UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
On November 29, 2021, Salona Global Medical Device Corporation (the "Registrant") and certain of its affiliates ("Affiliates", and together with the Registrant, the "Company") entered into a Contribution Agreement (the "Contribution Agreement") with ALG-Health LLC, an Ohio limited liability company ("ALG"), and Adam Harmon ("Harmon")"), ALG's sole member and manager pursuant to which: (i) the Company contributed $10,000 to ALG Health Plus, LLC, a newly-formed manager-managed Delaware limited liability company ("AHP") controlled by the Company in exchange for 10,000 Class A Units of membership interests in AHP; and (ii) ALG and Harmon contributed to AHP exclusive rights to sell to certain customers and related sales orders and supply agreements in exchange for 1,000 Class B Units of membership interest in AHP and 200,000 Class C Units of membership interest in AHP issued to Harmon.
The terms of the Class A Units, the Class B Units and Class C Units (collectively the "Units") are set forth in the Limited Liability Company Agreement of AHP dated November 29, 2021 between the Company and Harmon (the "LLC Agreement"). The Company, as the holder of the Class A Units, has the sole right to receive allocations and distributions from AHP, and the sole right to vote. The Class B Units and Class C Units are non-voting and receive no allocations or distributions from AHP. The Manager of AHP is the Company. The LLC Agreement further provides that, subject to certain call rights held by the Company, the Class B Units and the Class C Units are exchangeable into Class "A" non-voting common shares of the Company (the "Class A Shares") as follows:
(i) If AHP generates revenue of $1,000,000 during the quarter ended February 28, 2022, commencing November 29, 2022, the Class B Units become exchangeable for 1,000,000 Class A Shares of the Registrant.
(ii) For the quarter ended February 28, 2022, and each of the quarterly periods thereafter through February 28, 2024, commencing 15 days after the end of such quarter, the Class C Units become exchangeable for 100 Class A Shares for each $50.00 of EBITDA generated by AHP during such quarterly period.
Pursuant to the terms of that certain Contribution and Exchange Agreement dated November 29, 2021 between Harmon and the Company (the "Exchange Agreement"), the Class A Shares are convertible into shares of the Registrant's Common Shares which are listed on the TSX Venture Exchange (the "Listed Shares") on a one-for-one basis. The Class A Shares have the same attributes as the Listed Shares, provided, however that they do not carry the right to vote, and are not convertible to the extent that it would result in a holder holding more than 9.9% of the Listed Shares. Furthermore, each of the holders of the Class B Units and the Class C Units is restricted from holding more than 500,000 Listed Shares at any one time, and the maximum number of Listed Shares that are issuable upon conversion of the Class A shares issued in exchange for the Class B Units and the Class C Units is 21,000,000 Listed Shares.
The Contribution Agreement and the agreements entered in connection therewith (the "Agreements") contain customary representations, warranties, covenants, and indemnification provisions of the parties. The foregoing description of the Contribution Agreement, the LLC Agreement and the Exchange Agreement does not purport to be complete, is solely intended as a summary of the material terms of the Agreements and qualified in its entirety by reference to the full text of the Contribution Agreement and the other Agreements, which are attached herewith as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information in Item 1.01 of this Current Report on Form 8-K relating to the issuance of securities which may result in the Registrant issuing the Listed Shares is incorporated by reference into this Item 3.02.
Item 7.01 Regulation FD Disclosure.
On November 30, 2021, the Registrant issued a press release announcing the matters described in Item 1.01 of this Current Report on Form 8-K. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K (and is incorporated by reference herein).
The information in this Item 7.01, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of Section 18, (and shall not be deemed to be incorporated by reference into the filings of the Registrant under the Securities Act of 1933 or the Exchange Act), except as shall be expressly set forth by specific reference in any such filing. This Current Report will not be deemed an admission as to the materiality of any information contained in this Item 7.01, including Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
* Certain schedules and exhibits to this exhibit have been omitted pursuant to Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that the Registrant may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| SALONA GLOBAL MEDICAL DEVICE CORPORATION | ||
| Date: December 3, 2021 | By: | /s/ Leslie Cross |
| Name: Leslie Cross | ||
| Title: Chairman of the Board and Interim Chief Executive Officer | ||
EXHIBIT 10.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement"), is dated as of November 29, 2021 (the "Effective Date") by and between INSPIRA FINANCIAL COMPANY, a corporation incorporated under the laws of the state of Washington ("Inspira"), PAN NOVUS HOSPITAL SALES GROUP, LLC, a Delaware limited liability company ("Pan Novus"), ALG Health Plus, LLC, a Delaware limited liability company (the "Company" and together with Inspira and Pan Novus, the "Inspira Parties") on the one hand, and ALG-HEALTH LLC, an Ohio limited liability company ("ALG"), and ADAM HARMON ("Harmon" and together with ALG the "ALG Parties") on the other hand. The Inspira Parties and the ALG Parties are sometimes each respectively referred to herein as a "Party" and sometimes collectively referred to herein as the "Parties".
Capitalized terms not otherwise defined in this Agreement shall have the respective meanings specified in article II .
RECITALS
A. ALG is solely engaged in the ALG Business.
B. The Parties desire to form the Company and jointly engage in causing the Company to distribute certain of the Products to Customers.
NOW, THEREFORE, in consideration of the premises, agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the mutual representations and warranties contained herein, the parties hereto agree as follows:
ARTICLE I - RECITALS; DEFINITIONS
1.1 Recitals. The above Recitals are true and correct and are incorporated by reference into this Agreement.
1.2 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
"Acquired Assets" has the meaning set forth in Section 3.1(b).
"Affiliate" means with respect to any specified Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.
"Agreement" means this Agreement (including all Exhibits and Schedules hereto) as amended, supplemented or modified and in effect from time to time.
"ALG Business" means the manufacturing, marketing, sale, and distribution of the Products to the Customers.
"Business Day" means any day that is not a Saturday, a Sunday or other day on which federal banks are required or authorized by law to be closed.
"Company" means ALG Health Plus, LLC, a Delaware limited liability company.
"Customer" means any current and past Person who has purchased any of the Products from ALG including those Customers listed on the Current Customer List.
"Current Customer List" has the meaning set forth in Section 4.9.
"Enforceable" means, with respect to any contract or other agreement, that such contract or other agreement is the legal, valid, and binding obligation of the Person in question, enforceable against such Person in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other Legal Requirements affecting creditors' rights generally and general principles of equity (whether considered in a proceeding at law or in equity).
"Environmental Laws" means any and all past, present and/or future Laws relating to health, safety or pollution or protection of the environment, including, without limitation, those relating to emissions, discharges, spills or other Releases or threatened Releases of Hazardous Materials into or impacting the environment or natural resources (including, without limitation, ambient air, surface water, groundwater or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, recycling, storage, disposal, transport, sale, offer for sale, distribution or handling of Hazardous Materials, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and the Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq., any amendments or successor statutes to any of the foregoing, and the rules, regulation, permits orders and decrees implementing the same and all analogous state and local laws, rules, regulations, permits, orders and decrees and common law, including, without limitation, principles of nuisance, negligence, trespass and strict liability.
"Exchange Agreement" means that certain Contribution and Exchange Agreement among the Parent, ALG and Harmon attached hereto and incorporated by reference hereby as Exhibit B.
"Exclusive Supply Agreement" means that certain agreement between ALG and the Company regarding the supply of the Products, attached hereto and incorporated by reference hereby as Exhibit C.
"Family" means, with respect to an individual, (i) the individual, (ii) the individual's spouse, (iii) any other natural Person who is related to the individual or the individual's spouse within the second degree and (iv) any other natural Person who resides with such individual.
"Governmental Authority" means any foreign, federal, state, local or other governmental authority or regulatory body.
"Governmental Order" means any order, writ, subpoena, judgment, injunction, decree, stipulation, determination or award entered by or with any Regulatory Authority.
"Initial Operating Capital" has the meaning set forth in Section 3.1(a).
"Knowledge" when used in respect of any Person is determined as follows: (i) an individual is deemed to have "Knowledge" of a particular fact or other matter if that individual is actually aware of that fact or matter; and (ii) a Person other than an individual is deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving or who has at any time served as a director, manager, officer or partner of that Person or owns an equity interest in that Person has, or at any time had, Knowledge of that fact or other matter (as set forth above).
"Legal Requirements" means all statutes, laws, rules, codes, ordinances, regulations, orders, judgments, decrees, and Permits of any Regulatory Authority.
"Liability" means any Indebtedness or other liability or obligation, whether accrued or fixed, absolute or contingent, matured or unmatured, known or unknown, or determined or determinable.
"Lien" means any lien (including the lien of any mortgage or deed of trust, any mechanic's or materialmen's liens and any judgment liens), pledge, hypothecation, security interest, encumbrance, lease, sublease, license, occupancy agreement, adverse claim or interest, easement, right-of-way, covenant, encroachment, burden, option, lien, right of first refusal or other similar restriction.
"LLC Agreement" has the meaning set forth in Section 2.2.
"Material Adverse Effect" means any change or effect on: (a) such party or its assets that is materially adverse to the condition (financial or otherwise), results of operations or prospects of such party or such party's business' (b) the ability of such party to materially perform its obligations under any of the Transaction Documents; or (c) the validity or enforceability of the Transaction Documents against any party hereto.
"Members" means the members of the Company as set forth in the LLC Agreement.
"Permits" means all licenses, consents, approvals, permits, registrations, certificates and determinations of need and other authorizations, if any, issued by any Regulatory Authority that are required or convenient to operate a party's Business.
"Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity.
"Products" shall mean all items offered for sale and sold by ALG, including but not limited to those certain items listed on Schedule 1.1 to this Agreement, as well as items to be offered for sale and sold by the Company.
"Regulatory Authority" means all agencies, authorities, bodies, boards, commissions, institutions, instrumentalities, legislatures, and offices of any nature whatsoever for any governing unit or political subdivision, whether foreign, federal, state, county, district, municipal, city or otherwise and whether now or hereafter in existence.
"Related Person" means, with respect to (a) a particular individual: (1) each other member of such individual's Family; (2) any Person that is directly or indirectly controlled by any one or more members of such individual's Family; (3) any Person in which members of such individual's Family hold (individually or in the aggregate) a Material Interest; and (4) any Person with respect to which one or more members of such individual's Family serves as a director, officer, partner, executor or trustee (or in a similar capacity) and (b) a specified Person other than an individual: (1) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with, such specified Person; (2) any Person that holds a Material Interest in such specified Person; (3) each Person that serves as a director, officer, partner, executor or trustee of such specified Person (or in a similar capacity); (4) any Person in which such specified Person holds a Material Interest; and (4) any Person which respect to which such specified Person serves as a general partner or trustee (or in a similar capacity).
"Restrictive Covenant Agreement" means that certain agreement between the Company and each of the persons listed on Schedule 7.2(a)(iii) in the form attached hereto and incorporated by reference herein as Exhibit D.
"Supply Contracts" has the meaning set forth in Section 4.8.
"Tax" or "Taxes" means any and all taxes, levies, duties, tariffs, imposts and other similar charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Regulatory Authority, including taxes on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes for any Person, or imposed on such Person with respect to another Person by contract, as transferee or successor, under U.S. Treasury regulation Section 1.1502-6 or any similar provision of any Legal Requirement.
"Transaction Documents" means this Agreement and each other instrument, document, and agreement to be executed and delivered pursuant hereto.
1.3 Rules of Construction. Unless the context otherwise requires:
(a) References to Articles, Sections, Schedules and Exhibits shall refer to Articles, Sections, Schedules and Exhibits of this Agreement, unless otherwise specified.
(b) The words "herein," "hereof" and "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) References to a "party" means a party to this Agreement and include references to such party's successors and permitted assigns.
(d) References to a "third party" means a Person not party to this Agreement.
(e) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.
(f) All references to any time during a day refer to prevailing Eastern Time.
(g) An accounting term not otherwise defined has the meaning assigned to it in accordance with, or shall otherwise be interpreted by reference to, GAAP.
(h) References in the singular or to "him," "her," "it," "itself," or other like references and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular or the masculine, feminine or neuter reference, as the case may be.
(i) The word "or" is not exclusive.
(j) With respect to any matter or thing, the terms "including" or "includes" means "including but not limited to" such matter or thing.
(k) Any definition of or reference to any Legal Requirement, agreement, instrument or other document herein shall be construed as referring to such Legal Requirement, agreement, instrument or other document as from time to time amended, supplemented or otherwise modified; and any definition of or reference to any statute shall be construed as referring also to any rules and regulations promulgated thereunder.
ARTICLE II - FORMATION OF THE COMPANY
2.1 Certificate of Formation. The Certificate of Formation of the Company was filed on October 28, 2021.
2.2 Limited Liability Company Agreement. The Company shall be managed and operated in accordance with the terms of that certain Limited Liability Company Agreement of even date herewith attached hereto and incorporated by reference hereby as Exhibit A (the "LLC Agreement").
ARTICLE III - CONTRIBUTIONS OF THE PARTIES
3.1 Contributions of the Parties. Upon the terms and subject to the conditions set forth in this Agreement:
(a) On the Effective Date, in accordance with the LLC Agreement, Inspira shall contribute to the Company $10,000 for start-up costs, professional fees and initial operating expenses (the "Initial Operating Capital"); and
(b) On the Effective Date, in accordance with the LLC Agreement, ALG and/or Harmon shall contribute to the Company, all of its right, title and interest, legal and equitable, in and to the assets identified below, free and clear of all Liens (collectively, the "Acquired Assets"):
(i) the sole and exclusive right, title and interest in and to any and all Customers including, but not limited to those Persons listed on the Current Customer List;
(ii) all of ALG's right, title and interest in and to all customer purchase orders, customer accounts, customer contracts, bids and other rights to provide the Products to Customers, including, without limitation, the Supply Contracts; and
(iii) business files and records, including digitized records, relating to the Acquired Assets and/or the ALG Business, including, without limitation, all sales order files, systems order files, purchase order files, customer records and copies of all legal, accounting and tax records relating to the Acquired Assets and/or the ALG Business.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE ALG PARTIES
The ALG Parties, jointly and severally, represent and warrant to the Inspira Parties:
4.1 Existence and Good Standing. ALG is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Ohio, with the full limited liability company power and authority to own its property and to carry on its business all as and in the places where such properties are now owned or operated or such business is now being conducted.
4.2 Authority; Enforceability.
(a) Each of the ALG Parties has all requisite power to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and all other Transaction Documents executed or to be executed pursuant to this Agreement and the consummation of the transactions contemplated hereby and thereby, have been authorized by all necessary action. This Agreement and all other Transaction Documents executed by the ALG Parties have been, at the time of their respective execution and delivery, duly executed and delivered by each of the ALG Parties, as the case may be.
(b) This Agreement constitutes and, upon execution and delivery by the ALG Parties, each of the Transaction Documents executed by it, will constitute, a valid and legally binding obligation of each of the ALG Parties respectively, enforceable against it in accordance with their respective terms.
4.3 Capitalization. Harmon is the sole owner of the membership interests of ALG.
4.4 No Conflict or Violation. The execution and delivery by the ALG Parties of this Agreement and the consummation of the transactions contemplated hereby do not and will not: (a) conflict with or violate any order, judgment or decree of any Regulatory Authority or any Legal Requirement applicable to either of them; or (b) violate, conflict with or result in a breach of or constitute a default (or event that with the giving of notice or lapse of time or both, would become a default) under or give others any rights of termination, amendment, acceleration or cancellation of or result in the creation of any Lien on any of the assets or properties of any either of them pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or instrument to which either of them is a party or to which any of the Acquired Assets are subject or affected.
4.5 Consents and Approvals. Other than as set forth on Schedule 4.5, neither the execution nor delivery of this Agreement by any of the ALG Parties nor the consummation of the transactions contemplated hereby requires any consent, waiver, approval, license, authorization or Permit of or filing with or notification to, any Person.
4.6 Title to Assets. ALG has good and marketable title to all tangible and intangible personal property included in the Acquired Assets, free and clear of all Liens.
4.7 Absence of Litigation. There are no claims, actions, proceedings or investigations pending, or threatened against the Acquired Assets, the ALG Business or any of the ALG Parties, and in the past five (5) years there have been no claims, actions, proceedings or investigations against any of the ALG Parties, the ALG Business, or the Acquired Assets, and neither the ALG Parties nor any of the Acquired Assets are subject to any order, writ, judgment, injunction, decree, determination or award. The ALG Parties know of no basis for any action, proceeding or investigation by any Regulatory Authority relating to the Acquired Assets.
4.8 Supply Contracts. Set forth on Schedule 4.8 is a true, correct, and complete listing of any sales, distribution or similar agreement providing for the sale by ALG of the Products (each, a "Supply Contract"). ALG has delivered to the Company true and complete copies of all Supply Contracts and is not (and, to their Knowledge, no other party is) in breach of, in violation of or default under, any of the Supply Contracts.
4.9 Customers. Schedule 4.9 (the "Current Customer List") contains the name of each Customer as of the date hereof and certain other information for each Customer. As to the Customers set forth on Schedule 4.9 attached hereto, except as set forth on Schedule 4.9 attached hereto: (a) the ALG Parties are not engaged in any disputes with such Customers, except for minor returns, bill adjustments and similar disputes in the ordinary course of the ALG Business not exceeding $1,000 with respect to any single return, bill adjustment or similar dispute; and (b) there has not been any material adverse change, and, to the Knowledge of the ALG Parties, there are no facts which, in the ALG Parties' judgment, indicate that any material adverse change will occur, in the business relationship of ALG with any such Customer. As to the Customers set forth on Schedule 4.9 attached hereto, except as set forth on Schedule 4.9 attached hereto, the ALG Parties have not received any notice nor do the ALG Parties have any Knowledge that any such Customer: (i) has a present intent to terminate, fail to renew or seek any material adverse modification of its existing business arrangements with ALG; (ii) has ceased, or will cease, to purchase the Products of the ALG Business; (iii) has substantially reduced, or will substantially reduce, its purchase of Products of the ALG Business; (iv) has sought, or is seeking, to reduce the price it will pay for Products of the ALG Business, including in each case after the consummation of the transactions contemplated hereby; or (v) has a present intent to return Products to ALG, the value of which would be material to the ALG Business.
4.10 Compliance with Laws; Permits; Licenses.
(a) The ALG Parties are not, and have not been at any time in the past five (5) years, in violation of any Legal Requirement or Governmental Order applicable to the ALG Business.
(b) The ALG Parties hold all Permits that are required to be obtained to conduct its business or the ALG Business as contemplated to be conducted, and such Permits are valid and in full force and effect, and the ALG Parties are currently and have been during the last five (5) years, operating in compliance therewith. The ALG Parties have not received any notice of any violation of any Permits and to the Knowledge of the ALG Parties, there are no pending or threatened notices of violation or any event, occurrence or condition that exists or upon consummation of the transactions contemplated by this Agreement will exist that with the giving of notice or the lapse of time or both would give rise to a material default thereunder.
(c) There are no investigations, proceedings or sanctions pending or, to the Knowledge of the ALG Parties, threatened before any Regulatory Authority that seek to limit, restrict, suspend, revoke or terminate any Permits or to impose any other remedy with respect to such licensure, and to their Knowledge no grounds exist for such limitation, restriction, suspension, revocation or termination.
4.11 Environmental Matters. The ALG Business is, has at all times been conducted in compliance with all material respects with all applicable Environmental Laws, and the ALG Parties and the Acquired Assets are, and have at all times been, in compliance with all material respects with all applicable Environmental Laws. To the Knowledge of the ALG Parties, ALG has: (i) timely filed all reports required to be filed under any Environmental Laws; (ii) obtained all Governmental Permits required under any Environmental Laws, and is and has at all times been in compliance with such Governmental Permits; and (iii) generated and maintained all required data, documentation, and records under any Environmental Laws. Neither the ALG Parties nor any of their respective Affiliates nor to the Knowledge of any of the ALG Parties, any predecessor of either of them, has received any notice of an Environmental Claim, including, without limitation, any notice from any Governmental Authority or any other Person advising it of a violation of Environmental Laws with respect to the ALG Business or the Acquired Assets or that it is responsible for or potentially responsible for corrective action or investigation or response costs with respect to a Release, a threatened Release, or clean-up of Hazardous Materials with respect to the ALG Business or the Acquired Assets and neither the ALG Parties nor any Affiliate of the ALG Parties has any reason to believe that such notice may be forthcoming.
4.12 Financial Statements. No Material Adverse Change.
(a) Attached as Schedule 4.12(a) are unaudited financial statements of ALG as of and for the years ended December 31, 2020 and 2019, and for the nine-month period ended September 30, 2021 (the "Financial Statements"). The Financial Statements fairly present in all material respects the financial condition, results of operations, assets, liabilities, revenues and expenses of the ALG as of the dates and for the periods indicated. The information used in the preparation of the Financial Statements was derived from Seller's general ledger and has been recorded in accordance with accounting principles generally accepted in the United States (U.S. GAAP), consistently applied.
(b) Since September 30, 2021, the ALG Business has been conducted in the ordinary course, and there has not been any events, changes, developments, circumstances or occurrences that have resulted in, or could reasonably be expected to result in a Material Adverse Effect.
4.13 Governmental Authorizations. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Authority is required on the part of the ALG Parties or any of its respective Affiliates in connection with the execution, delivery and performance by them of this Agreement.
4.14 Books and Records. The books and records relating to ALG, and the Acquired Assets have been made available to the Inspira Parties and set forth in all respects all material transactions affecting the Acquired Assets, and such books and records are complete and correct and do not contain or reflect any material inaccuracies or discrepancies and have been properly kept and maintained in a manner consistent with sound business practices.
4.15 Brokers. No broker, finder or investment banker is entitled to any brokerage, finders' or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the ALG Parties.
4.16 Full Disclosure. No representation or warranty of the ALG Parties in this Agreement contains any untrue statement of material fact or omits or will omit to state a material fact that is necessary to make the statements contained herein and therein not misleading.
4.17 Solvency. Both immediately before and immediately after giving effect to the transactions contemplated by this Agreement: (i) the fair value of ALG's assets exceed its liabilities (including contingent liabilities); (ii) the present fair saleable value of ALG's assets are greater than the amount required to pay its probable liabilities on its existing debts (including contingent liabilities) as such debts become absolute and mature; (iii) ALG is able to pay its liabilities (including contingent liabilities) as they mature; (iv) ALG is "solvent" (within the meaning of applicable laws relating to fraudulent transfers) and would not have unreasonably small capital for the business in which it is engaged and in which it is proposed to be engaged following consummation of the transactions contemplated by this Agreement. ALG does not intend to incur, and ALG does not believe that it has incurred nor will incur as a result of the transactions contemplated by this Agreement, debts beyond ALG's ability to pay such debts as such debts mature.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE INSPIRA PARTIES
The Inspira Parties represent and warrant to the ALG Parties:
5.1 Organization. Inspira is a corporation, duly organized, validly existing and in good standing under the laws of the state of Washington, respectively, and have the requisite corporate power and authority to own or lease the properties and assets now owned or leased by it. Inspira ALG Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
5.2 Authority. Each of the Inspira Parties has the requisite power to enter into this Agreement and to consummate the Transactions contemplated hereby. The execution and delivery of this Agreement and all other Transaction Documents executed or to be executed by each of the Inspira Parties and the consummation by the Inspira Parties of the transactions contemplated hereby and thereby have been duly authorized. This Agreement and all other Transaction Documents executed or to be executed by the Inspira Parties have been duly executed and delivered by each of the Inspira Parties. This Agreement and each of the Transaction Documents executed or to be executed by the Inspira Parties constitute a valid and binding obligation of the Inspira Parties enforceable against the Inspira Parties in accordance with its terms.
5.3 No Conflict. The execution and delivery by the Inspira Parties of this Agreement and the consummation of the Transactions contemplated hereby do not and will not: (i) violate or conflict with any provision of their formation documents; (ii) conflict with or violate any order, judgment or decree of any Regulatory Authority or any Legal Requirement applicable to the Inspira Parties; or (iii) violate, conflict with or result in a breach of or constitute a default (or an event that with the giving of notice or lapse of time or both would become a default) under or give others any rights of termination, amendment, acceleration or cancellation of or result in the creation of any Lien on any of the assets or properties of the Inspira Parties pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or instrument to which Inspira is a party.
5.4 Brokers. No broker, finder or investment banker is entitled to any brokerage, finders' or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Inspira Parties.
ARTICLE VI - COVENANTS
6.1 Appointment of CEO. Harmon shall be appointed as the Chief Executive Officer of the Company, and Harmon hereby accepts such appointment, as of the Effective Date.
6.2 Confidentiality. Unless expressly consented to in writing by the other Party, no Party shall nor shall any such Party permit any of its Affiliates, agents, representatives and employees to, directly or indirectly, disclose to any other Person any trade secret, financial data, customer list, pricing or marketing policies or plans or other proprietary or confidential information relating to the other party, the Company or the Acquired Assets, except for such disclosures as may be required to comply with any Legal Requirement or Governmental Order. No Party hereto nor its Affiliates shall disclose to any third party the financial terms of this Agreement, except for disclosures to their respective advisors, representatives or lenders, each of whom shall agree to keep such information confidential, or disclosures as may be required to comply with any Legal Requirement or Governmental Order.
ARTICLE VII - CLOSING MATTERS
7.1 Closing. The closing of the transactions contemplated by this Agreement and the other Transaction Documents (the "Closing") shall take place at the offices of the Company and shall be effective on the date hereof or such other date as the Parties agree (the "Closing Date"). All transactions which are to take place at the Closing shall be considered to have taken place simultaneously. Title to, ownership of, control over and risk of loss of the Acquired Assets shall pass to the Company effective as of 12:01 a.m. on the Closing Date.
7.2 Closing Deliveries. At the Closing, the Parties shall make the following deliveries:
(a) The ALG Parties shall deliver or cause to be delivered to the Inspira Parties the following:
(i) The LLC Agreement executed by ALG and Harmon;
(ii) The Exchange Agreement executed by ALG and Harmon;
(iii) The Exclusive Supply Agreement executed by ALG;
(iv) The Restrictive Covenant Agreements executed by Harmon and each of the persons listed on Schedule 7.2(a)(iii);
(v) A Bill of Sale and Assignment executed by ALG;
(vi) A secretary's certificate attesting to the incumbency of the members and managers of ALG and certifying copies of ALG's organizational documents and resolutions of the members and managers of ALG authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and
(vii) such other documents as may be reasonably requested by the Company.
(b) The Inspira Parties shall deliver or cause to be delivered to ALG and Harmon the following:
(i) The LLC Agreement executed by Inspira;
(ii) The Exchange Agreement executed by Parent;
(iii) The Exclusive Supply Agreement executed by the Company;
(iv) The Restrictive Covenant Agreements, executed by the Company;
(v) The Initial Operating Capital in immediately available funds; and
(vi) such other documents as may be reasonably requested by the ALG Parties.
ARTICLE VIII - INDEMNIFICATION
8.1 Survival. All representations and warranties of the Parties contained in this Agreement shall survive the Closing for a period of two (2) years. Notwithstanding the first sentence of this Section 8.1 , any expiration of the survival period pursuant to such sentence shall not terminate or limit in any manner whatsoever any Damages any party has or may have for (i) fraud or (ii) knowing and intentional misrepresentations and knowing and intentional breaches of any provision of this Agreement. Notwithstanding the above provisions of this paragraph, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under Section 8.2 and shall survive the time at which it would otherwise terminate pursuant to the above provisions if notice of the inaccuracy or breach thereof giving rise to such right to indemnity shall have been given to the party against whom such indemnity may be sought prior to such time and then only with respect to the claim specified in such notice.
8.2 Indemnification.
(a) Subject to the provisions of this article VIII , the ALG Parties, jointly and severally, hereby indemnify the Inspira Parties (including their officers, managers, directors, employees, Related Persons agents and their respective successors and assigns) (collectively, the "Inspira Indemnified Persons") from and agree to hold the Inspira Indemnified Persons harmless against any and all losses, Liabilities, claims, damages and out-of-pocket expenses (including reasonable legal expenses and costs) ("Damages") that the Inspira Indemnified Persons or any one or more of them may suffer or incur insofar as such Damages arise out of or are based upon: (i) any Liabilities of the ALG Parties; (ii) the inaccuracy of any representation or warranty (or a third-party claim that, if valid, would constitute an inaccuracy of any representation or warranty) of the ALG Parties; or (iii) a breach of any covenant or agreement made or to be performed by the ALG Parties, provided that the Inspira Indemnified Persons shall give the ALG Parties written notice in respect of such claim for Damages ("Claim") and if any such Claim shall have been made in writing by the Inspira Indemnified Persons prior to the termination of the applicable indemnification obligation, such termination shall not affect the indemnification obligation in respect of the particular matter as to which such Claim was made. It is expressly understood and agreed that the limitations on indemnification set forth in this article VIII shall not apply to any claim arising out of or based on fraud, knowing and intentional misrepresentations or knowing and intentional breaches.
(b) Subject to the provisions of this article VIII , effective as of the Closing, the Inspira Parties hereby indemnify the ALG Parties (including their respective officers, directors, employees, Related Persons agents and their respective successors and assigns ) (collectively, the "ALG Indemnified Persons") from and agrees to hold the ALG Indemnified Persons harmless against any and all Damages that the Inspira Indemnified Persons or any one or more of them may suffer or incur insofar as such Damages arise out of or are based upon the inaccuracy of any representation or warranty (or a third party claim that, if valid, would constitute an inaccuracy of any representation or warranty) or a breach of any covenant or agreement made or to be performed by the Inspira Parties, provided that ALG Indemnified Persons shall give the Inspira Parties written notice in respect of such Claim and, if any such Claim shall have been made in writing by the ALG Indemnified Persons prior to the termination of the applicable indemnification obligation, such termination shall not affect the indemnification obligation in respect of the particular matter as to which such Claim was made. It is expressly understood and agreed that the limitations on indemnification set forth in this article VIII shall not apply to any claim arising out of or based on fraud, knowing and intentional misrepresentations or knowing and intentional breaches.
8.3 Procedure for Indemnification. The respective indemnification obligations of the ALG Parties on the one hand and the Inspira Parties on the other pursuant to Section 8.2 shall be conditioned upon compliance by the ALG Parties on the one hand and Inspira and the Company on the other with the following procedures for Claims:
(a) The party seeking indemnification under Section 8.2 (the "Aggrieved Party") agrees to give notice in writing to the party(ies) from whom indemnity is sought (the "Indemnifying Party") of the assertion of any Claim or the commencement of any suit, action or proceeding in respect thereof for which indemnity may be sought under Section 8.2. The Indemnifying Party may participate in and control the defense of any third-party suit, action or proceeding at its own expense, provided that the Indemnifying Party agrees in writing to be responsible for the full amount of the Aggrieved Party's Damages attributable to such suit, action or proceeding. Except as otherwise provided in Section 8.3(b), the Aggrieved Party shall not settle any Claim in respect of which indemnity may be sought hereunder without the consent of the Indemnifying Party.
(b) If the Indemnifying Party assumes the defense of any such Claim or action or proceeding in respect thereof: (i) it shall take all steps necessary in the defense or settlement thereof and shall hold the Aggrieved Party harmless from and against any and all Damages caused by or arising out of any settlement approved by the Indemnifying Party or any judgment rendered in connection with such Claim, action or proceeding; and (ii) the Aggrieved Party agrees to cooperate and make available to the Indemnifying Party all books and records and such officers, employees and agents as are reasonably necessary and useful in connection with the defense. The Indemnifying Party shall not, in the defense of such claim, action or proceeding, consent to the entry of any judgment or enter into any settlement, except, in either event, with the prior consent of the Aggrieved Party unless the judgment or settlement: (w) does not provide for any remedy against the Aggrieved Party other than the payment of money; (x) the Indemnifying Party promptly pays all amounts required thereunder; (y) includes as an unconditional term thereof the giving by the claimant or the plaintiff to the Aggrieved Party of a release from all Liability in respect of such claim or litigation; and (z) such judgment or settlement could not be the basis of any claim or action by any third party (whether governmental or otherwise). If the Indemnifying Party assumes the defense of any such Claim or action or proceeding in respect thereof, the Aggrieved Party will have the right to participate in such litigation and to retain its own counsel at such Aggrieved Party's own expense.
(c) If the Indemnifying Party does not assume the defense of any such Claim, action or proceeding, the Indemnifying Party agrees to: (i) cooperate and make available to the Aggrieved Party (A) all such books and records that are in the possession or control of the Indemnifying Party and (B) such officers, employees and agents of the Indemnifying Party that are reasonably necessary and useful in connection with the defense; and (ii) promptly grant consent to any reasonable settlement.
ARTICLE IX - MISCELLANEOUS
9.1 No Third-Party Beneficiaries. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the parties hereto and their respective heirs, permitted successors, permitted assigns or legal representatives any legal or equitable right, remedy or claim in respect of this Agreement or any provision herein contained, except to the extent expressly provided in this Agreement.
9.2 Amendment; Waiver.
(a) This Agreement may not be amended, modified, supplemented or restated, nor may any provision of this Agreement be waived, other than through a written instrument adopted, executed and agreed to by the parties hereto.
(b) A waiver or consent, express or implied, to or of any breach or default by any party hereto in the performance by such party of its obligations hereunder is not a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligations of such party hereunder. Failure on the part of any party hereto to complain of any act of any other party hereto or to declare any other party hereto in default hereunder, irrespective of how long that failure continues, does not constitute a waiver by such party of its rights with respect to that default until the applicable statute-of-limitations period has run.
9.3 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each party hereto shall execute and deliver all such future instruments and take such further action as may be reasonably necessary or appropriate to carry out the provisions of this Agreement and the intention of the parties as expressed herein. Without limiting the foregoing, if any of the Acquired Assets is not assignable, or if the Company is not vested with good title to any of the Acquired Assets, for any reason, the parties hereto shall cooperate with each other in any reasonable and lawful arrangements designed to provide the Company with the benefits and burdens of such Asset (or any right, benefit, obligation or duty arising thereunder, including the enforcement for the benefit of the Company of any and all rights of Sustainable Fuels Incorporated against a third party thereunder), notwithstanding the provisions of this agreement as otherwise delineated.
9.4 Notices. All notices and other communications under this Agreement shall be in writing and deemed duly given, if delivered: (a) personally by hand or by a nationally recognized overnight courier service, when delivered at the address specified in this Section 9.4; (b) by United States certified or registered first class mail when delivered at the address specified in this Section 9.4, on the date appearing on the return receipt therefor; or (c) by electronic mail when such electronic mail is transmitted to the electronic mail address specified in this Section 9.4. Addresses and electronic mail addresses (unless and until written notice is given of any other address or electronic mail address) for purposes of this Section 9.4 are set forth below:
(i) if to the ALG Parties, to the following address:
ALG-Health LLC
520 West Mulberry St.
Bryan, OH 43506
Attn: Adam Harmon
Tel: 843-694-6469
Email: adam@alg-health.com
(ii) if to the Inspira Parties, to the following address:
Inspira Financial Company
3330 Caminito Daniella
Del Mar, CA 92014
Attn: President
Tel: 800-760-6826
Email: les@salonaglobal.com
Any such notice shall, if delivered personally, be deemed received upon delivery; shall, if delivered by certified mail, be deemed received upon the earlier of actual receipt thereof or five (5) Business Days after the date of deposit in the United States mail, as the case may be; and shall, if delivered by nationally recognized overnight delivery service, be deemed received the first Business Day after the date of deposit with the delivery service.
(b) Whenever any notice is required to be given by any Legal Requirement or this Agreement, a written waiver thereof, signed by the party entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
9.5 Specific Performance. Each party acknowledges that the other parties would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms, and that any material breach of this Agreement by such party could not be adequately compensated in all cases by monetary damages alone. Therefore, to assure the other parties that they will obtain the bargained-for benefits of this Agreement, such party, in addition to any other right or remedy to which it may be entitled, shall also be entitled to obtain injunctive relief, including a decree of specific performance, and to obtain temporary, preliminary and permanent injunctive relief to enforce the provisions of this Agreement, without posting any bond or other undertaking and without the necessity of proving actual damages, except to the extent required by any court of competent jurisdiction.
9.6 Entire Agreement; Superseder. This Agreement, the other Transaction Documents and any other writings referred to herein or delivered pursuant hereto, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior contracts, agreements and understandings, whether oral or written, among the parties with respect to the subject matter hereof.
9.7 Governing Law; Venue.
(a) This Agreement is governed by and shall be construed in accordance with the laws of the State of Delaware without regard to the conflicts of law principles of such state.
(b) The parties hereto hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of Delaware and the federal courts of the United States of America located in Delaware, and appropriate appellate courts therefrom, over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby, and each party hereby irrevocably agrees that all claims in respect of such dispute or proceeding may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. This consent to jurisdiction is being given solely for purposes of this Agreement and is not intended to, and shall not, confer consent to jurisdiction with respect to any other dispute in which a party to this Agreement may become involved. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding of the nature specified in this subsection (b) by the mailing of a copy thereof in the manner specified by the provisions of Section 9.4.
9.8 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future Legal Requirements effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
9.9 Waiver of Punitive and Exemplary Damage Claims. EACH PARTY, BY EXECUTING THIS AGREEMENT, WAIVES, TO THE FULLEST EXTENT ALLOWED BY LAW, ANY CLAIMS TO RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES NOT MEASURED BY THE PREVAILING PARTY'S ACTUAL DAMAGES IN ANY DISPUTE OR CONTROVERSY ARISING UNDER, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ANY ARBITRATION PROCEEDING.
9.10 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all fees and expenses incurred in connection with this Agreement and the transactions contemplated herein, shall be paid by the party incurring such expense.
9.11 Headings. The descriptive headings used herein are inserted for convenience of reference only, do not constitute a part of this Agreement, and shall not affect in any manner the meaning or interpretation of this Agreement.
9.12 Counterparts; Exchange by Electronic Transmission. This Agreement may be executed in any number of counterparts (including facsimile counterparts), all of which together shall constitute a single instrument. The Parties may execute this Agreement, as well as any of the Transaction Documents and exchange on the Closing Date, counterparts of such documents by means of electronic mail and the Parties agree that the receipt of such executed counterparts shall be binding.
9.13 Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing Party shall be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceeding, in addition to any other relief to which it or they may be entitled.
9.14 No Assignment. Neither of the Parties may assign either this Agreement or any of the rights, interests or obligations hereunder without the prior written approval of the other Party.
[Signatures on next page]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.
| INSPIRA FINANCIAL COMPANY | ||
| By: | /s/ Les Cross | |
| Name: Les Cross | ||
| Title: President | ||
| PAN NOVUS HOSPITAL SALES GROUP, LLC | ||
| By: | /s/ Les Cross | |
| Name: Les Cross | ||
| Title: Authorized Signatory | ||
| ALG-HEALTH LLC | ||
| By: | /s/ Adam Harmon | |
| Name: Adam Harmon | ||
| Title: Manager | ||
| /s/ Adam Harmon | ||
| Adam Harmon, Individually | ||
|
COMPANY: ALG HEALTH PLUS, LLC |
||
| By: | /s/ Les Cross | |
| Name: Les Cross | ||
| Title: Authorized Signatory | ||
EXHIBIT 10.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALG HEALTH PLUS, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT of ALG HEALTH PLUS, LLC, a Delaware limited liability company (the "Company"), is entered into as of November 29, 2021 by and among the Members listed on Schedule A hereto (collectively, the "Members"). Capitalized terms not otherwise defined in this Agreement shall have the respective meanings specified in Section 1.02.
RECITALS
A. The Company was formed under the laws of the State of Delaware by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware (the "Secretary of State") on October 28, 2021 (the "Certificate of Formation"); and
B. The Members wish to enter into this Agreement setting forth the terms and conditions governing the operation and management of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
RECITALS; DEFINITIONS
Section 1.01 Recitals. The above Recitals are true and correct and are incorporated by reference into this Agreement.
Section 1.02 Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in this Section 1.02:
"Affiliate" means, with respect to any Person (a) that is not an individual, any other Person that, directly or indirectly (including through one or more intermediaries), (i) controls, is controlled by, or is under common control with, such Person, or (ii) is an officer, director, managing member, manager, general partner, or trustee of such Person or of which such Person is an officer, director, managing member, manager, general partner, or trustee; or (b) that is an individual, (i) the Family Members of such individual and any trust for the benefit of such individual or his or her Family Member, and (ii) any Person other than an individual that, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, any of the foregoing individuals or trusts referenced in this clause (b). For purposes of this definition, "control", when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract, or otherwise; provided, however, that a Person that, directly or indirectly, owns or controls 10% or more of any voting securities, partnership, or other interests that provide the ability to cause the direction of the management and policies of a Person shall be deemed to control such Person); and the terms "controlling" and "controlled" shall have correlative meanings.
"Agreement" means this Limited Liability Company Agreement, as executed and as it may be amended, modified, supplemented, or restated from time to time, as provided herein.
"Applicable Law" means all applicable provisions of (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (b) any consents or approvals of any Governmental Authority; and (c) any orders, decisions, advisory, or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements with, any Governmental Authority.
"Arrangement" means an arrangement under the Business Corporations Act (British Columbia) pursuant to which a person and its associates will acquire 50% or more of the issued and outstanding capital of Parent.
"Bankruptcy" means, with respect to a Member, the occurrence of any of the following: (a) the filing of an application by such Member for, or a consent to, the appointment of a trustee of such Member's assets; (b) the filing by such Member of a voluntary petition in bankruptcy or the filing of a pleading in any court of record admitting in writing such Member's inability to pay such Member's debts as they come due; (c) the making by such Member of a general assignment for the benefit of such Member's creditors; (d) the filing by such Member of an answer admitting the material allegations of, or such Member's consenting to, or defaulting in answering a bankruptcy petition filed against such Member in any bankruptcy proceeding; or (e) the expiration of sixty (60) days following the entry of an order, judgment, or decree by any court of competent jurisdiction adjudicating such Member a bankrupt or appointing a trustee of such Member's assets.
"Business" has the meaning set forth in Section 2.05.
"Business Day" means a day other than a Saturday, Sunday, or other day on which commercial banks in the City of New York are authorized or required to close.
"Capital Contribution" means, for any Member, the total amount of cash and cash equivalents and the book value of any property contributed to the Company by such Member.
"Certificate of Formation" has the meaning set forth in the Recitals.
"Change of Control" means: (A) a Takeover Bid is made in respect of the shares of Parent and both of the following have occurred: (1) the holders of at least 50% of the shares in respect of which the Takeover Bid is made that are not subject to escrow have accepted the offer made under the Takeover Bid; and (2) the Takeover Bid becomes unconditional; (B) an Arrangement is proposed in respect of Parent and both of the following have occurred: (1) the Arrangement has become unconditional; and (2) the Arrangement has been approved by the court for implementation; (C) the acquisition of voting securities of Parent or any reorganization, amalgamation, merger, consolidation or share exchange in a single transaction (or series of related transactions) as a result of which the holders of the voting securities of Parent prior to the transaction (or series of related transactions) hold, immediately after such transaction (or series of related transactions), directly or indirectly, securities to which are attached 50% or less of the voting power with respect to Parent; or (D) a single transaction (or series of related transactions) resulting in the acquisition of Parent by another entity that results in the sale of all or substantially all of the assets of Parent.
"Class A Member" means a Member that holds Class A Units.
"Class A Units" means the Units having any privileges, preference, duties, liabilities, obligations, and rights that are specified with respect to "Class A Units" in this Agreement.
"Class B Call Option" has the meaning set forth in Section 3.04(a).
"Class B Member" means a Member that holds Class B Units.
"Class B Revenue Target" has the meaning set forth in Section 3.03(a).
"Class B Units" means the Units having any privileges, preference, duties, liabilities, obligations, and rights that are specified with respect to "Class B Units" in this Agreement.
"Class C Call Option" has the meaning set forth in Section 3.04(a).
"Class C Member" means a Member that holds Class C Units.
"Class C Units" means the Units having any privileges, preference, duties, liabilities, obligations, and rights that are specified with respect to "Class C Units" in this Agreement.
"Code" means the Internal Revenue Code of 1986.
"Company" has the meaning set forth in the Preamble.
"Confidential Information" has the meaning set forth in Section 11.01.
"Contribution Agreement" has the meaning set forth in the Recitals.
"Covered Person" shall mean each (i) Member; (ii) officer, manager, director, member, stockholder, general partner, employee, agent, or representative of a Member, and each of their controlling Affiliates; and (iii) manager, Officer, employee, agent, or representative of the Company.
"Delaware Act" means the Delaware Limited Liability Company Act, Title 6, Chapter 18, §§ 18-101, et seq.
"Distribution" means a distribution made by the Company to a Member, whether in cash, property, or securities of the Company and whether by liquidating distribution or otherwise; provided, that none of the following shall be a Distribution: (a) any redemption or repurchase by the Company or any Member of any Units; (b) any recapitalization or exchange of securities of the Company; or (c) any subdivision (by a split of Units or otherwise) or any combination (by a reverse split of Units or otherwise) of any outstanding Units; or (d) any fees or remuneration paid to any Member in such Member's capacity as a service provider for the Company. "Distribute" when used as a verb shall have a correlative meaning.
"EBITDA" means (i) the net earnings (or loss) after taxes for such period taken as a single accounting period, plus (ii) depreciation, depletion and amortization expense for such period, plus (iii) federal, state and local income (or equivalent) taxes paid or accrued for such period, plus (iv) total interest expense for such period (including amortization of capitalized indebtedness issuance costs) whether paid or accrued, including all commissions, discounts and other fees and charges owed with respect to letters of credit, plus (v) extraordinary, unusual or non-recurring losses and non-cash charges for any disposition of businesses or early extinguishment of indebtedness for such period, minus (vi) any cash payments with respect to any non-cash charges and expenses related to the disposition of businesses or early extinguishment of indebtedness previously taken into account for such period, minus (vii) debt, in each case determined in accordance with generally accepted accounting principles and in the case of clauses (ii) through (vii), to the extent included in the determination of net earnings (or loss) for such period.
"Electronic Transmission" means any form of communication not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), 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.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations.
"Exchange Agreement" has the meaning set forth in Section 3.02(b).
"Exchange Notice" has the meaning set forth in Section 3.03(a).
"Exchange Rights" has the meaning set forth in Section 3.03.
"Expiration Date" has the meaning set forth in Section 3.04(a).
"Family Members" means, with respect to any Member that is an individual, to (i) the individual, (ii) the individual's Spouse, (iii) any other natural Person who is related to the individual or the individual's Spouse within the second degree and (iv) any other natural Person who resides with such individual.
"Fiscal Year" means the calendar year, unless the Company is required to have a taxable year other than the calendar year, in which case Fiscal Year shall be the period that conforms to its taxable year.
"Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority have the force of law), or any arbitrator, court, or tribunal of competent jurisdiction.
"Losses" has the meaning set forth in Section 10.02(a).
"Manager" means, initially, Pan Novus Hospital Sales Group LLC, a Delaware limited liability company wholly owned by Inspira Financial Company, a Washington corporation wholly owned by Parent, or such other Person as may become the Manager pursuant to the terms of this Agreement.
"Marital Relationship" means a civil union, domestic partnership, marriage, or any other similar relationship that is legally recognized in any jurisdiction.
"Member" means (a) each initial Member; and (b) each Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Delaware Act, in each case so long as such Person is shown on the Company's books and records as the owner of one or more Units. The Members shall constitute the "members" (as that term is defined in the Delaware Act) of the Company.
"Members Schedule" has the meaning set forth in Section 3.01(a).
"Membership Interest" means an interest in the Company owned by a Member, including such Member's right (based on the type, class, or series of Unit or Units held by such Member), as applicable, to (a) such Member's Distributive share of Net Income, Net Losses, and other items of income, gain, loss, and deduction of the Company; (b) such Member's Distributive share of the assets of the Company; (c) vote on, consent to, or otherwise participate in any decision of the Members as provided in this Agreement; and (d) any and all other benefits to which such Member may be entitled as provided in this Agreement or the Delaware Act.
"Officers" has the meaning set forth in Section 6.02.
"Option Notice" has the meaning set forth in Section 3.04(c).
"Parent" means Salona Medical Device Corporation, a corporation incorporated under the laws of the Province of British Columbia.
"Parent Special Shares" means the Class "A" common shares of Parent.
"Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity.
"Representative" means, with respect to any Person, any and all directors, managers, officers, employees, consultants, financial advisors, counsel, accountants, and other agents of such Person.
"Revenue" means, for any period of determination, the sum of the following for such period: (a) the amounts invoiced and recognized as revenue in accordance with GAAP by the Company with respect to the sale of its products and services to third parties by the Company, (b) the amounts invoiced and recognized as revenue in accordance with GAAP by the Company, from third parties with respect to the sale, distribution or other use of Company's products and services by such third parties in connection with any marketing, royalty, manufacturing, co-promotion, co-development, equity investment, cost sharing or other strategic arrangements, and (c) any collections in respect of write-offs or allowances for bad debts in respect of items described in the preceding clauses (a) and (b). For purposes of prevention of duplication, "Revenue" shall not include amounts invoiced by distributors, wholesalers or other Persons acting in similar capacities.
"Secretary of State" has the meaning set forth in the Recitals.
"Securities Act" means the Securities Act of 1933.
"Spousal Consent" has the meaning set forth in Section 11.18.
"Spouse" means a spouse, a party to a civil union, a domestic partner, a same-sex spouse or partner, or any individual in a Marital Relationship with a Member.
"Takeover Bid" has the meaning ascribed thereto in the Securities Act (British Columbia).
"Transfer" means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate, or similarly dispose of, either voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation, or similar disposition of, any Units owned by a Person or any interest (including a beneficial interest) in any Units owned by a Person. "Transfer" when used as a noun shall have a correlative meaning. "Transferor" and "Transferee" mean a Person who makes or receives a Transfer, respectively.
"Treasury Regulations" means the final or temporary regulations issued by the United States Department of Treasury pursuant to its authority under the Code, and any successor regulations.
"TSXV" means the TSX Venture Exchange.
"Unit" means a unit representing a fractional part of the Membership Interests of the Members and shall include all types, classes, and series of Units issued hereunder, including the Class A Units, the Class B Units and the Class C Units; provided, that any type, class, or series of Unit shall have the privileges, preference, duties, liabilities, obligations, and rights set forth in this Agreement with respect to such type, class, or series of Unit and the Membership Interests represented by such type, class, or series of Unit shall be determined in accordance with such privileges, preference, duties, liabilities, obligations, and rights.
Section 1.03 Interpretation. For purposes of this Agreement, (a) the words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation"; (b) the word "or" is not exclusive; and (c) the words "herein," "hereof," "hereby," "hereto," and "hereunder" refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. Unless the context otherwise requires, references herein: (x) to Articles, Sections, and Exhibits mean the Articles and Sections of, and Exhibits attached to, this Agreement; (y) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
ARTICLE II
ORGANIZATION
Section 2.01 Formation. The Company was formed on October 28, 2021, pursuant to the provisions of the Delaware Act, upon the filing of the Certificate of Formation with the Secretary of State. This Agreement shall constitute the "limited liability company agreement" (as that term is used in the Delaware Act) of the Company. The rights, powers, duties, obligations, and liabilities of the Members shall be determined pursuant to the Delaware Act and this Agreement. To the extent that the rights, powers, duties, obligations, and liabilities of any Member are different by reason of any provision of this Agreement than they would be under the Delaware Act in the absence of such provision, this Agreement shall, to the extent permitted by the Delaware Act, control.
Section 2.02 Name. The name of the Company is "ALG Health Plus, LLC" or such other name or names as the Manager may from time to time designate and file with the Secretary of State in accordance with the Delaware Act.
Section 2.03 Principal Office. The principal office of the Company is located at 3330 Caminito Daniella, Del Mar, CA 92014, or such other place as may from time to time be determined by the Manager. The Manager shall give prompt notice of any such change to each of the Members.
Section 2.04 Registered Office; Registered Agent. The registered office of the Company shall be the office of the initial registered agent named in the Certificate of Formation or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by the Delaware Act and Applicable Law.
Section 2.05 Purpose; Powers. The purpose of the Company is to engage in (i) the sale of medical products (the "Business") and any and all other activities as may be determined by the Manager, to the extent that the same may be lawfully exercised by limited liability companies under the Delaware Act, and (ii) any and all lawful activities necessary or incidental thereto. The Company shall have all the powers necessary or convenient to carry out the purposes for which it is formed, including the powers granted by the Delaware Act.
Section 2.06 Term. The term of the Company commenced on the date the Certificate of Formation was filed with the Secretary of State and shall continue in existence perpetually until the Company is dissolved in accordance with the provisions of this Agreement.
ARTICLE III
MEMBERSHIP INTERESTS; UNITS
Section 3.01 Members; Membership Interests.
(a) The Company shall have three classes of Members: (i) Class A Members, (ii) Class B Members, and (iii) Class C Members. The names and addresses of the Members of the Company, the number of units each of the Members owns and other information regarding the Members is listed on Schedule A, as from time to time amended and supplemented in accordance with this Agreement (the "Members Schedule").
(b) The Membership Interests of the Members shall be represented by issued and outstanding Units, which are divided into classes as set forth in Section 3.02. Each class of Units shall have the privileges, preference, duties, liabilities, obligations and rights, including voting rights, if any, set forth in this Agreement with respect to such class. Each Member shall hold the number and type of Units set forth opposite such Member's name on the Members Schedule, which shall be amended from time to time so that it sets forth the then current list of Members and the number of Units held by such Member.
Section 3.02 Classes of Units. The Company shall have three classes of Units, designated as "Class A Units", "Class B Units," and "Class C Units," as follows:
(a) Class A Units. Class A Units shall receive all Company allocations and Distributions and be the only class of Units to have voting rights, with each Class A Unit having one (1) vote per Class A Unit.
(b) Class B Units. Class B Units shall have no right to and shall receive no Company allocations or Distributions. Class B Units are non-voting. For the avoidance of doubt, Class B Units have no rights other than as set forth in that certain Contribution and Exchange Agreement of even date herewith, a copy of which is attached hereto and incorporated by reference hereby as Exhibit A to this Agreement (the "Exchange Agreement"). Any and all other rights otherwise attributable to membership interests are hereby waived to the extent permitted by the Delaware Act and Delaware law generally.
(c) Class C Units. Class C Units shall have no right to and shall receive no Company allocations or Distributions. Class C Units are non-voting. For the avoidance of doubt, Class C Units have no rights other than as set forth in the Exchange Agreement. Any and all other rights otherwise attributable to membership interests are hereby waived to the extent permitted by the Delaware Act and Delaware law generally.
Section 3.03 Exchange Rights. The Class B Units and the Class C Units are exchangeable into Parent Special Shares as follows (the "Exchange Rights"):
(a) Class B Units. Commencing on the first year anniversary of the date hereof, provided that the Company has generated Revenue of One Million Dollars ($1,000,000) during the three months ended February 28, 2022 (the "Class B Revenue Target"), the Class B Member shall have the option, but not the obligation, at any time but at only one time, to exchange in whole and not in part, all 1,000 Class B Units into an aggregate of 1,000,000 shares of Parent Special Shares, upon fifteen (15) days prior written notice to the Parent from the Class B Member (an "Exchange Notice").
(b) Class C Units. Upon the date which is fifteen (15) days after each quarter commencing with the three months ended February 28, 2022, and each of the quarterly periods thereafter through February 28, 2024, the Class C Member shall have the option, but not the obligation, to exchange one (1) Class C Unit into one hundred (100) shares of Parent Special Shares for each $50.00 of EBITDA generated by the Company during such quarterly period, upon fifteen (15) days prior written notice to the Parent from the Class C Member.
Section 3.04 Call Rights.
(a) Class B Call Option. On the earlier to occur of (i) the Company not meeting the Class B Revenue Target; or (ii) the date which is five (5) years from the date hereof (the "Expiration Date"); or (iii) a Change in Control of either the Company or the Parent, the Parent and/or the Company shall have the option, but not the obligation, to purchase all of the Class B Units at the purchase price set forth in Section 3.04(d) (the "Class B Call Option").
(b) Class C Call Option. On the earlier to occur of (i) the Expiration Date; or (ii) a Change in Control of either the Company or the Parent, the Parent and/or the Company shall have the option, but not the obligation, to purchase all of the Class C Units at the purchase price set forth in Section 3.04(d) (the "Class C Call Option").
(c) Exercise of Call Option. The Company shall exercise the Class B Call Option and/or the Class C Class Option by providing ten (10) days prior written notice to the Class B Member or the Class C Member, as the case may be, of its desire to exercise the Class B Call Option or Class C Call Option, as applicable (the "Option Notice").
(d) Purchase Price of Units. The purchase price for the Class B Units and Class C Units purchased pursuant to the exercise of the Class B Call Option or Class C Call Option, as applicable, shall be $0.01 per Unit, which the Company shall pay to the seller no later than thirty (30) days following the date of the Option Notice by delivery of cash or immediately available funds in an amount equal to the applicable purchase price.
Section 3.05 Mandatory Conversion. Notwithstanding anything contained herein to the contrary, Class B Units and Class C Units shall be automatically converted into Class A Units as follows:
(a) Each Class B Unit acquired by the Company pursuant to Section 3.04(a)Section 3.04(a) shall be automatically converted into 0.01 Class A Units.
(b) Each Class C Unit acquired by the Company pursuant to Section 3.04(a) shall be automatically converted into 0.01 Class A Units.
Section 3.06 Termination of Exchange Rights. Notwithstanding anything contained herein to the contrary, the Exchange Rights for the Class B Units and Class C Units shall terminate and shall be of no further force or effect upon the termination of Adam Harmon's engagement as an officer of the Company for cause or upon the voluntary resignation of Adam Harmon as an officer of the Company.
Section 3.07 Certification of Units. The Manager in its sole discretion may, but shall not be required to, issue certificates to the Members representing the Units held by such Members. In the event that the Manager shall issue certificates representing Units, then in addition to any other legend required by Applicable Law, all certificates representing issued and outstanding Units shall bear a legend substantially in the following form:
THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LIMITED LIABILITY COMPANY AGREEMENT AMONG ITS MEMBERS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, OR OTHER DISPOSITION OF THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH LIMITED LIABILITY COMPANY AGREEMENT.
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER SUCH ACT AND LAWS OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.
Section 3.08 Restrictions on Parent Special Shares. Each of the Members acknowledges that the Parent Special Shares issuable upon conversion of the Class B Units and the Class C Units are "restricted securities," as such term is defined under the Securities Act. Each of the Members agrees not to attempt to pledge, transfer, convey or otherwise dispose of such shares except in a transaction that is the subject of either: (i) an effective registration statement under the Securities Act of 1933 as amended, and any applicable state securities laws; or (ii) an opinion of counsel rendered by legal counsel satisfactory to the Company, which opinion of counsel shall be satisfactory to the Company, to the effect that such registration is not required. Each of the Members consents to the placement of a legend on the Parent Special Shares issuable upon the exchange of the Class B Units or Class C Units pursuant to this Agreement stating that the shares represented by the certificate have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale thereof.
Section 3.09 No Personal Liability. Except as otherwise provided in the Delaware Act, by Applicable Law, or expressly in this Agreement, no Member will be obligated personally for any debt, obligation, or liability of the Company or other Members, whether arising in contract, tort, or otherwise, solely by reason of being a Member.
Section 3.10 No Withdrawal. A Member shall not cease to be a Member as a result of the Bankruptcy of such Member or as a result of any other events specified in § 18-304 of the Delaware Act. So long as a Member continues to hold any Units, such Member shall not have the ability to withdraw or resign as a Member prior to the dissolution and winding up of the Company and any such withdrawal or resignation or attempted withdrawal or resignation by a Member prior to the dissolution or winding up of the Company shall be null and void. As soon as any Person who is a Member ceases to hold any Units, such Person shall no longer be a Member.
ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
Section 4.01 Initial Capital Contributions. Concurrently with the execution of this Agreement, each of the Members (a) have been admitted to the Company as a member; and (b) is deemed to own the number and class of Units, in each case in the amounts set forth opposite such Member's name, on the Members Schedule as in effect on the date hereof.
Section 4.02 Additional Capital Contributions.
(a) No Member shall be required to make any additional Capital Contributions to the Company. Any future Capital Contributions made by any Member shall only be made with the approval of the Manager, and in connection with an issuance of Units made in compliance with this Agreement.
(b) No Member shall be required to lend any funds to the Company and no Member shall have any personal liability for the payment or repayment of any Capital Contribution by or to any other Member.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
Section 5.01 Allocation of Net Income and Net Loss. For each Fiscal Year (or portion thereof), all items of income, gain, loss, deduction and credit shall be allocated to the Class A Member. Only Class A Units shall have the right to allocations under this Agreement.
Section 5.02 Distributions. All Distributions shall be made and paid to the Class A Member at such time and in such amounts as the Manager may determine. Only Class A Units shall have the right to and receive Distributions from the Company.
ARTICLE VI
MANAGEMENT
Section 6.01 Management of the Company. The business and affairs of the Company shall be managed by the Manager. Subject to the provisions of this Agreement, the Manager shall have full and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to take all such actions as it deems necessary or appropriate to accomplish the purpose of the Company. The actions of the Manager taken in accordance with the provisions of this Agreement shall bind the Company. No Member of the Company shall have any authority or right to act on behalf of or bind the Company, unless otherwise provided herein or specifically authorized by the Manager pursuant to a written resolution expressly authorizing such action duly adopted by the Manager.
Section 6.02 Officers. The Manager may appoint individuals as officers of the Company (the "Officers") as it deems necessary or desirable to carry on the business of the Company and the Manager may delegate to such Officers such power and authority as the Manager deems advisable. No Officer need be a Member of the Company. Any individual may hold two or more offices of the Company. Each Officer shall hold office until his or her successor is designated by the Manager or until his or her earlier death, resignation, or removal. Any Officer may resign at any time on written notice to the Manager. Any Officer may be removed by the Manager with or without cause at any time. A vacancy in any office occurring because of death, resignation, removal, or otherwise, may, but need not, be filled by the Manager.
Section 6.03 Removal, Resignation, Replacement of Manager. The Manager may be removed at any time, with or without cause, by the Class A Member. If the Manager resigns, is, or otherwise ceases to be Manager, the Class A Member shall appoint a successor Manager.
Section 6.04 No Personal Liability. Except as otherwise provided in the Delaware Act, or expressly in this Agreement, no Manager will be obligated personally for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, solely by reason of being Manager.
ARTICLE VII
TRANSFER
Section 7.01 General Restrictions on Transfer.
(a) No Member shall Transfer any Units except with the prior written consent of the Manager. No Transfer of Units to a Person not already a Member of the Company shall be deemed completed until the prospective Transferee is admitted as a Member of the Company in accordance with this Agreement.
(b) Any Transfer or attempted Transfer of any Units in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company's books, and the purported Transferee in any such Transfer shall not be treated (and the purported Transferor shall continue to be treated) as the owner of such Units for all purposes of this Agreement.
(c) For the avoidance of doubt, any approved Transfer of Units and purporting to be a sale, transfer, assignment, or other disposal of the entire Membership Interest represented by such Units, inclusive of all the rights and benefits applicable to such Membership Interest as described in the definition of the term "Membership Interest," shall be deemed a sale, transfer, assignment, or other disposal of such Membership Interest in its entirety as intended by the parties to such Transfer, and shall not be deemed a sale, transfer, assignment, or other disposal of any less than all of the rights and benefits described in the definition of the term "Membership Interest," unless otherwise explicitly agreed to by the parties to such Transfer.
ARTICLE VIII
ACCOUNTING; TAX MATTERS
Section 8.01 Tax Returns. At the expense of the Company, the Manager (or any Officer that it may designate pursuant to Section 6.02) shall endeavor to cause the preparation and timely filing (including extensions) of all tax returns required to be filed by the Company pursuant to the Code as well as all other required tax returns in each jurisdiction in which the Company owns property or does business. As soon as reasonably possible after the end of each Fiscal Year, the Manager or designated Officer will cause to be delivered to each Person who was a Member at any time during such Fiscal Year, IRS Schedule K-1 to Form 1065 and such other information with respect to the Company as may be necessary for the preparation of such Person's federal, state, and local income tax returns for such Fiscal Year.
Section 8.02 Company Funds. All funds of the Company shall be deposited in its name in such checking, savings, or other accounts, or held in its name in the form of such other investments as shall be designated by the Manager. The funds of the Company shall not be commingled with the funds of any other Person. All withdrawals of such deposits or liquidations of such investments by the Company shall be made exclusively upon the signature or signatures of such Officer or Officers as the Manager may designate.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
Section 9.01 Events of Dissolution. The Company shall be dissolved, and its affairs wound up only upon the occurrence of any of the following events:
(a) An election to dissolve the Company made by the Manager and the Class A Member;
(b) The sale, exchange, involuntary conversion, or other disposition or transfer of all or substantially all the assets of the Company; or
(c) The entry of a decree of judicial dissolution under §18-802 of the Delaware Act.
Section 9.02 Effectiveness of Dissolution. Dissolution of the Company shall be effective on the day on which the event described in Section 9.01 occurs, but the Company shall not terminate until the winding up of the Company has been completed, the assets of the Company have been Distributed, and the Certificate of Formation shall have been cancelled.
ARTICLE X
EXCULPATION AND INDEMNIFICATION
Section 10.01 Limitation of Liability. Except as otherwise provided by the Delaware Act, the debts, obligations, and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or the management of its business or affairs under this Agreement or the Delaware Act shall not be grounds for imposing personal liability on the Members for any debts, liabilities, or obligations of the Company. Except as otherwise expressly required by law, the Members, in such Member's capacity as such, shall have no liability in excess of (a) the amount of such Member's net Capital Contributions, (b) such Member's share of any assets and undistributed profits of the Company, and (c) the amount of any distributions required to be returned pursuant to the Delaware Act.
Section 10.02 Indemnification.
(a) To the fullest extent permitted by the Delaware Act, as the same now exists or may hereafter be amended, substituted, or replaced (but, in the case of any such amendment, substitution, or replacement only to the extent that such amendment, substitution, or replacement permits the Company to provide broader indemnification rights than the Delaware Act permitted the Company to provide prior to such amendment, substitution, or replacement), the Company shall indemnify, hold harmless, defend, pay, and reimburse any Covered Person from and against any and all losses, claims, damages, judgments, fines, or liabilities, including reasonable legal fees or other expenses incurred in investigating or defending against such losses, claims, damages, judgments, fines, or liabilities, and any amounts expended in settlement of any claims (collectively, "Losses") to which such Covered Person may become subject by reason of:
(i) Any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Company in connection with the business of the Company; or
(ii) The fact that such Covered Person is or was acting in connection with the business of the Company as a manager, officer, employee, or agent of the Company or that such Covered Person is or was serving at the request of the Company as a manager, director, officer, employee, or agent of any other Person;
provided, that (x) such Covered Person acted in good faith and in a manner believed by such Covered Person to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal proceeding, had no reasonable cause to believe his, her, or its conduct was unlawful, and (y) such Covered Person's conduct did not constitute fraud, gross negligence, willful misconduct, or a material breach by such Covered Person of any of such Covered Person's or his, her, or its Affiliates' agreements contained herein or in any other agreements with the Company, in either case as determined by a final, non-appealable order of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit, or 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 Covered Person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such Covered Person's conduct was unlawful, or that the Covered Person's conduct constituted fraud, gross negligence, willful misconduct, or a material breach by such Covered Person of any of such Covered Person's or his, her, or its Affiliates' agreements contained herein or in any other agreements with the Company.
Section 10.03 Advancement. To the fullest extent permitted by Applicable Law, expenses (including reasonable legal fees and expenses) incurred by a Covered Person in connection with investigating, preparing to defend, or defending any claim relating to any Losses for which such Covered Person may be entitled to be indemnified pursuant to Section 10.02(a) shall, from time to time, be advanced by the Company prior to a final, non-appealable determination of a court of competent that, in respect of such matter, such Covered Person is not entitled to indemnification for such Losses; provided, however, that the Covered Person shall have provided to the Company (i) written affirmation of such Covered Person's good faith belief that he, she, or it has met the standard of conduct necessary for indemnification for such Losses under Section 10.02(a); and (ii) an undertaking to repay all such advanced amounts if it shall ultimately be determined that the Covered Person is not entitled to such indemnification.
Section 10.04 Entitlement to Indemnity. The indemnification provided by Section 10.02 shall not be deemed exclusive of any other rights to indemnification to which those seeking indemnification may be entitled under any agreement or otherwise. The provisions of Section 10.02 shall continue to afford protection to each Covered Person regardless of whether such Covered Person remains in the position or capacity pursuant to which such Covered Person became entitled to indemnification under Section 10.02 and shall inure to the benefit of the executors, administrators, legatees, and distributees of such Covered Person.
Section 10.05 Survival. The provisions of this ARTICLE X shall survive the dissolution, liquidation, winding up, and termination of the Company.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Confidentiality. Each Member shall, and shall cause each of his, her, or its Affiliates to, maintain, at all times (including after any time that such Member ceases to be a Member), the confidentiality of all information furnished to such Member pertaining to the Company ("Confidential Information"), other than information that such Member can demonstrate (a) is or becomes generally available to the public other than as a result of a disclosure by such Member or his, her, or its Affiliates; (b) becomes available to such Member or any of his, her, or its Representatives on a non-confidential basis from a third party who is not known by such Member to be prohibited by any obligation of confidentiality owed to the Company from transmitting the information to such Member; or (c) was already in the possession of such Member prior to his, her, or its becoming a Member; provided, however, that the prohibitions set forth in this Section 11.01 shall not prohibit disclosure of Confidential Information as is required to be disclosed by a court of competent jurisdiction, administrative body, or governmental body or by subpoena, summons, or legal process, or by Applicable Law; provided that, to the extent permitted by Applicable Law, the Member required to make such disclosure shall provide to the Manager prompt notice of such disclosure.
Section 11.02 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors, and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or waiver hereof, and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
Section 11.03 Further Assurances. Each Member shall execute all such certificates and other documents and do all such filing, recording, publishing, and other acts as the Manager deems necessary or appropriate to comply with the requirements of the Delaware Act and Applicable Law generally, relating to the formation and operation of the Company and the acquisition, operation, or holding of its property.
Section 11.04 Notices. All notices and other communications under this Agreement shall be in writing and deemed duly given, if delivered: (a) personally by hand or by a nationally recognized overnight courier ser-vice, when delivered at the address specified in this Section; (b) by United States certified or registered first class mail when delivered at the address specified in this Section, on the date appearing on the return receipt therefor; or (c) by electronic mail when such electronic mail is transmitted to the electronic mail address specified in this Section. Addresses and electronic mail addresses (unless and until written notice is given of any other address or electronic mail address) for purposes of this Section are set forth below:
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If to the Company: |
3330 Caminito Daniella Del Mar, CA 92014 Attn: Manager Tel: 800-760-6826 Email: les@salonaglobal.com |
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If to a Member: |
To such Member's respective mailing address as set forth on the Members Schedule. |
Section 11.05 Headings. The headings in this Agreement are inserted for convenience or reference only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision of this Agreement.
Section 11.06 Severability. If any term or provision of this Agreement is held to be invalid, illegal, or unenforceable under Applicable Law in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 11.07 Entire Agreement. This Agreement, together with the Certificate of Formation, the Contribution Agreement, and all related Exhibits and Schedules, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.
Section 11.08 Successors and Assigns. Subject to the restrictions on Transfers set forth herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns. This Agreement may not be assigned by any Member except as permitted by this Agreement and any assignment in violation of this Agreement shall be null and void.
Section 11.09 No Third-Party Beneficiaries. Except as provided in ARTICLE X, which shall be for the benefit of and enforceable by Covered Persons as described therein, this Agreement is for the sole benefit of the parties hereto (and their respective heirs, executors, administrators, successors, and permitted assigns) and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any creditor of the Company, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 11.10 Amendment.
(a) No provision of this Agreement may be amended or modified except by an instrument in writing executed by the Company and the Class A Member. Any such written amendment or modification will be binding upon the Company and each Member; provided, that (i) an amendment or modification modifying the rights or obligations of (x) any Member in a manner that is disproportionately adverse to such Member relative to the rights of other Members in respect of Units of the same class or series or (y) a class or series of Units in a manner that is disproportionately adverse to such class or series relative to the rights of another class or series of Units, shall in either case be effective only with that Member's consent, and (ii) any amendment or modification of this Section 11.10 shall require the approval of all Members.
(b) Notwithstanding Section 11.10(a), the Manager may, without the consent of or execution by the Members, amend or modify the Members Schedule to reflect any new authorization, issuance, redemption, repurchase, or Transfer of Units in accordance with this Agreement.
Section 11.11 Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. For the avoidance of doubt, nothing contained in this Section 11.11 shall diminish any of the explicit and implicit waivers described in this Agreement.
Section 11.12 Governing Law. All issues and questions concerning the application, construction, validity, interpretation, and enforcement of this Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.
Section 11.13 Submission to Jurisdiction. The parties hereby agree that any suit, action, or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, whether in contract, tort, or otherwise, shall be brought in the United States District Court for the District of Delaware or in the Court of Chancery of the State of Delaware (or, if such court lacks subject matter jurisdiction, in the Superior Court of the State of Delaware), so long as one of such courts shall have subject matter jurisdiction over such suit, action, or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of Delaware. Each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action, or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding in any such court or that any such suit, action, or proceeding which is brought in any such court has been brought in an inconvenient form. Service of process, summons, notice, or other document by registered mail to the address set forth in Section 11.04 shall be effective service of process for any suit, action, or other proceeding brought in any such court.
Section 11.14 Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.
Section 11.15 [Attorneys' Fees. In the event that any party hereto institutes any legal suit, action, or proceeding, including arbitration, against another party in respect of a matter arising out of or relating to this Agreement, the prevailing party in the suit, action, or proceeding shall be entitled to receive, in addition to all other damages to which he, she, or it may be entitled, the costs incurred by such party in conducting the suit, action, or proceeding, including reasonable attorneys' fees and expenses, and court costs.
Section 11.16 Remedies Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.
Section 11.17 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of Electronic Transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 11.18 Spousal Consent. Each Member who has a Spouse on the date of this Agreement shall cause such Member's Spouse to execute and deliver to the Company a spousal consent (a "Spousal Consent"), pursuant to which such Spouse shall acknowledge that he or she has read and understood the Agreement and agrees to be bound by its terms and conditions. If any Member should marry or engage in a Marital Relationship following the date of this Agreement, such Member shall cause his or her Spouse to execute and deliver to the Company a Spousal Consent within five (5) Business Days thereof.
Section 11.19 Interpretation and Construction. Each Initial Member acknowledges that (a) he, she, or it has reviewed this Agreement with independent counsel of his, her, or its selection and (b) any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| INSPIRA FINANCIAL COMPANY | ||
| By: | /s/ Les Cross | |
| Name: Les Cross | ||
| Title: President | ||
| /s/ Adam Harmon | ||
| Adam Harmon | ||
AGREED AND ACKNOWLEDGED THIS 29TH DAY OF NOVEMBER, 2021:
| SALONA GLOBAL DEVICE CORPORATION | |
| By: | /s/ Les Cross |
| Name: Les Cross | |
| Title: President | |
SCHEDULE A
MEMBERS SCHEDULE
|
Member Name and Address |
Class of Units |
Number of Units |
Capital Contributions |
|
Class A Member: Inspira Financial Company 3330 Caminito Daniella Del Mar, CA 92014
|
Class A |
10,000 |
As set forth on the books and records of the Company |
|
|
|
|
|
|
Class B Member: Adam Harmon 520 West Mulberry St. Bryan, OH 43506
|
Class B |
1,000 |
As set forth on the books and records of the Company |
|
|
|
|
|
|
Class C Member: Adam Harmon 520 West Mulberry St. Bryan, OH 43506
|
Class C |
200,000 |
As set forth on the books and records of the Company |
EXHIBIT 10.3
CONTRIBUTION AND EXCHANGE AGREEMENT
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") is dated as of November 29, 2021 (the "Effective Date"), by and between Adam Harmon ("Harmon") and Salona Global Medical Device Corporation, a corporation existing under the laws of British Columbia, Canada ("Pubco").
RECITALS
WHEREAS, Harmon is a party to that certain that certain Limited Liability Company Agreement of even date herewith, a copy of which is attached hereto and incorporated by reference hereby as Exhibit A to this Agreement (the "LLC Agreement"). Capitalized terms not otherwise defined in this Agreement shall have the respective meanings specified in the LLC Agreement.
WHEREAS, pursuant to the LLC Agreement, Harmon was issued Class B Units and Class C Units, respectively;
WHEREAS, from time to time, in accordance with and expressly subject to compliance with the Exchange Rights contained in the LLC Agreement, the Class B Member and the Class C Member may exchange their Class B Units and Class C Units, respectively, as a contribution to the capital of Pubco in exchange for the Pubco Special Shares (as defined below), the rights, privileges, restrictions and conditions of which Pubco Special Shares are as set forth on Exhibit B to this Agreement, and, following such election, Pubco shall accept such contribution from the Class B Member and the Class C Member, as the case may be, upon the terms and subject to the conditions of this Agreement;
WHEREAS, in accordance with and expressly subject to compliance with the Exchange Rights, Pubco will issue Class "A" non-voting common shares in the capital of Pubco (the "Pubco Special Shares"), to the Class B Member and the Class C Member, respectively, in exchange for the contribution by each of the Class B Units and the Class C Units;
WHEREAS, the Pubco Special Shares shall have the same attributes as the common shares in the capital of Pubco that are currently listed for trading on the TSX Venture Exchange (the "Listed Shares"), except that the Pubco Special Shares will not carry the right to vote and shall be convertible, subject to certain terms and conditions, into Listed Shares on a one for one basis ("Conversion"), the terms and provisions of which Listed Shares are set out in Exhibit A hereto; and
WHEREAS, the Conversion of the Pubco Special Shares into Listed Shares shall be subject to the conversion limitations contained in this Agreement and the LLC Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Contribution of the Class B Units and Class C Units.
(a) At any time and from time to time in accordance with and expressly subject to compliance with the Exchange Rights, the Class B Member and the Class C Member may, at his, her or its option, contribute the Class B Units and the Class C Units, respectively, to Pubco and, upon such election, Pubco shall accept from the Class B Member and the Class C Member such Class B Units and Class C Units as are contributed (the "Contribution"). The Contribution shall occur within three (3) business days following the receipt of the Exchange Notice by the Pubco (the "Contribution Date").
(b) Pubco may, in its discretion, require that a Contribution of all or a portion of a Class B Member's or Class C Member's Pubco Special Shares to be made:
(i) If either a Class B Member or Class C Member holds Pubco Special Shares on or following the Expiration Date; or
(ii) upon the occurrence of a Change of Control.
(c) No fractional Pubco Special Shares will be issued in connection with a Contribution and all issuances of Pubco Special Shares will be rounded down to the nearest whole share.
2. Investment Representations. Each Class B Member and Class C Member makes the following representations, warranties, acknowledgments and agreements to Pubco, jointly and severally, as a material inducement to Pubco's consummation of the transactions contemplated hereby as of the date of this Agreement:
(a) On the Effective Date, the Class B Member and Class C Member will not be under any binding obligation or other commitment, arrangement or understanding to sell, transfer or otherwise dispose of any portion of the Pubco Special Shares to any other person, nor does the Class B Member or the Class C Member have any current plan, intention or agreement to sell, transfer or otherwise dispose of any portion of the Pubco Special Shares to any other person.
(b) Each of the Class B Member and the Class C Member is acquiring the Pubco Special Shares for investment for his or her own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Such Class B Member and Class C Member understands that the Pubco Special Shares have not been, and will not be, registered under the Securities Act of 1933, as amended, by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Class B Member's and Class C Member's representations as expressed herein. Each of the Class B Member and Class C Member is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933.
(c) Each of the Class B Member and the Class C Member further acknowledges and agrees that the ability to dispose of the Pubco Special Shares may be subject to certain restrictions contained in the articles and other constating documents of Pubco. Such Class B Member and Class C Member recognizes that there will not be any public trading market for the Pubco Special Shares and, as a result, each of the Class B Member and the Class C Member may be unable to sell or dispose of the Pubco Special Shares. Each of the Class B Member and the Class C Member further acknowledges and agrees that Pubco shall have no obligation to register the Pubco Special Shares or listing them for trading.
(d) Each of the Class B Member and the Class C Member has had the opportunity to consult his, her or its own tax advisors with respect to the tax consequences to him, her or it of the transfer, receipt and ownership of the Pubco Special Shares, including the tax consequences under the tax laws of any state, local, U.S. federal or non-U.S. jurisdiction and the possible effects of changes in such tax laws. Each of the Class B Member and the Class C Member acknowledges that none of Pubco or its subsidiaries or affiliates or any of their successors, beneficiaries, and assigns or their past and present directors, managers, shareholders, members, partners, officers, employees, and agents (including, without limitation, their attorneys) makes or has made any representations or warranties to such Class B Member or Class C Member regarding the tax consequences to such Class B Member or Class C Member of the transfer, receipt or ownership of the Pubco Special Shares, including the tax consequences under the tax laws of any state, local, U.S. federal or non-U.S. jurisdiction and the possible effects of changes in such tax laws. Nothing in this Section 2(d) shall limit the liability of the parties hereto in connection with any breach of the provisions of this Agreement.
(e) Each of the Class B Member and the Class C Member is aware that the Pubco Special Shares will not be listed or quoted on any exchange or market and on any other exchange, and the Class B Member and the Class C Member acknowledges and agrees that Pubco has no obligation to list the Pubco Special Shares on any exchange or market.
(f) Each of the Class B Member and the Class C Member acknowledges that (i) Pubco has made available information concerning Pubco sufficient for such Class B Member and Class C Member to make an informed decision regarding an investment in Pubco and an opportunity to ask questions and receive answers concerning the Pubco Special Shares, and (ii) Pubco has made available the opportunity to obtain any additional information that Pubco possesses or can acquire without unreasonable effort or expense deemed necessary by such Class B Member and Class C Member to verify the accuracy of the information provided, and such Class B Member and Class C Member has received all such additional information requested.
(g) Each of the Class B Member and Class C Member is the legal and beneficial owner of the Class B Units and Class C Units, respectively, free and clear of any liens, and upon the delivery of such Class B Units and Class C Units, Pubco shall acquire good and valid title to the Class B Units and Class C Units, free and clear of all liens (other than restrictions on transfer under applicable federal and state securities laws and liens or encumbrances created by or imposed by Pubco). Other than as a result of the transactions contemplated by this Agreement and except as set forth in the articles and constating documents of Pubco, each of the Class B Member and Class C Member does not directly or indirectly own or have any right to acquire any units, membership interests, equity securities, options, warrants, convertible or exchangeable securities, subscriptions, rights (including any preemptive rights), calls or commitments of any character whatsoever relating to the equity securities of, or other equity, ownership or voting interest in, Pubco.
(h) Each of the Class B Member and the Class C Member acknowledges that none of Pubco or any of its officers, directors, managers, shareholders, members, partners, representatives or affiliates has given him, her or it any investment advice, credit information, or opinion on whether the exchange of the Class B Units and Class C Units for the Pubco Special Shares is prudent. Neither the Class B Member nor the Class C Member has relied on Pubco to furnish or make available any documents or other information regarding the credit, affairs, financial condition or business of Pubco, or any other matter concerning Pubco. Except as set forth herein, each of the Class B Member and the Class C Member acknowledges that none of Pubco or any of its officers, directors, managers, shareholders, members, partners, representatives or affiliates has made any representation or warranty to him, her or it.
3. Bring-Down Certificate. Prior to any Contribution being made, Pubco will have received a certificate executed by each of the Class B Member and the Class C Member in respect of which such Contribution is to be made, confirming (a) the accuracy of its representations and warranties set out in Section 2 hereof as of the Effective Date and as of the Contribution Date, and (b) the performance of and compliance with all covenants and obligations to be performed or complied with by each of the Class B Member and the Class C Member at or prior to the Contribution Date in accordance with this Agreement.
4. Acknowledgements of the Class B Member and the Class C Member. Each of the Class B Member and the Class C Member further acknowledges and agrees as follows:
(a) The certificates representing the Pubco Special Shares or the Listed Shares issued on Conversion thereof, as applicable, (and any replacement certificate issued prior to the expiration of the applicable hold periods), or ownership statements issued under a direct registration system or other electronic book-based or book-entry system, will bear the following legends:
(i) a legend, only in respect of the Pubco Special Shares, as follows:
"THE TRANSFER IS ALSO RESTRICTED PURSUANT TO A CONTRIBUTION AND EXCHANGE AGREEMENT DATED NOVEMBER 29, 2021, BETWEEN THE HOLDER AND THE ISSUER."
(ii) a legend in accordance with applicable securities laws of the United States, if required:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATIONS UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT AND IS AVAILABLE FOR RESALE OF THE SECURITIES, OR (D) IN COMPLIANCE WITH ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, INCLUDING RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER FURTHER UNDERSTANDS AND AGREES THAT IN THE EVENT OF A TRANSFER."
(b) No person has made any written or oral representations: (i) that any person will resell or repurchase the Pubco Special Shares or the Listed Shares; or (ii) as to the future price or value of the Pubco Special Shares or the Listed Shares or the ability to sell or transfer any such Pubco Special Shares or Listed Shares, as applicable.
(c) Neither the Class B Member nor the Class C Member shall sell, assign, transfer or convey or cause to be sold, assigned, transferred or conveyed any Class B Units or Class C Units, other than to Pubco in accordance with the terms hereof.
(d) In completing the Contribution, each of the Class B Member and the Class C Member have relied solely upon this Agreement and publicly available information relating to Pubco, not upon any verbal or written representation as to any fact or otherwise made by or on behalf of Pubco or any affiliate, associate or representative thereof or any other person associated therewith. No "Offering Memorandum" for purposes of the Securities Act (British Columbia) has been delivered to either the Class B Member or the Class C Member in connection with the transactions contemplated herein.
(e) Each of the Class B Member and the Class C Member is solely responsible for obtaining such legal advice and tax advice as it considers appropriate in connection with the execution, delivery and performance by it of this Agreement and the completion of the transactions contemplated hereby.
(f) Each of the Class B Member and the Class C Member hereby consents to the collection, use and disclosure by Pubco and any other of its authorized representatives of the Class B Member's and Class C Member's personal information set forth herein ("Personal Information") to enable Pubco to fulfill their respective regulatory and reporting requirements and recognizes that this disclosure may result in the disclosure of some or all of the Personal Information becoming public information and, without limiting the foregoing, consents to the disclosure of such Personal Information to Pubco and any of their respective authorized representatives; securities commissions and/or other regulatory agencies in any jurisdiction in which the rules and requirements of such body may require such reporting; stock exchanges; publication on the SEDAR website; or as may be required or permitted by law.
(g) Each of the Class B Member and Class C Member hereby acknowledges, agrees and consents to: (a) the disclosure of Personal Information to Pubco, a stock exchange or any relevant securities commission or other regulatory authority; and (b) the collection, use and disclosure of Personal Information by Pubco for corporate finance and shareholder communication purposes or such other purposes as are necessary for Pubco's business. Each of the Class B Member and Class C Member hereby acknowledges and consents to the collection, use, and disclosure of Personal Information by the provincial securities commissions in Canada (to the extent applicable), including the publishing or otherwise making available to the public Personal Information including, for individuals, their name, number and type of securities purchased, the purchase price therefor, and their insider or registrant status, if applicable, and if the Class B Member and/or Class C Member is a non-individual, the above information and their address, contact person name and telephone number and the exemption relied upon.
(h) In order to permit Pubco to comply with the requirements of the Personal Information Protection and Electronic Documents Act (Canada) ("PIPEDA"), each of the Class B Member and Class C Member expressly consents to the disclosure by Pubco in any submission or filing that Pubco may be required to make with any applicable regulatory authority or stock exchange of any Personal Information.
(i) Each of the Class B Member and the Class C Member hereby acknowledges and agrees that he/she/it (i) has been notified by Pubco of the delivery to the securities regulatory authority, regulator or stock exchange of the Personal Information, that the Personal Information is being collected by the securities regulatory authority, regulator or stock exchange under the authority granted in securities legislation and by its policies, as applicable, and that the Personal Information is being collected for the purposes of the administration and enforcement of the securities legislation of the local jurisdiction, and (ii) has authorized the indirect collection of the Personal Information by the regulatory authority, regulator or stock exchange.
(j) The Personal Information will not be placed on the public file of any securities regulatory authority, regulator or stock exchange. However, freedom of information legislation may require the securities regulatory authority, regulator or stock exchange to make this information available if requested.
(k) Each of the Class B Member and the Class C Member hereby acknowledges and agrees that he/she/it is subject to the limitation set forth in the LLC Agreement and this Agreement and further, neither the Class B Member nor the Class C Member may, directly or indirectly through one or more affiliates, hold more than Five Hundred Thousand (500,000) shares of Listed Shares (as adjusted for stock splits, stock combinations, recapitalizations and similar events) at any time.
5. Survival. The representations, warranties and covenants contained in this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
6. Further Assurances. Each of the Class B Member and the Class C Member and Pubco agree to execute such documents and other instruments and take such further actions as may reasonably be required or desirable to carry out the provisions hereof and consummate the transactions contemplated by this Agreement. Upon the terms and subject to the conditions hereof, each of the Class B Member and the Class C Member and Pubco shall use their respective commercially reasonable efforts to take or cause to be taken all actions, and to do or cause to be done all other things, necessary, proper or advisable to consummate the transactions contemplated by this Agreement as promptly as practicable.
7. Amendments and Waivers. No addition or modification to this Agreement shall be valid unless made by written amendment signed by the parties hereto. No failure or delay by any party in exercising any right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
8. Successors and Assigns. All of the terms and provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.
9. Governing Law. This Agreement and any related dispute shall be governed by and interpreted and enforced in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of laws rules or provisions that would cause the application of the laws of any jurisdiction other than the State of Delaware.
10. Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement and each other agreement or instrument entered into in connection herewith or contemplated hereby, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine, electronic transmission of a .tiff, .pdf, JPEG or similar file, shall be treated in all manner and respects and for all purposes as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto shall re-execute original forms thereof and deliver them to all other parties, except that the failure of any party to comply with such a request shall not render this Agreement invalid or unenforceable. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine, electronic transmission of a .tiff, .pdf, JPEG or similar file, to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine, electronic transmission of a .tiff, .pdf, JPEG or similar file, as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
11. No Inducement. Each of the Class B Member and the Class C Member hereby represents and warrants that he, she or it has not been induced to agree to and execute this Agreement by any statement, act or representation of any kind or character by anyone, except as contained herein. Each of the Class B Member and the Class C Member further represents that he, she or it has fully reviewed this Agreement and has full knowledge of its terms, and executes this Agreement of his, her or its own choice and free will, after having received the advice of its attorney(s) and financial and tax advisor(s).
12. Notice. Notices to be provided pursuant to this Agreement shall be given in accordance with the terms of the LLC Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.
| SALONA GLOBAL MEDICAL DEVICE CORPORATION | ||
| By: | /s/ Les Cross | |
| Name: Les Cross | ||
| Its: President | ||
| /s/ Adam Harmon | ||
| Adam Harmon | ||
EXHIBIT A
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALG HEALTH PLUS, LLC
EXHIBIT B
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS
ATTACHING TO THE COMPANY SHARES
1. COMMON SHARES. Subject to the rights of any class of shares that are expressed to rank prior to them, the common shares (the "Common Shares") will have the following rights, privileges, restrictions and conditions:
(a) Voting. The holders of the Common Shares will be entitled to receive notice of, attend and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote. Each Common Share will entitle its holder to one (1) vote.
(b) Dividends. The holders of Common Shares shall be entitled to receive such dividends payable in cash or property of the Company as may be declared thereon by the directors from time to time. The directors may declare no dividend payable in cash or property on the Common Shares unless the directors simultaneously declare a dividend payable in cash or property on the Class "A" Shares, in an amount per Class "A" Share equal to the amount of the dividend declared per Common Share.
(c) Liquidation. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company to its shareholders for the purposes of winding up its affairs, the holders of the Common Shares shall be entitled to participate pari passu with the holders of Class "A" non-voting Common Shares, with the amount of such distribution per Common Share equal to the amount of such distribution per Class "A" Share.
(d) Subdivision or Consolidation. The Common Shares shall not be consolidated or subdivided unless the Class "A" Shares are simultaneously consolidated or subdivided utilizing the same divisor or multiplier.
2. CLASS "A" NON-VOTING COMMON SHARES
Subject to the rights of any class of shares that are expressed to rank prior to them, the Class "A" non-voting common shares (the "Class "A" Shares") will have the following rights, privileges, restrictions and conditions:
(a) Voting. Except as required under the Act, the holders of the Class "A" Shares will not be entitled to receive notice of nor to attend meetings of the Company's shareholders and will have no voting rights. The holders of the Class "A" Shares shall, however, be entitled to notice of meetings of the shareholders called for the purpose of authorizing the dissolution of the Company or the sale of its undertaking or a substantial part thereof.
(b) Dividends. The holders of Class "A" Shares shall be entitled to receive such dividends payable in cash or property of the Company as may be declared thereon by the directors from time to time. The directors may declare no dividend payable in cash or property on the Class "A" Shares unless the directors simultaneously declare a dividend payable in cash or property on the Common Shares, in an amount per Common Share equal to the amount of the dividend declared per Class "A" Shares.
(c) Liquidation. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company to its shareholders for the purposes of winding up its affairs, the holders of the Class "A" Share shall be entitled to participate pari passu with the holders of Common Shares, with the amount of such distribution per Class "A" Share equal to the amount of such distribution per Common Share.
(d) Subdivision or Consolidation. The Class "A" Shares shall not be consolidated or subdivided unless the Common Shares are simultaneously consolidated or subdivided utilizing the same divisor or multiplier.
(e) Transfer. No Class "A" Share may be sold, transferred, assigned, pledged or otherwise disposed of, other than: (i) in connection with the conversion of Class "A" Shares into Common Shares; (ii) to an immediate family member of the holder; or (iii) a transfer for purposes of estate or tax planning to a company or person that is wholly beneficially owned by the holder or immediate family members of the holder or which the holder or immediate family members of the holder are the sole beneficiaries thereof.
(f) Voluntary Conversion. Subject to the Beneficial Ownership Limitation (as defined below) set forth in herein, holders of Class "A" Shares shall have the following rights of conversion (the "Share Conversion Right"):
(i) Right to Convert. Subject to the Beneficial Ownership Limitation, each Class "A" Share shall be convertible at the option of the holder into such number of Common Shares as is determined by multiplying the number of Class "A" Shares in respect of which the Share Conversion Right is exercised by one.
(ii) Beneficial Ownership Limitation. A holder of the Class "A" Shares shall not have the right to convert any Class "A" Share, to the extent that, after giving effect to such conversion, the holder (together with such holder's affiliates, and any other persons acting as a group together with the holder or any of the holder's affiliates (such persons, "Attribution Parties")), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the holder of the Class "A" Shares and his, her or its affiliates and Attribution Parties shall include the number of Common Shares issuable upon conversion of a Class "A" Share with respect to which such determination is being made, but shall exclude the number of Common Shares that would be issuable upon (i) conversion of the remaining, non-converted portion of a Class "A" Shares beneficially owned by the holder or any of his, her or its affiliates or Attribution Parties, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company, subject to a limitation on conversion or exercise analogous to the limitation contained herein, beneficially owned by the holder or any of his, her or its affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(f)(ii), beneficial ownership shall be calculated in accordance with each of National Instrument 55-104 - Insider Reporting Requirements and Exemptions and 62-104 - Take-Over Bids and Issuer Bids, it being acknowledged by the holder of the Class "A" Shares that the Company is not representing to the holder that any such calculation is in compliance with such instruments. To the extent that the limitation contained in this Section 2(f)(ii) applies, the determination of whether a Class "A" Share of a holder is convertible (in relation to other securities owned by the holder together with any affiliates and Attribution Parties) and of which number of Class "A" Shares is convertible shall be in the sole discretion and at the sole responsibility of the holder, and the submission of a Conversion Notice (as defined below) shall be deemed to be the holder's determination of whether a Class "A" Share is convertible (in relation to other securities owned by the holder together with any affiliates and Attribution Parties) and of which number of Class "A" Shares is convertible, in each case subject to the Beneficial Ownership Limitation, and the Company shall not have any obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(f)(ii), in determining the number of outstanding Common Shares, a holder of Class "A" Shares may rely on the number of outstanding Common Shares as reflected in (A) the Company's most recent interim report or annual financial statements filed on SEDAR, as the case may be, (B) a more recent public announcement by the Company, or (C) a more recent written notice by the Company or the Company's transfer agent setting forth the number of Common Shares outstanding. Upon the written request of a holder of Class "A" Shares, the Company shall, within two business days, confirm orally and in writing to the holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Class "A" Shares being converted, by the Class "A" holder or his, her or its affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The "Beneficial Ownership Limitation" shall be 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Common Shares issuable upon conversion of the Class "A" Shares in question.
(iii) Mechanics of Conversion. Before any holder of Class "A" Shares shall be entitled to voluntarily convert Class "A" Shares into Common Shares in accordance with the terms hereof, the holder shall surrender the certificate or certificates representing the Class "A" Shares to be converted at the head office of the Company, or the office of any transfer agent for the Class "A" Shares, and shall give written notice to the Company at its head office of his or her election to convert such Class "A" Shares and shall state therein the name or names in which the certificate or certificates representing the Common Shares are to be issued (a "Conversion Notice"). The Company shall (or shall cause its transfer agent to) as soon as practicable thereafter, issue to such holder or his or her nominee, a certificate or certificates or direct registration statement representing the number of Common Shares to which such holder is entitled upon conversion. Such conversion shall be deemed to have taken place immediately prior to the close of business on the day on which the certificate or certificates representing the Class "A" Shares to be converted is surrendered and the Conversion Notice is delivered, and the person or persons entitled to receive the Common Shares issuable upon such conversion shall be treated for all purposes as the holder or holders of record of such Common Shares as of such date.
(g) Mandatory Conversion. Notwithstanding anything to the contrary contained herein, upon the occurrence of a Change of Control Event, each issued and outstanding Class "A" Share shall be automatically converted into such number of Common Shares as is determined by multiplying the number of Class "A" Shares by one.
For the purposes of the Class "A" Share rights:
(a) "Change of Control Event" means:
(i) a Take Over Bid is made in respect of the shares in the Company and both of the following have occurred:
A. the holders of at least 50% of the shares in respect of which the Take over bid is made that are not subject to escrow have accepted the offer made under the Take over bid; and
B. the Take Over Bid becomes unconditional;
(ii) an Arrangement is proposed in respect of the Company and both of the following have occurred:
A. the Arrangement has become unconditional; and
B. the Arrangement has been approved by the court for implementation.
(iii) the acquisition of voting securities of the Company or any reorganization, amalgamation, merger, consolidation or share exchange in a single transaction (or series of related transactions) as a result of which the holders of the voting securities of the Company prior to the transaction (or series of related transactions) hold, immediately after such transaction (or series of related transactions), directly or indirectly, securities to which are attached 50% or less of the voting power with respect to the Company; or
(iv) a single transaction (or series of related transactions) resulting in the acquisition of the Company by another entity that results in the sale of all or substantially all of the assets of the Company.
(b) "Arrangement" means an arrangement under the Business Corporations Act (British Columbia) pursuant to which a person and its associates will acquire 50% or more of the issued and outstanding capital of the Company.
(c) "Take Over Bid" has the meaning ascribed thereto in the Securities Act (British Columbia).
Salona Global Medical Device Corporation Launches U.S. Sales Subsidiary; Acquires Team to Focus on Sales
and Marketing to Independent U.S. Hospitals and Group Purchasing Organizations (GPOs)
San Diego, California - November 30, 2021 - Salona Global Medical Device Corporation ("Salona" or the "Company") (TSXV:SGMD), an acquisition-oriented medical device company serving the global injury and surgery recovery (known as recovery science) market, has launched a new U.S. sales subsidiary, formed in the U.S. as a Limited Liability Company (the "LLC"), aimed at selling medical devices and supplies to small, independent hospitals and group purchasing organization ("GPO"). GPO's are organizations that offer small medical offices and clinics access to devices and supplies on a larger scale creating efficiencies by aggregating purchasing volumes.
Salona has created the LLC with an arm's length seasoned U.S. sales executive ("Agent") and his team with deep contacts and current sales relationships in the independent hospital and GPO sales channel on an exclusive basis. As part of the agreements to acquire the sales channel and existing customers, the Agent will receive 1,000,000 Salona Class "A" Shares (defined and details regarding these restricted, non-voting shares is below) so long as the LLC generates at least US$1,000,000 in profitable revenue for the quarter ending February 28, 2022, as well as additional equity incentives for generating profitable revenues from the channel as described below.
"We are pleased to launch this sales subsidiary and welcome the new team," said Les Cross, Chairman and interim CEO of the Company. "As we work to close additional acquisitions and focus on our future acquisition pipeline, we are simultaneously building a fully integrated medical device company with each transaction and partnership we form. In addition to our FDA approved production facility, our European sales channel, and our cash flow generating innovation team, we now add the GPO sales channel. Through this acquisition, we expect to add profitable revenues to our existing annual revenue base immediately. Once we close more acquisitions, we anticipate being able to increase organic revenue growth by making our products available to all of our sales channels."
Details of the Sales Subsidiary and Compensation for Profitable Sales
Salona has formed the LLC by contributing US$10,000 in organizational expenses and is the sole manager of the LLC, and, as such, holds all of the voting and participating units of the LLC. In addition to the initial revenue target of US$1,000,000 for the quarter ending February 28, 2022, for every US$50 block in marginal profit above market transfer pricing ("Sales Channel EBITDA") for the LLC during each quarter commencing with the three months ended February 28, 2022, and each of the quarterly periods thereafter through February 28, 2024 (up to US$10,000,000 in Sales Channel EBITDA), the Agent will receive $72 in Salona Class "A" Shares (based on the market price of the Salona Common Shares on November 29, 2021). The Agent has contributed the exclusive rights to sell to certain customers and related sales orders and supply agreements, in exchange for non-voting, non-participating units of the LLC that are exchangeable pursuant to a contribution and exchange agreement (the "Contribution and Exchange Agreement") with Salona into Class "A" non-voting common shares of Salona ("Salona Class "A" Shares"). The Salona Class "A" Shares have the same attributes as the common shares of Salona ("Salona Common Shares"), except that are not listed on the TSX Venture Exchange, do not carry the right to vote, and are convertible, subject to certain terms and conditions, including a provision prohibiting a holder of Salona Class "A" Shares from converting Salona Class "A" Shares for Salona Common Shares if it would result in such holder holding more than 9.9% of the Salona Common Shares, into Salona Common Shares on a one-for-one basis. In addition, pursuant to the Contribution and Exchange Agreement, the Agent is restricted from holding more than 500,000 Salona Common Shares at any time and the maximum allotment is no more than 21,000,000 Salona Class "A" Shares.
For more information please contact:
Les Cross
Chairman of the Board and Interim Chief Executive Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Additional Information
All dollar amounts are expressed in Canadian currency unless otherwise indicated.
The securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.
There can be no assurance that any acquisition (including the particular acquisitions contemplated herein) will be completed or the timing of any acquisitions. Completion of any transaction will be subject to applicable director, shareholder and regulatory approvals.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Certain statements contained in this press release constitute "forward-looking information" within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. These statements can be identified by the use of forward-looking terminology such as "expects" "believes", "estimates", "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", and "anticipate", and similar expressions as they relate to the Company, including: the Company closing additional acquisitions; the Company expecting to add revenues as a result of the acquisition; and upon closing more acquisitions, the Company anticipating being able to increase organic revenue growth by making its products available to its sales channel. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions, including Salona cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include but are not limited to the general business and economic conditions in the regions in which Salona operates; the ability of Salona to execute on key priorities, including the successful completion of acquisitions, business retention, and strategic plans and to attract, develop and retain key executives; difficulty integrating newly acquired businesses; the ability to implement business strategies and pursue business opportunities; disruptions in or attacks (including cyber-attacks) on Salona's information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which Salona is exposed; the failure of third parties to comply with their obligations to Salona or its affiliates; the impact of new and changes to, or application of, current laws and regulations; granting of permits and licenses in a highly regulated business; the overall difficult litigation environment, including in the United States; increased competition; changes in foreign currency rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the availability of funds and resources to pursue operations; critical accounting estimates and changes to accounting standards, policies, and methods used by Salona; the occurrence of natural and unnatural catastrophic events and claims resulting from such events; and risks related to COVID-19 including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession; as well as those risk factors discussed or referred to in Salona's disclosure documents filed with United States Securities and Exchange Commission and available at www.sec.gov, and with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect Salona in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Salona does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Salona undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
Document and Entity Information Document |
Nov. 29, 2021 |
|---|---|
| Document Information [Line Items] | |
| Document Type | 8-K |
| Document Creation Date | Nov. 29, 2021 |
| Document Period End Date | Nov. 29, 2021 |
| Amendment Flag | false |
| Entity Registrant Name | Salona Global Medical Device Corp. |
| Entity Address, Address Line One | 3330 Caminito Daniella |
| Entity Address, City or Town | Del Mar |
| Entity Address, State or Province | CA |
| Entity Address, Country | US |
| Entity Address, Postal Zip Code | 92014 |
| Entity Incorporation, State Country Name | A1 |
| City Area Code | 800 |
| Local Phone Number | 760-6826 |
| Entity File Number | 333-255642 |
| Entity Central Index Key | 0001617765 |
| Entity Emerging Growth Company | true |
| Entity Tax Identification Number | 00-0000000 |
| Entity Ex Transition Period | false |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |