CONFIDENTIAL TREATMENT REQUESTED
STOCK PURCHASE AGREEMENT
by and among
THE STOCKHOLDERS OF MERIDIAN FLEETWORKS, INC. (as listed on Exhibit A hereto)
(collectively, the "Sellers")
SOLARA FLEET HOLDINGS LLC
(the "Buyer")
MERIDIAN FLEETWORKS, INC.
(the "Company")
and
[STOCKHOLDER REPRESENTATIVE], as Stockholder Representative
Dated as of [●], 2026
DRAFT — Prepared by Calderwood & Harkness LLP — Subject to Client Approval — Not for Distribution Matter Reference: 1041-00004 — Project Trident
RECITALS
WHEREAS, Meridian FleetWorks, Inc. (the "Company") is a corporation duly organized and existing under the laws of the State of Delaware (Delaware File Number 5582037), with its principal place of business at 8750 Westpark Drive, Suite 600, McLean, Virginia 22102;
WHEREAS, the Company has authorized capitalization consisting of (a) 10,000,000 shares of common stock, par value $0.001 per share (the "Common Stock"), of which 7,850,000 shares are issued and outstanding, and (b) 2,000,000 shares of Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), of which 1,500,000 shares are issued and outstanding;
WHEREAS, the Company has outstanding options to purchase 650,000 shares of Common Stock under the Company's 2016 Stock Incentive Plan (the "Option Plan"), of which 480,000 are vested and 170,000 are unvested, with a weighted-average exercise price of $8.50 per share;
WHEREAS, the Sellers collectively own all of the issued and outstanding shares of Common Stock and Series A Preferred Stock (the shares of Common Stock and Series A Preferred Stock, together, the "Shares");
WHEREAS, Solara Fleet Holdings LLC (the "Buyer") is a Delaware limited liability company to be formed as a wholly-owned subsidiary of Solara Fund III, LP, a Delaware limited partnership;
WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers desire to sell to the Buyer, all of the Shares, on the terms and subject to the conditions set forth herein;
WHEREAS, simultaneously with the Closing (as defined herein), Garrett Holliday shall contribute a portion of the consideration otherwise payable to him hereunder (the "Rollover Contribution") to the Buyer in exchange for membership interests in the Buyer, pursuant to the Rollover Agreement (as defined herein);
WHEREAS, simultaneously with the Closing, all outstanding Options (as defined herein) shall be cancelled and converted into the right to receive the Option Consideration (as defined herein);
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Aggregate Purchase Price" means Three Hundred Fifty Million Dollars ($350,000,000), subject to adjustment pursuant to Section 2.4.
"Agreement" means this Stock Purchase Agreement, including all Exhibits, Schedules, and Disclosure Schedules attached hereto, as the same may be amended, supplemented, or modified from time to time in accordance with the terms hereof.
"Ancillary Agreements" means the Escrow Agreement, the Rollover Agreement, the Stockholder Support Agreement, the Restrictive Covenant Agreements, the Debt Commitment Letter, the Equity Commitment Letter, and each other agreement, instrument, certificate, or document delivered or to be delivered in connection with the transactions contemplated hereby.
"Business Day" means any day other than a Saturday, Sunday, or a day on which commercial banks in New York, New York or Wilmington, Delaware are authorized or required by Law to be closed.
"Buyer" means Solara Fleet Holdings LLC, a Delaware limited liability company.
"Buyer Indemnified Parties" means the Buyer, its Affiliates (including, after the Closing, the Company), and their respective officers, directors, managers, members, partners, employees, agents, successors, and assigns.
"Cash" means the aggregate amount of cash and cash equivalents (including checks, wire transfers, and drafts deposited or in transit for the account of the Company, but excluding any amounts in respect of outstanding but uncashed checks or drafts issued by the Company) of the Company as of the close of business on the Business Day immediately preceding the Closing Date, determined in accordance with GAAP.
"Closing" has the meaning set forth in Section 2.7.
"Closing Cash Consideration" has the meaning set forth in Section 2.3(a).
"Closing Date" has the meaning set forth in Section 2.7.
"Closing Date Indebtedness" has the meaning set forth in Section 2.4.
"Closing Net Working Capital" has the meaning set forth in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
"Common Stock" means the common stock, par value $0.001 per share, of the Company.
"Company" means Meridian FleetWorks, Inc., a Delaware corporation (EIN 47-3891205).
"Company Transaction Expenses" means all fees, costs, and expenses incurred by or on behalf of the Company or the Sellers in connection with the negotiation, preparation, execution, and consummation of the transactions contemplated hereby, including (a) all fees and expenses of Hawthorne Kinsey & Alcott LLP, counsel to the Company, (b) all fees and expenses of Redstone Arbor Capital LLC, financial advisor to the Company, including the success fee of $6,125,000 payable upon the Closing, (c) all accounting and auditing fees incurred in connection with the transactions contemplated hereby, and (d) all sale bonuses, change-of-control payments, transaction bonuses, retention bonuses, or similar payments triggered by the announcement, execution, or consummation of the transactions contemplated hereby. The Company Transaction Expenses are estimated in aggregate at approximately $12,000,000.
"Confidential Information" means any and all information, data, and materials relating to the business, operations, assets, liabilities, financial condition, prospects, or affairs of the Company, the Buyer, or any of their respective Affiliates, that is proprietary, confidential, or not generally available to the public, including trade secrets, know-how, customer lists, supplier lists, pricing information, marketing strategies, financial projections, business plans, and technical data, but excluding information that (a) is or becomes generally available to the public other than as a result of a breach of this Agreement or any confidentiality obligation, (b) was already known to the receiving party on a non-confidential basis prior to its disclosure, or (c) is independently developed by the receiving party without reference to Confidential Information.
"Consent" means any consent, approval, authorization, waiver, permit, license, exemption, order, or notice of or to any Person, including any Governmental Authority.
"Contract" means any legally binding agreement, contract, commitment, lease, sublease, license, sublicense, purchase order, work order, statement of work, note, bond, mortgage, indenture, franchise, guaranty, joint venture arrangement, or other arrangement, whether written or oral.
"Debt Commitment Letter" has the meaning set forth in Section 5.4.
"Disclosure Schedules" means the disclosure schedules delivered by the Company and the Sellers to the Buyer concurrently with the execution and delivery of this Agreement, arranged in sections corresponding to the numbered and lettered sections of this Agreement to which they relate.
"Environmental Law" means any Law relating to pollution, protection of the environment, natural resources, or human health and safety (to the extent relating to exposure to Hazardous Materials), including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, and analogous state and local Laws, each as amended.
"Equity Commitment Letter" has the meaning set forth in Section 5.4.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
"Escrow Agent" means Northgate Escrow Services LLC, with its principal office at 100 Summer Street, Suite 800, Boston, MA 02110.
"Escrow Agreement" means the Escrow Agreement to be entered into at the Closing among the Buyer, the Stockholder Representative, and the Escrow Agent, in substantially the form attached hereto as Exhibit B.
"Escrow Amount" means Seventeen Million Five Hundred Thousand Dollars ($17,500,000), representing five percent (5%) of the Aggregate Purchase Price.
"Escrow Release Date" means the date that is eighteen (18) months following the Closing Date.
"Estimated Closing Statement" has the meaning set forth in Section 2.4(a).
"Estimated Purchase Price" has the meaning set forth in Section 2.4(a).
"Final Closing Statement" has the meaning set forth in Section 2.4(b).
"Final Purchase Price" has the meaning set forth in Section 2.4(d).
"Financing Commitments" has the meaning set forth in Section 5.4.
"FIRPTA Certificate" means a certificate, in form and substance reasonably satisfactory to the Buyer, conforming to the requirements of Treasury Regulation Section 1.1445-2(b), certifying that the Company is not, and has not been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a "United States real property holding corporation" within the meaning of Section 897(c) of the Code.
"Fraud" means an actual and intentional misrepresentation of a material fact made by a party hereto with respect to the making of the representations and warranties set forth in this Agreement, made with the actual knowledge that such representation is false and with the specific intent to deceive, and upon which the other party has actually and reasonably relied to its detriment. For the avoidance of doubt, "Fraud" does not include equitable fraud, promissory fraud, unfair dealing fraud, or any other fraud theory based on recklessness, negligence, or constructive knowledge.
"Fully Diluted Shares" means 10,000,000 shares, consisting of (a) 7,850,000 shares of issued and outstanding Common Stock, (b) 1,500,000 shares of issued and outstanding Series A Preferred Stock, and (c) 650,000 shares of Common Stock issuable upon exercise of all outstanding Options (whether vested or unvested).
"Fundamental Representations" means the representations and warranties set forth in Section 3.1 (Organization and Qualification), Section 3.2 (Authorization), Section 3.3 (Capitalization), Section 3.21 (Brokers and Finders), Section 4.1 (Ownership of Shares), Section 4.2 (Authority), and Section 4.6 (Brokers).
"GAAP" means United States generally accepted accounting principles, as in effect from time to time.
"General Cap" has the meaning set forth in Section 9.4(b).
"Governmental Authority" means any federal, state, local, municipal, foreign, or other government or governmental or quasi-governmental authority of any nature, including any governmental agency, branch, bureau, department, commission, court, tribunal, arbitral body, instrumentality, or other body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.
"Hazardous Materials" means any substance, material, or waste that is listed, defined, designated, or classified as hazardous, toxic, radioactive, dangerous, or a pollutant or contaminant under or pursuant to any Environmental Law, including petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, and per- and polyfluoroalkyl substances.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, without duplication, with respect to the Company as of the applicable date of determination: (a) all outstanding indebtedness for borrowed money (including all obligations under the existing credit facility with Sentinel Commerce Bank, N.A., which has an outstanding balance of approximately $4,200,000 as of the date hereof); (b) all obligations evidenced by notes, bonds, debentures, or other similar instruments; (c) all obligations in respect of capital leases as determined in accordance with GAAP; (d) all obligations in respect of guarantees of any indebtedness of any other Person; (e) all accrued and unpaid interest, premiums, penalties, fees, expenses, and other charges payable in connection with any of the foregoing (including any prepayment penalties, make-whole amounts, breakage costs, or similar amounts payable as a result of the repayment of any such indebtedness at the Closing); and (f) all obligations in respect of letters of credit, bankers' acceptances, and similar credit transactions to the extent drawn upon.
"Independent Accounting Firm" means a nationally recognized independent accounting firm mutually agreed upon by the Buyer and the Stockholder Representative, or, if the Buyer and the Stockholder Representative are unable to agree within five (5) Business Days of the date on which the Independent Accounting Firm is to be selected, such firm as shall be selected by lot from among Severin Beck CPAs LLP, Muldoon Thackeray CPAs LLP, and Beck Morriven CPAs LLP (excluding any such firm that has provided services to the Buyer, the Company, or any of their respective Affiliates within the preceding twenty-four (24) months).
"intellectual Property" means all intellectual property and proprietary rights of any kind, including all (a) patents and patent applications, (b) trademarks, service marks, trade names, trade dress, logos, and all registrations and applications for registration thereof, together with the goodwill associated therewith, (c) copyrights and copyrightable works, and all registrations and applications for registration thereof, (d) internet domain names, (e) trade secrets, know-how, inventions (whether patentable or not), algorithms, software, databases, data collections, technical data, processes, techniques, designs, and other confidential or proprietary information, and (f) all rights to sue for and recover damages for past, present, and future infringement, misappropriation, or other violation of any of the foregoing.
"Knowledge of the Company" or "Company's Knowledge" means the actual knowledge of Garrett Holliday (Chief Executive Officer), Diana Vasquez-Park (Chief Technology Officer), and Marcus Trahan (Chief Financial Officer), in each case after reasonable inquiry of their respective direct reports with responsibility for the relevant matter.
"Law" means any federal, state, local, municipal, foreign, or other statute, law, ordinance, regulation, rule, code, executive order, administrative order, judgment, decree, injunction, or other requirement of any Governmental Authority.
"Lien" means any lien, pledge, mortgage, deed of trust, hypothecation, security interest, encumbrance, easement, covenant, restriction on transfer, option, right of first refusal, right of first offer, or other restriction or charge of any kind, whether imposed by Law, Contract, or otherwise.
"Losses" means any and all damages, losses, deficiencies, liabilities, obligations, judgments, awards, fines, penalties, claims, demands, assessments, costs, and expenses (including reasonable and documented attorneys' fees, accountants' fees, consultants' fees, and other professional fees and costs of investigation, litigation, settlement, and enforcement), but excluding punitive, exemplary, or speculative damages, lost profits, diminution of value, or consequential damages (except, in each case, to the extent actually awarded to a third party in connection with a Third-Party Claim).
"Material Adverse Effect" means any event, change, effect, development, occurrence, condition, or state of facts that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, operations, assets, liabilities, financial condition, or results of operations of the Company, taken as a whole, or (b) the ability of the Company or any Seller to consummate the transactions contemplated hereby; provided, however, that none of the following, individually or in the aggregate, shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect: (i) changes in general economic, business, financial, or market conditions; (ii) changes in conditions generally affecting the industry in which the Company operates; (iii) changes in applicable Law or GAAP (or the interpretation or enforcement thereof); (iv) any effect arising from or relating to the announcement, pendency, or consummation of the transactions contemplated hereby; (v) any natural disaster, act of God, pandemic, epidemic, or public health emergency; (vi) any hostilities, act of war, sabotage, terrorism, or military actions, or any escalation or worsening thereof; or (vii) any failure of the Company to meet any internal or published financial projections, budgets, forecasts, or estimates (it being understood that the underlying causes of any such failure may be considered in determining whether a Material Adverse Effect has occurred); provided, further, that the exceptions set forth in clauses (i), (ii), (iii), (v), and (vi) shall not apply to the extent that such event, change, effect, development, occurrence, condition, or state of facts disproportionately affects the Company relative to other companies operating in the same industry and geographic markets as the Company.
"Net Working Capital" means (a) the current assets of the Company (excluding Cash) minus (b) the current liabilities of the Company (excluding any Closing Date Indebtedness and Company Transaction Expenses), in each case calculated in accordance with GAAP applied consistently with the Company's past practice and in accordance with the accounting principles, policies, and methodologies set forth on Schedule 1.1(a) (the "NWC Methodology").
"Notice of Disagreement" has the meaning set forth in Section 2.4(c).
"NWC Methodology" has the meaning set forth in the definition of "Net Working Capital."
"Option" means each outstanding option to purchase shares of Common Stock granted under the Option Plan, whether vested or unvested.
"Option Consideration" means, with respect to each Option, an amount in cash (without interest) equal to (a) the Per Share Price, minus (b) the exercise price per share applicable to such Option. For the avoidance of doubt, based on the initial Per Share Price of $35.00 and the weighted-average exercise price of $8.50 per share, the net per-share Option Consideration is $26.50, and the aggregate Option Consideration for all 650,000 outstanding Options is $17,225,000.
"Option Plan" means the Meridian FleetWorks, Inc. 2016 Stock Incentive Plan, as amended from time to time.
"Order" means any order, writ, injunction, judgment, decree, ruling, assessment, or arbitration award of any Governmental Authority.
"Outside Date" means June 30, 2026.
"Per Share Price" means the quotient obtained by dividing (a) the Final Purchase Price by (b) the number of Fully Diluted Shares. Based on an initial Aggregate Purchase Price of $350,000,000 and 10,000,000 Fully Diluted Shares, the initial Per Share Price is $35.00 per share, subject to adjustment pursuant to Section 2.4.
"Permit" means any permit, license, franchise, certificate of authority, registration, approval, clearance, or similar authorization of any Governmental Authority.
"Permitted Liens" means (a) statutory liens for current Taxes not yet due and payable or the validity or amount of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (b) mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar statutory liens arising or incurred in the ordinary course of business; (c) zoning, entitlement, and other land use regulations imposed by Governmental Authorities that do not materially interfere with the use or occupancy of the applicable property; (d) purchase money liens and liens securing rental payments under capital lease arrangements; and (e) other imperfections of title or encumbrances, if any, that do not, individually or in the aggregate, materially impair the continued use of the applicable property in the ordinary course of business.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or other entity of any kind.
"Pro Rata Share" has the meaning set forth in Section 2.3(b).
"R&W Insurance Policy" means the buyer-side representations and warranties insurance policy to be obtained by the Buyer with Atlas Meridian Underwriters Ltd. as carrier, with a policy limit of Thirty-Five Million Dollars ($35,000,000), placed through Trident Peak Insurance Brokers Inc. (account executive Megan Forsythe).
"Restricted Period" has the meaning set forth in Section 6.8.
"Restrictive Covenant Agreements" means, collectively, the Restrictive Covenant Agreement to be entered into by Garrett Holliday in substantially the form attached hereto as Exhibit E-1 and the Restrictive Covenant Agreement to be entered into by Diana Vasquez-Park in substantially the form attached hereto as Exhibit E-2.
"Rollover Agreement" means the Rollover Agreement to be entered into at the Closing between Garrett Holliday and the Buyer, in substantially the form attached hereto as Exhibit C, pursuant to which Holliday shall contribute Rollover Shares having a value equal to approximately Twenty-Five Million Dollars ($25,000,000) to the Buyer in exchange for membership interests in the Buyer.
"Rollover Amount" means approximately Twenty-Five Million Dollars ($25,000,000), representing the aggregate value of the Rollover Shares to be contributed by Garrett Holliday to the Buyer at Closing.
"Rollover Shares" means the shares of Common Stock and/or Series A Preferred Stock contributed by Garrett Holliday to the Buyer at Closing in exchange for membership interests in the Buyer pursuant to the Rollover Agreement.
"Seller" or "Sellers" means each holder of Shares listed on Exhibit A hereto, including Garrett Holliday, Diana Vasquez-Park, Pinnacle Bluff Ventures LLC, Marcus Trahan, and all other holders of Shares as set forth on Exhibit A.
"Seller Indemnified Parties" means the Sellers and their respective Affiliates, and their respective officers, directors, managers, members, partners, employees, agents, successors, and assigns.
"Series A Preferred Stock" means the Series A Preferred Stock, par value $0.001 per share, of the Company.
"Stockholder Representative" means [to be designated, expected to be Garrett Holliday or a designee of Pinnacle Bluff Ventures LLC], in its capacity as representative of the Sellers pursuant to this Agreement.
"Stockholder Support Agreement" means the Stockholder Support Agreement to be entered into by Pinnacle Bluff Ventures LLC, Garrett Holliday, and Diana Vasquez-Park in favor of the Buyer, in substantially the form attached hereto as Exhibit D.
"Target Net Working Capital" means Five Million Eight Hundred Thousand Dollars ($5,800,000), which amount is based on the trailing twelve-month average of the Company's Net Working Capital as of December 31, 2025.
"Tax" or "Taxes" means (a) any and all federal, state, local, municipal, foreign, or other taxes of any kind, including income, gross receipts, excise, real and personal property, ad valorem, sales, use, value added, service, stamp, documentary, transfer, registration, franchise, payroll, employment, social security, Medicare, workers' compensation, unemployment compensation, disability, withholding, estimated, alternative minimum, and any other tax, assessment, charge, duty, fee, levy, or impost of any kind whatsoever, imposed by any Governmental Authority, together with (b) any and all interest, penalties, fines, additions to tax, or additional amounts imposed with respect to any of the foregoing, and (c) any liability for the payment of any amounts of the type described in clauses (a) or (b) as a result of being (or having been) a member of a consolidated, combined, unitary, or affiliated group, or as a result of any obligation under any Tax sharing, Tax allocation, or Tax indemnification agreement or arrangement, or as a result of being a transferee or successor, by contract, or otherwise.
"Tax Return" means any return, declaration, report, form, claim for refund, information return, or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, filed or required to be filed with any Governmental Authority.
"TerraLink Consent" means the written consent of TerraLink Logistics, Inc. required pursuant to the Strategic Partnership Agreement dated March 15, 2022, between the Company and TerraLink Logistics, Inc., for any change of control of the Company, in form and substance reasonably satisfactory to the Buyer.
"Transaction" means the purchase and sale of the Shares and all other transactions contemplated by this Agreement and the Ancillary Agreements.
Section 1.2 — Rules of Construction
(a) Unless the context otherwise requires, (i) words in the singular shall include the plural and vice versa, (ii) words of one gender shall include the other genders, (iii) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement, (iv) the terms "Article," "Section," "Schedule," "Exhibit," and "Disclosure Schedule" refer to the specified Article, Section, Schedule, Exhibit, or Disclosure Schedule of or to this Agreement, and (v) the term "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding or succeeding such term.
(b) All references to "$" or "dollars" shall be deemed references to United States dollars. All accounting terms not specifically defined herein shall have the meanings ascribed to them under GAAP, except as otherwise specified herein.
(c) All references herein to any period of days shall mean calendar days unless otherwise specified as "Business Days." If the last day of any period prescribed hereunder is not a Business Day, such period shall be extended to and through the next succeeding Business Day.
(d) The Disclosure Schedules and Exhibits referred to herein shall be deemed an integral part of this Agreement and shall be construed with and as part of this Agreement to the same extent as if they were set forth verbatim herein. Any item disclosed on any section or subsection of the Disclosure Schedules shall be deemed disclosed with respect to any other section or subsection of this Agreement to the extent that the relevance of such disclosure to such other section or subsection is reasonably apparent on the face of such disclosure.
(e) The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(f) All references to any Law shall be deemed references to such Law as amended, supplemented, or modified from time to time (and, in the case of any statute, to any rules and regulations promulgated thereunder), unless the context specifically requires otherwise.
ARTICLE II — PURCHASE AND SALE; CLOSING
Section 2.1 — Purchase and Sale of Shares
Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, each Seller shall sell, transfer, convey, assign, and deliver to the Buyer, and the Buyer shall purchase and acquire from each Seller, all of the Shares held by such Seller, free and clear of all Liens (other than restrictions under applicable securities Laws and the Company's organizational documents, which shall be terminated effective at the Closing). The total number of Shares to be acquired by the Buyer at the Closing shall consist of 7,850,000 shares of Common Stock and 1,500,000 shares of Series A Preferred Stock, representing one hundred percent (100%) of the issued and outstanding capital stock of the Company.
The allocation of Shares among the Sellers is set forth on Exhibit A hereto and summarized as follows:
For the avoidance of doubt, the foregoing table does not include the 650,000 shares of Common Stock subject to outstanding Options, which shall be treated in accordance with Section 2.2. The Rollover Shares to be contributed by Garrett Holliday to the Buyer at Closing pursuant to the Rollover Agreement are included in the shares listed above and shall be treated in accordance with Section 2.6.
Section 2.2 — Treatment of Options
(a) At the Closing, each outstanding Option (whether vested or unvested) to purchase shares of Common Stock under the Option Plan shall, without any action on the part of the holder thereof, be cancelled and shall cease to represent a right to acquire shares of Common Stock. In consideration of such cancellation, each holder of a cancelled Option shall become entitled to receive, as promptly as practicable following the Closing (and in any event within five (5) Business Days following the Closing Date), an amount in cash (without interest) equal to the Option Consideration with respect to such Option, subject to Section 2.2(c).
(b) As of the date hereof, there are 650,000 Options outstanding under the Option Plan, with a weighted-average exercise price of $8.50 per share. Based on an initial Per Share Price of $35.00, the net per-share Option Consideration is $26.50, and the aggregate Option Consideration for all outstanding Options is $17,225,000 (calculated as ($35.00 − $8.50) × 650,000 = $17,225,000). The aggregate exercise prices that would have been payable upon exercise of all outstanding Options is $5,525,000 (calculated as $8.50 × 650,000 = $5,525,000).
(c) The Option Consideration shall be paid through the Company's payroll system (or as otherwise directed by the Buyer) and shall be subject to all applicable Tax withholdings required by the Code or any applicable state, local, or other Tax Law. The Company shall be responsible for all employer-side payroll taxes associated with the payment of the Option Consideration.
(d) Prior to the Closing, the Company shall take all actions necessary or appropriate to effect the cancellation of all outstanding Options and the termination of the Option Plan effective as of the Closing, including (i) obtaining any required consents from holders of Options, (ii) providing any notices required under the Option Plan or applicable Law, (iii) adopting any resolutions of the Board of Directors of the Company necessary to authorize such actions, and (iv) amending the Option Plan to the extent necessary. Following the Closing, no further options, restricted stock, restricted stock units, or other equity awards shall be granted under the Option Plan.
Section 2.3 — Purchase Price and Payment
Section 2.3(a) — Aggregate Purchase Price. The aggregate purchase price for all of the Shares shall be Three Hundred Fifty Million Dollars ($350,000,000) (the "Aggregate Purchase Price"), subject to adjustment as provided in Section 2.4. The Aggregate Purchase Price shall be payable at the Closing as follows:
(i) Closing Cash Consideration. An amount (the "Closing Cash Consideration") equal to (A) the Estimated Purchase Price (as defined in Section 2.4(a)), minus (B) the Rollover Amount, minus (C) the Escrow Amount, shall be payable by wire transfer of immediately available funds to the account or accounts designated in writing by each Seller (or the Stockholder Representative on behalf of the Sellers) not less than two (2) Business Days prior to the Closing Date, in proportion to each Seller's Pro Rata Share (as defined in Section 2.3(b)). The Closing Cash Consideration shall be allocated among the Sellers in accordance with the allocation table set forth on Exhibit A.
(ii) Rollover Contribution. The Rollover Amount (approximately $25,000,000) shall not be paid in cash to Garrett Holliday at the Closing but shall instead be contributed by Garrett Holliday to the Buyer in exchange for membership interests in the Buyer pursuant to the terms and conditions of the Rollover Agreement attached hereto as Exhibit C. The Rollover Contribution is described in greater detail in Section 2.6.
(iii) Escrow Deposit. The Escrow Amount ($17,500,000) shall be deposited by the Buyer with the Escrow Agent (Northgate Escrow Services LLC, 100 Summer Street, Suite 800, Boston, MA 02110) at the Closing, pursuant to the terms and conditions of the Escrow Agreement attached hereto as Exhibit B. The Escrow Amount shall be withheld from the Closing Cash Consideration otherwise payable to the Sellers and shall be allocated among the Sellers in proportion to their respective Pro Rata Shares. The Escrow Amount shall serve as security for the post-closing purchase price adjustment under Section 2.4 and the indemnification obligations under Article IX, as further described in Section 2.5.
Section 2.3(b) — Pro Rata Share. "Pro Rata Share" means, with respect to each Seller, the percentage obtained by dividing (a) the total number of Shares owned by such Seller plus the number of shares of Common Stock subject to in-the-money Options held by such Seller, by (b) the total number of Fully Diluted Shares. The Pro Rata Share of each Seller is set forth on Exhibit A. The Pro Rata Share shall be used for purposes of allocating the Closing Cash Consideration, the Escrow Amount, and the purchase price adjustment among the Sellers.
Section 2.3(c) — Payment of Company Transaction Expenses and Indebtedness. At the Closing, the Buyer shall cause to be paid, on behalf of the Company (and such payments shall reduce the Estimated Purchase Price on a dollar-for-dollar basis as described in Section 2.4(a)):
(i) All Company Transaction Expenses, in each case in accordance with invoices delivered pursuant to Section 2.8(a)(viii), including (A) the success fee of $6,125,000 payable to Redstone Arbor Capital LLC, (B) all legal fees and expenses of Hawthorne Kinsey & Alcott LLP, and (C) all other Company Transaction Expenses identified in the Estimated Closing Statement. The aggregate Company Transaction Expenses are estimated at approximately $12,000,000.
(ii) All Closing Date Indebtedness, including the payoff of the approximately $4,200,000 outstanding under the Company's existing credit facility with Sentinel Commerce Bank, N.A. (2100 Wilson Boulevard, Suite 700, Arlington, VA 22201), in each case in accordance with payoff letters delivered pursuant to Section 2.8(a)(vii). Such payoff letters shall set forth the aggregate amount required to be paid to discharge each item of Closing Date Indebtedness in full, including all principal, accrued interest, prepayment penalties, breakage costs, and other fees and expenses, and shall provide for the release of all Liens securing such Indebtedness upon receipt of payment.
Section 2.3(d) — Withholding. The Buyer (and any other Person making payments hereunder) shall be entitled to deduct and withhold from any consideration payable hereunder such amounts as may be required to be deducted and withheld pursuant to the Code, or any provision of state, local, or foreign Tax Law. To the extent any amounts are so deducted and withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. The Buyer shall provide the Stockholder Representative with reasonable advance notice of any intended withholding (other than withholding in respect of Option Consideration, which shall be handled pursuant to Section 2.2(c)) and shall cooperate with the Stockholder Representative to minimize or eliminate any such withholding to the extent permitted by applicable Law.
Section 2.4 — Purchase Price Adjustment
Section 2.4(a) — Estimated Closing Statement. Not less than three (3) Business Days prior to the Closing Date, the Company shall prepare and deliver to the Buyer a statement (the "Estimated Closing Statement") setting forth the Company's good-faith estimates of: (i) Closing Net Working Capital (the "Estimated Closing Net Working Capital"), (ii) Closing Date Indebtedness (the "Estimated Closing Date Indebtedness"), (iii) Cash (the "Estimated Cash"), and (iv) Company Transaction Expenses (the "Estimated Company Transaction Expenses"). The Estimated Closing Statement shall be prepared in accordance with GAAP applied consistently with the Company's past practice and the NWC Methodology set forth on Schedule 1.1(a). The Company shall provide the Buyer with reasonable access to the workpapers and supporting documentation used in the preparation of the Estimated Closing Statement, and the Company shall consider in good faith any comments of the Buyer to the Estimated Closing Statement received prior to the Closing.
For purposes of this Agreement, "Estimated Purchase Price" shall mean an amount equal to:
$350,000,000
plus the amount, if any, by which the Estimated Closing Net Working Capital exceeds the Target Net Working Capital ($5,800,000);
minus the amount, if any, by which the Target Net Working Capital ($5,800,000) exceeds the Estimated Closing Net Working Capital;
plus Estimated Cash;
minus Estimated Closing Date Indebtedness;
minus Estimated Company Transaction Expenses.
The foregoing adjustment mechanism is intended to effect the purchase of the Shares on a cash-free, debt-free basis with a customary Net Working Capital adjustment.
Section 2.4(b) — Post-Closing Adjustment. Within ninety (90) days following the Closing Date, the Buyer shall prepare and deliver to the Stockholder Representative a statement (the "Final Closing Statement") setting forth the Buyer's good-faith determination of the actual amounts of: (i) Closing Net Working Capital, (ii) Closing Date Indebtedness, (iii) Cash, and (iv) Company Transaction Expenses, in each case as of the close of business on the Business Day immediately preceding the Closing Date (or, in the case of Company Transaction Expenses, taking into account all amounts paid or payable at or prior to the Closing). The Final Closing Statement shall be prepared in accordance with GAAP applied consistently with the Company's past practice and the NWC Methodology set forth on Schedule 1.1(a), which NWC Methodology is based on the trailing twelve-month average methodology used to derive the Target Net Working Capital of $5,800,000.
The Buyer shall provide the Stockholder Representative and its representatives with reasonable access to the books, records, workpapers, and supporting documentation used in the preparation of the Final Closing Statement.
Section 2.4(c) — Dispute Resolution. The Stockholder Representative shall have a period of thirty (30) days following receipt of the Final Closing Statement (the "Review Period") to review the Final Closing Statement. During the Review Period, the Buyer shall provide (and shall cause the Company to provide) the Stockholder Representative and its accountants and other representatives with reasonable access during normal business hours to the books, records, and workpapers used in the preparation of the Final Closing Statement.
If the Stockholder Representative disagrees with any item set forth in the Final Closing Statement, the Stockholder Representative shall, on or prior to the last day of the Review Period, deliver to the Buyer a written notice (a "Notice of Disagreement") setting forth in reasonable detail (i) each item in dispute, (ii) the amount in dispute with respect to each such item, and (iii) the Stockholder Representative's proposed resolution of each such item. Any item not specifically identified in the Notice of Disagreement shall be deemed accepted by the Stockholder Representative and shall be final, binding, and conclusive for all purposes hereunder. If the Stockholder Representative does not deliver a Notice of Disagreement within the Review Period, the Final Closing Statement as delivered by the Buyer shall be deemed accepted and shall be final, binding, and conclusive for all purposes hereunder.
If a Notice of Disagreement is delivered, the Buyer and the Stockholder Representative shall negotiate in good faith for a period of twenty (20) days following delivery of the Notice of Disagreement (the "Negotiation Period") to resolve any items in dispute. If the Buyer and the Stockholder Representative are unable to resolve all items in dispute within the Negotiation Period, then the unresolved items shall be submitted for determination to the Independent Accounting Firm. The Independent Accounting Firm shall act as an expert, not as an arbitrator, and shall determine only those items in dispute (and shall not assign a value to any item greater than the highest value claimed by either party or less than the lowest value claimed by either party). The Independent Accounting Firm shall deliver its written determination within thirty (30) days after its engagement. The determination of the Independent Accounting Firm shall be final, binding, and conclusive on the parties for all purposes hereunder and shall not be subject to appeal or further review.
The fees, costs, and expenses of the Independent Accounting Firm shall be allocated between the Buyer, on the one hand, and the Sellers (payable by the Stockholder Representative on behalf of the Sellers), on the other hand, based upon the relative success of their respective positions. Specifically, the aggregate fees, costs, and expenses shall be allocated such that the Sellers' share thereof equals the product of (x) the total fees, costs, and expenses of the Independent Accounting Firm, multiplied by (y) a fraction, the numerator of which is the aggregate amount of the items in dispute that are resolved in favor of the Buyer (as determined by the Independent Accounting Firm) and the denominator of which is the total aggregate amount of all items in dispute submitted to the Independent Accounting Firm, and the Buyer's share thereof shall be the remainder.
Section 2.4(d) — Post-Closing True-Up. Following the final determination of the items set forth in the Final Closing Statement (whether by acceptance, agreement, or determination by the Independent Accounting Firm), the "Final Purchase Price" shall be calculated as follows:
Final Purchase Price = $350,000,000
plus the amount, if any, by which the finally determined Closing Net Working Capital exceeds the Target Net Working Capital ($5,800,000);
minus the amount, if any, by which the Target Net Working Capital ($5,800,000) exceeds the finally determined Closing Net Working Capital;
plus the finally determined Cash;
minus the finally determined Closing Date Indebtedness;
minus the finally determined Company Transaction Expenses.
If the Final Purchase Price exceeds the Estimated Purchase Price, the Buyer shall pay to the Stockholder Representative (for distribution to the Sellers in accordance with their respective Pro Rata Shares) the amount of such excess by wire transfer of immediately available funds within five (5) Business Days following the final determination of the Final Purchase Price.
If the Estimated Purchase Price exceeds the Final Purchase Price, the Stockholder Representative shall pay to the Buyer the amount of such excess by wire transfer of immediately available funds within five (5) Business Days following the final determination of the Final Purchase Price. Any such payment shall first be satisfied from the Escrow Amount in accordance with the Escrow Agreement and, to the extent the Escrow Amount is insufficient to satisfy such payment, from the Sellers directly (severally, in proportion to their respective Pro Rata Shares).
Section 2.5 — Escrow
At the Closing, the Buyer shall deposit the Escrow Amount (Seventeen Million Five Hundred Thousand Dollars ($17,500,000)) with Northgate Escrow Services LLC, as Escrow Agent, pursuant to the terms and conditions of the Escrow Agreement attached hereto as Exhibit B.
The Escrow Amount shall serve as security for: (i) any amounts payable by the Sellers to the Buyer in connection with the post-closing purchase price adjustment pursuant to Section 2.4, and (ii) the indemnification obligations of the Sellers under Article IX.
The Escrow Release Date shall be the date that is eighteen (18) months following the Closing Date (estimated to be approximately October 31, 2027, assuming a Closing Date of April 30, 2026). On or promptly following the Escrow Release Date, the Escrow Agent shall release to the Stockholder Representative (for distribution to the Sellers in accordance with their respective Pro Rata Shares) the remaining balance of the Escrow Amount, less any amounts (a) previously disbursed from the Escrow Amount in respect of claims under Sections 2.4 or 9.2, and (b) subject to pending but unresolved claims that have been properly noticed by the Buyer prior to the Escrow Release Date (which amounts shall continue to be held in escrow until final resolution of such pending claims).
The Escrow Agent shall invest the Escrow Amount in such investments as are permitted under the Escrow Agreement, which shall be limited to money market funds, United States Treasury securities, or similar liquid, investment-grade instruments. All income earned on the Escrow Amount shall be treated as income of the Sellers for Tax purposes and shall be distributed or allocated in accordance with the Escrow Agreement.
Section 2.6 — Rollover
At the Closing, Garrett Holliday shall contribute to the Buyer shares of Common Stock and/or Series A Preferred Stock having a value equal to the Rollover Amount (approximately Twenty-Five Million Dollars ($25,000,000), representing approximately 7.14% of the Aggregate Purchase Price) in exchange for membership interests in the Buyer, pursuant to the terms and conditions of the Rollover Agreement attached hereto as Exhibit C.
The Rollover Contribution is intended to qualify as a tax-deferred contribution under Section 721 of the Code. The parties shall cooperate to structure the Rollover Contribution in a manner consistent with such treatment, including the preparation and filing of any required Tax Returns and information statements.
As a result of the Rollover Contribution, the cash consideration payable to Garrett Holliday at the Closing shall be reduced by the Rollover Amount. The Rollover Shares shall be valued at the Per Share Price for purposes of determining the number of shares to be contributed and the membership interests to be received by Holliday in the Buyer.
Section 2.7 — Closing
The closing of the Transaction (the "Closing") shall take place remotely by electronic exchange of documents and signatures on the date (the "Closing Date") that is three (3) Business Days after the satisfaction or waiver of all conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or at such other time, date, and place as the Buyer and the Stockholder Representative may mutually agree in writing. The target Closing Date is April 30, 2026, subject to the satisfaction or waiver of all conditions precedent set forth in Article VII. The Closing shall be deemed effective as of 12:01 a.m. Eastern Time on the Closing Date.
Section 2.8 — Closing Deliverables
Section 2.8(a) — Seller Closing Deliverables. At the Closing, the Sellers and the Company shall deliver (or cause to be delivered) to the Buyer the following:
(i) Stock certificates representing all of the Shares, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank, with all required stock transfer stamps affixed thereto, in proper form for transfer of good and valid title to all of the Shares, free and clear of all Liens (other than restrictions under applicable securities Laws);
(ii) Evidence, in form and substance reasonably satisfactory to the Buyer, of the cancellation of all outstanding Options and the termination of the Option Plan, including any required consents from Option holders and resolutions of the Board of Directors of the Company;
(iii) A duly executed counterpart of the Escrow Agreement, executed by the Stockholder Representative on behalf of the Sellers;
(iv) A duly executed counterpart of the Rollover Agreement, executed by Garrett Holliday;
(v) Duly executed counterparts of the Restrictive Covenant Agreements, executed by Garrett Holliday (Exhibit E-1) and Diana Vasquez-Park (Exhibit E-2);
(vi) A duly executed counterpart of the Stockholder Support Agreement (to the extent not previously delivered), executed by Pinnacle Bluff Ventures LLC, Garrett Holliday, and Diana Vasquez-Park;
(vii) Payoff letters from Sentinel Commerce Bank, N.A. with respect to the Company's existing credit facility (with an outstanding balance of approximately $4,200,000), in form and substance reasonably satisfactory to the Buyer, setting forth the aggregate amount required to discharge such Indebtedness in full as of the Closing Date and providing for the release of all Liens upon receipt of payment;
(viii) Evidence of all Company Transaction Expenses and invoices therefor, including invoices from (A) Redstone Arbor Capital LLC for the success fee of $6,125,000, (B) Hawthorne Kinsey & Alcott LLP for legal fees and expenses, and (C) each other Person to whom Company Transaction Expenses are owed;
(ix) A certificate of good standing for the Company issued by the Secretary of State of the State of Delaware, dated not more than five (5) Business Days prior to the Closing Date, and certificates of qualification or good standing for the Company from the appropriate Governmental Authorities in the Commonwealth of Virginia, the State of Texas, and the State of Idaho, each dated not more than ten (10) Business Days prior to the Closing Date;
(x) A secretary's certificate of the Company, executed by the Secretary or an Assistant Secretary of the Company, attaching and certifying (A) the certificate of incorporation of the Company (as amended to date), (B) the bylaws of the Company (as amended to date), and (C) resolutions of the Board of Directors and stockholders of the Company authorizing and approving the execution, delivery, and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby;
(xi) The FIRPTA Certificate, duly executed by the Company, certifying under penalties of perjury that the Company is not and has not been a "United States real property holding corporation" within the meaning of Section 897(c) of the Code;
(xii) Resignations of such officers and directors of the Company as shall be designated by the Buyer in writing not less than three (3) Business Days prior to the Closing Date, effective as of the Closing;
(xiii) The Estimated Closing Statement, prepared and delivered in accordance with Section 2.4(a);
(xiv) Evidence, in form and substance reasonably satisfactory to the Buyer, of the receipt of all third-party consents required in connection with the Transaction, including the TerraLink Consent; and
(xv) An executed legal opinion of Hawthorne Kinsey & Alcott LLP, counsel to the Company, addressed to the Buyer, in form and substance reasonably satisfactory to the Buyer and its counsel, covering such matters as are customary for transactions of this type.
Section 2.8(b) — Buyer Closing Deliverables. At the Closing, the Buyer shall deliver (or cause to be delivered) to the Sellers, the Company, and/or the Escrow Agent, as applicable, the following:
(i) The Closing Cash Consideration, by wire transfer of immediately available funds to the accounts designated by the respective Sellers (or the Stockholder Representative on behalf of the Sellers) in accordance with Section 2.3(a);
(ii) The Escrow Amount ($17,500,000), by wire transfer of immediately available funds to the Escrow Agent's account designated in the Escrow Agreement;
(iii) Payment of all Company Transaction Expenses and all Closing Date Indebtedness on behalf of the Company, in each case in accordance with the invoices and payoff letters delivered pursuant to Sections 2.8(a)(vii) and 2.8(a)(viii);
(iv) A duly executed counterpart of the Escrow Agreement, executed by the Buyer;
(v) A duly executed counterpart of the Rollover Agreement, executed by the Buyer;
(vi) Duly executed counterparts of the Restrictive Covenant Agreements, executed by the Buyer;
(vii) A secretary's certificate of the Buyer (or its managing member), attaching and certifying (A) the certificate of formation and limited liability company agreement of the Buyer (as amended to date), and (B) resolutions of the managing member(s) of the Buyer authorizing and approving the execution, delivery, and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby;
(viii) Evidence, in form and substance reasonably satisfactory to the Stockholder Representative, that the Buyer has received the debt financing contemplated by the Debt Commitment Letter from Ironclad National Bank, N.A. and Ridgeline Commercial Lending Corp., sufficient to fund the Closing Cash Consideration, the Escrow Amount, and the payment of Company Transaction Expenses and Closing Date Indebtedness; and
(ix) An executed legal opinion of Calderwood & Harkness LLP, counsel to the Buyer, addressed to the Sellers and the Stockholder Representative, in form and substance reasonably satisfactory to the Stockholder Representative and its counsel, covering such matters as are customary for transactions of this type.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedules (which Disclosure Schedules shall be arranged in sections corresponding to the numbered and lettered sections of this Article III, and the disclosure of any item in any section or subsection of the Disclosure Schedules shall be deemed disclosure with respect to any other section or subsection of this Agreement to the extent the relevance of such disclosure to such other section or subsection is reasonably apparent on the face of such disclosure), the Company represents and warrants to the Buyer as of the date hereof and as of the Closing Date as follows:
Section 3.1 — Organization and Qualification
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (Delaware File Number 5582037). The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the properties owned, leased, or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The jurisdictions in which the Company is qualified to do business include the Commonwealth of Virginia, the State of Texas, and the State of Idaho. The Company has made available to the Buyer true, correct, and complete copies of the Company's certificate of incorporation and bylaws, each as amended to date, and each such document is in full force and effect. The Company is not in violation of any provision of its certificate of incorporation or bylaws.