlying
disclosure schedules which are not filed publicly and which are subject to a contractual standard of materiality different from that
generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters
as facts. Nukkleus does not believe that these schedules contain information that is material to an investment decision.
Stockholder
Support Agreements
Concurrently
with the execution of the Merger Agreement, certain holders of Nukkleus common stock entered into a Support Agreement with Brilliant
(each, a “Nukkleus Stockholder Support Agreement”), pursuant to which each such holder agreed, among other things,
(a) to vote all of the shares of Nukkleus beneficially owned by such holder (which vote may be done by executing a written consent)
in favor of the adoption of the Merger Agreement and the approval of the Business Combination, and (b) not to engage in any transactions
involving the securities of Brilliant prior to the Closing.
The
foregoing description of the Nukkleus Stockholder Support Agreement is subject to and qualified in its entirety by reference to the full
text of the Nukkleus Stockholder Support Agreement, a copy of which is included as Exhibit 10.1 hereto, and the terms of which are
incorporated herein by reference.
Lock-Up
Agreements
At
the effective time of the Business Combination, Nukkleus and certain shareholders of Brilliant will enter into lock-up agreements (the
“Lock-Up Agreements”), pursuant to which, among other things, the shareholders will agree to be subject, for a one-year
period, to restrictions on the transfer of the PubCo Shares they receive in the Business Combination.
The
foregoing descriptions of the Lock-Up Agreements are subject to and qualified in its entirety by reference to the full text of the forms
of Lock-Up Agreements, a form of which is included as Exhibit 10.3, and the terms of which are incorporated herein by reference.
Registration
Rights Agreement
At
the effective time of the Business Combination, Nukkleus and certain shareholders of Brilliant will enter into a registration rights
agreement (the “Registration Rights Agreement”), pursuant to which, among other things, Nukkleus will grant to such
shareholders certain customary registration rights with respect to the PubCo Shares they receive in the Business Combination.
The
foregoing description of the Registration Rights Agreements is subject to and qualified in its entirety by reference to the full text
of the forms of Registration Rights Agreements, a form of which is included as Exhibit 10.2, and the terms of which are incorporated
herein by reference.