Item 1.01 |
Entry Into A Material Definitive Agreement. |
Business Combination Agreement
On December 14, 2022, DarkPulse, Inc., a Delaware
corporation (the “Company”), entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise
modified from time to time, the “BCA”), by, between, and among the Company, Global System Dynamics, Inc., a Delaware
corporation (“GSD”), and Zilla Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of GSD (the
“Merger Sub”).
The BCA and the transactions contemplated thereby
were approved by the board of directors of each of the Company, GSD, and the Merger Sub.
The Business Combination
The BCA provides, among other things, that Merger
Sub will merge with and into the Company, with the Company as the surviving company in the merger and, after giving effect to such merger,
the Company shall be a wholly-owned subsidiary of GSD (the “Merger”). GSD will continue to be named “Global System
Dynamics, Inc.” and the combined entity will trade under the symbol “DARK.” The Merger and the other transactions contemplated
by the BCA are hereinafter referred to as the “Business Combination”. Other capitalized terms used, but not defined, herein,
shall have the respective meanings given to such terms in the BCA.
In accordance with the terms
and subject to the conditions of the BCA, at the Effective Time, among other things: (i) each
GSD Class A Share and each GSD Class B Share that is issued and outstanding immediately prior to the Merger will become one share of
common stock, par value $0.0001 per share, of GSD; (ii) by virtue of the Merger and without any action on the part of any Party or any
other Person, each Company Share (other than the Company Shares cancelled and extinguished pursuant to Section 2.1(a)(viii) of the BCA)
issued and outstanding as of immediately prior to the Effective Time shall be automatically canceled and extinguished and converted into
the right to receive that number of GSD Class A Shares equal to the Merger Consideration; provided, however, that any Company Shares
that are Restricted Shares shall be converted into restricted GSD Class A Shares, subject to the same vesting, transfer and other restrictions
as the applicable Restricted Shares; (iii) by virtue of the Merger and without any action on the part of any Party or any other Person,
each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically cancelled
and extinguished and converted into one share of common stock, par value $0.0001, of the Company; (vi) Dennis O’Leary, Joseph Catalino,
George Pappas, Geoff Mullins, Wayne Bale and John Bartrum shall become the directors of GSD, Dennis O’Leary shall become the Chief
Executive Officer of GSD and of the Surviving Company, and J. Richard Iler shall become the Chief Financial Officer of GSD, each to hold
office in accordance with the Governing Documents of GSD until such director’s or officer’s successor is duly elected or
appointed and qualified, or until the earlier of their death, resignation or removal; (v) by virtue of the Merger and without any action
on the part of any Party or any other Person, each Company Share held immediately prior to the Effective Time by the Company as treasury
stock shall be automatically canceled and extinguished, and no consideration shall be paid with respect thereto.
The Business Combination is expected to close
in the first calendar quarter of 2023, following the receipt of the required approval by the stockholders of the Company and GSD, approval
by the Nasdaq Stock Market (“Nasdaq”) of GSD’s initial listing application filed in connection with the Business
Combination, and the fulfillment of other customary closing conditions.
Representations and Warranties; Covenants
The parties to the BCA have agreed to customary
representations and warranties for transactions of this type. In addition, the parties to the BCA agreed to be bound by certain customary
covenants for transactions of this type, including, among others, covenants with respect to the conduct of the Company and its subsidiaries
during the period between execution of the BCA and the Closing. Each of the parties to the BCA has agreed to use its reasonable best efforts
to cause all actions and things necessary to consummate and expeditiously implement the Business Combination.
Conditions to Each Party’s Obligations
Under the BCA, the obligations of the parties
to consummate the Merger are subject to the satisfaction or waiver of certain customary closing conditions of the respective parties,
including, without limitation: (i) the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and the rules and regulations promulgated thereunder relating to the Business Combination having expired or been terminated and any other
required regulatory approvals applicable to the transactions contemplated by the BCA having been obtained and remaining in full force
and effect; (ii) all the Company Preferred Stock being converted to Company Common Stock prior to the Effective Time; (iii) no order
or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing
the consummation of the transactions contemplated by the Business Combination being in effect; (iv) the registration statement on Form
S-4 containing the joint proxy statement/prospectus to be filed by the Company relating to the BCA and the Merger (the “Registration
Statement”) becoming effective in accordance with the provisions of the Securities Act of 1933, as amended (the “Securities
Act”), no stop order being issued by Securities and Exchange Commission (the “SEC”) and remaining in effect
with respect to the Registration Statement, and no proceeding seeking such a stop order being threatened or initiated by the SEC and
remaining pending; (v) GSD’s initial listing application with Nasdaq in connection with the Business Combination having been approved;
(vi) GSD’s Board consisting of the number of directors, and comprising the individuals, determined pursuant to the BCA; (vii) the
approval and adoption of the BCA and the transactions contemplated thereby by the requisite vote of the Company’s stockholders
(the “Required Company Stockholder Consent”); (viii) the approval and adoption of the BCA and the transactions contemplated
thereby by the requisite vote of GSD’s stockholders; (ix) after giving effect to the transactions
contemplated (including the PIPE Financing), GSD having at least $5,000,001 of net tangible assets (as determined in accordance with
Rule 3a51-1(g)(1) of the Exchange Act of 1934, as amended (the “Exchange Act”)) immediately after the Effective Time;
(x) the absence of a Company Material Adverse Effect since the date of the BCA that is continuing, and (xi) the absence of a GSD
Material Adverse Effect since the date of the BCA that is continuing.
Termination
The BCA may be terminated under certain customary
and limited circumstances at any time prior to the Closing, including, without limitation, (i) by the mutual written consent of GSD and
the Company; (ii) by GSD, subject to certain exceptions, if any of the representations or warranties made by the Company are not true
and correct or if the Company fails to perform any of its covenants or agreements under the BCA (including an obligation to consummate
the Closing) such that certain conditions to the obligations of GSD could not be satisfied and the breach (or breaches) of such representations
or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier
of (A) thirty (30) days after written notice thereof, and (B) August 9, 2023 (the “Termination Date”); (iii) by the
Company, subject to certain exceptions, if any of the representations or warranties made by GSD are not true and correct or if GSD fails
to perform any of its covenants or agreements under the BCA (including an obligation to consummate the Closing) such that the condition
to the obligations of the Company could not be satisfied and the breach (or breaches) of such representations or warranties or failure
(or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (A) thirty (30) days
after written notice thereof, and (B) the Termination Date; (iv) by either GSD or the Company, if the Closing does not occur on or prior
to the Termination Date, unless the breach of any covenants or obligations under the BCA by the party seeking to terminate proximately
caused the failure to consummate the transactions contemplated by the BCA; (v) by either GSD or the Company, if (A) any governmental entity
shall have issued an order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated
by the BCA and such order or other action shall have become final and non-appealable; or (B) if the required Company or GSD stockholder
consent is not obtained; (vi) by GSD, if (A) the Company does not deliver, or cause to be delivered to GSD a Transaction Support Agreement
duly executed by certain Company stockholders or (B) the Company stockholders meeting has been held, has concluded, the Company stockholders
have duly voted, and the Company stockholder approval was not obtained; (vii) by the Company, should GSD not have timely taken such actions
as are reasonably necessary to extend the period of time for it to complete an initial business combination for an additional period of
six months from February 9, 2023; provided, that it shall be the obligation of the Company to timely make the deposit into the Trust Account
in connection with such extension, and the Company shall not have a right to terminate the BCA as a result of the Company’s failure
to make such deposit; (ix) by GSD should the Company not deposit into the Trust Account in a timely manner the funds necessary to extend
the period for GSD to complete an initial business combination for an additional period of six months from February 9, 2023, in accordance
with, and as required pursuant to, the BCA; and (x) by GSD should: (A) Nasdaq not approve the initial listing application for the combined
company with Nasdaq in connection with the Business Combination; (B) the combined company not have satisfied all applicable initial listing
requirements of Nasdaq; or (C) the common stock of the combined company not have been approved for listing on Nasdaq prior to the Closing
Date.
In the event of the termination of this BCA, the
BCA will become void (and there will be no Liability or obligation on the part of the Parties and their respective Non-Party Affiliates)
with the exception of Section 5.3(a), this Section 7.2, Article VIII and Article I (to the extent related
to the termination), each of which will survive such termination and remain valid and binding obligations of the Parties.
A copy of the BCA has been filed as Exhibit 2.1
hereto (the terms of which are incorporated herein by reference) and the foregoing description of the BCA is qualified in its entirety
by reference thereto.
The BCA contains representations, warranties and
covenants that the respective parties made to each other as of the date of the BCA 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 BCA 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. The Company does not believe that these
schedules contain information that is material to an investment decision.
The Company Stockholder Transaction Support Agreement
Concurrently with, or with respect to a certain
stockholder holding all of the shares of Series A Preferred Stock of the Company, within a specified time after the signing of the BCA,
the “Company Stockholder” listed on Schedule I attached to the BCA (collectively, the “Supporting Company
Stockholder”) shall duly execute and deliver to GSD a transaction support agreement (the “The Company Stockholder Transaction
Support Agreement”), pursuant to which, among other things, such Supporting Company Stockholder will agree to, support and vote
in favor of the BCA, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated thereby (including
the Merger).
The foregoing description of the Company Stockholder
Transaction Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Company
Stockholder Transaction Support Agreement, a form of which is attached as Exhibit B (the terms of which are incorporated herein
by reference) to the BCA.