Item
1.01 Entry into a Material Definitive Agreement
On
January 11, 2022, LifeMD, Inc., a Delaware corporation (the “Company”), entered into a Stock Purchase Agreement (the “Purchase
Agreement”), by and among the Company, Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”)
and the stockholders of Cleared identified in the Purchase Agreement (the “Sellers”).
Pursuant
to the Purchase Agreement, the Company agreed to acquire all of the issued and outstanding equity securities of Cleared (the “Acquisition”)
in exchange for (i) a payment equal to $460,000 to be paid at the closing of the Acquisition, (ii) a payment equal to $1,730,000 to be
paid on or before the one year anniversary of the closing of the Acquisition, and (iii) a payment equal to $1,730,000 to be paid on or
before the two year anniversary following the closing of the Acquisition (all payments, the “Acquisition Consideration”).
In addition, pursuant to the Purchase Agreement, the Company agreed to pay to the Sellers certain “earn-out” payments, contingent
upon the achievement of certain milestones through December 31, 2025 if and when Cleared produces specified amounts of revenue (the “Earn
Out Consideration”). The maximum amount of Earn Out Consideration that Cleared can earn under the Purchase Agreement is $72,800,000
upon producing $150,000,000 of revenue within a trailing period of twelve consecutive months. The Acquisition Consideration and Earn
Out Consideration is payable, as determined by the Company in its sole discretion, by (i) cash, (ii) common stock of the Company based
upon the volume weighted average price of the common stock of the Company on the Nasdaq Capital Market (or another stock exchange, if
the common stock of the Company is no longer listed on the Nasdaq Capital Market) for the 20 trading days immediately preceding the fifth
day before the date of payment, or (iii) any combination of cash and common stock of the Company (valued in accordance with (ii) above).
Cleared
is a privately held, telehealth company that provides personalized treatments for allergy, asthma, and immunology to patients across
the United States. Cleared is based in New York City, New York.
The
Purchase Agreement contains customary representations, warranties and covenants by each of the parties, and contains indemnification
provisions under which the parties have agreed, subject to certain limitations, to indemnify each other against certain liabilities.
On the closing date of the Acquisition, the Company will deposit a portion of the Acquisition Consideration with an escrow agent to be
held in escrow. The escrow amount may be used to account for indemnification claims and any post-closing adjustment of the Acquisition
Consideration.
The
closing of the Acquisition is subject to customary conditions, including, among others, (i) the absence of any governmental order that
restrains, prevents or materially alters the transactions contemplated by the Purchase Agreement, (ii) the accuracy of the parties’
representations and warranties contained in the Purchase Agreement (subject to certain qualifications), (iii) the parties’ material
compliance with the covenants and agreements in the Purchase Agreement, and (iv) the absence of a material adverse effect on the Company
or Cleared. The Company expects the Acquisition to close in the first quarter of 2022.
The
Purchase Agreement also contains customary pre-closing covenants, including the obligation of Cleared to conduct its business in all
material respects in the ordinary course and to refrain from taking certain specified actions without the consent of the Company.
The
Purchase Agreement is terminable at any time prior to closing by mutual consent of the parties and in the following limited circumstances:
(i) by the Company if there is an uncured (within 10 days of written notice) breach by Sellers that would result in the failure of a
closing condition; (ii) by Sellers if there is an uncured (within 10 days of written notice) material breach by the Company that would
result in the failure of a closing condition; (iii) by the Company, if the Sellers or Cleared have not satisfied their respective closing
conditions as of January 31, 2022 or if satisfaction of such a condition becomes impossible and the Company has not waived such condition
on or before such date; or (iv) by Sellers, if the Company has not satisfied its closing conditions as of January 31, 2022 or if satisfaction
of such a condition becomes impossible and Sellers or Cleared has not waived such condition on or before such date.
The
foregoing description of the Purchase Agreement and the transactions contemplated therein does not purport to be complete and is qualified
in its entirety by reference to the complete text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on
Form 8-K and incorporated herein by reference.