| Item 1.01. |
Entry into a Material Definitive Agreement. |
Business Combination Agreement
Overview
Future Health ESG Corp., a
Delaware corporation (“Future Health”), entered into a business combination agreement, effective as of June
13, 2022 (the “Business Combination Agreement”), to acquire 100% of the issued and outstanding shares of common
stock (the “Purchased Shares”) of Excelera DCE, a California corporation (“Excelera”),
from its sole owner, MacArthur Court Acquisition Corp., a California corporation (“Seller”), in exchange for
the issuance of 40,000,000 shares of Future Health Common Stock at the Closing (“Closing Stock Consideration”)
and an additional 20,000,000 shares of Future Health Common Stock (the “Earnout Shares”) to be paid in accordance
with the terms, and subject to the conditions, set forth in Exhibit D of the Business Combination Agreement (the “Business
Combination”). The acquisition is intended to be treated by all parties as a tax-free reorganization within the meaning
of Sections 368(a)(1)(C) or (D) of the Internal Revenue Code of 1986, as amended (the “Intended Tax Treatment”).
Upon completion of the transaction, the combined company is expected to operate as Excelera Health, Inc., and is expected to be listed
on the Nasdaq under the new ticker symbol “XLRA”. Unless otherwise defined herein, the capitalized terms used herein are defined
in the Business Combination Agreement.
No later than three business
days following the satisfaction or waiver of the conditions set forth in the Business Combination Agreement (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time),
the Business Combination will be consummated by the transfer of the Purchased Shares to Future Health and the issuance of the Closing
Stock Consideration to Seller.
Transfer of Securities; Issuance of Securities
in exchange for Transferred Securities
On the Closing Date, (i)
Seller will sell, assign, transfer, convey and deliver to Future Health, and Future Health will purchase, assume, acquire and accept
from Seller, all of Seller’s rights, title and interest in and to the Purchased Shares, in each case, free and clear of any Liens
(other than transfer restrictions imposed thereon by applicable securities Law) and (ii) Future Health will instruct its transfer agent
to cause the Closing Stock Consideration to be accepted into The Depository Trust Company and to be issued (in uncertificated book-entry
form) to the Seller.
Earnout Shares
As additional purchase consideration,
Future Health will deliver (or cause to be delivered) to Seller or Seller’s permitted Assignee(s), 20,000,000 shares of Future Health
Common Stock (which will be equitably adjusted for share splits, (including share consolidations), combinations, exchanges, readjustments
of shares, or similar transactions, or any stock dividends or distributions paid in shares, reclassifications, share dividends, combinations,
recapitalizations and the like with respect to Future Health common stock occurring after the Closing) (the “Earnout Payment”)
within five business days after the filing (but in no event later than the fifth anniversary of the Closing Date) of the first Future
Health Quarterly Report on Form 10-Q or Annual Report on Form 10-K (each prepared in accordance with GAAP) in which Consolidated Revenues
in the most recent fiscal quarter included therein shall have exceeded One Hundred Fifty Million U.S. Dollars ($150,000,000), provided
that such Earnout Payment shall only be payable if the filing of such qualifying Form 10-Q or Form 10-K occurs prior to the fifth anniversary
of the Closing Date (the “Earnout Period”). Notwithstanding anything to the contrary herein, all Earnout Shares
required to be paid will be paid within 5 years of the Closing. In the event, and only in the event, of a Going Private Transaction prior
to the end of the Earnout Period, Future Health will deliver (or cause to be delivered) to Seller or, in connection with Seller’s
liquidation following the Closing or as otherwise permitted by Rev. Proc. 84-42, to an Affiliate of Seller or the shareholders of the
Seller, a pro rata portion of the Earnout Shares (the “Going Private Earnout”), within five (5) Business Days
after the closing of the Going Private Transaction, based on the most recently filed Future Health Quarterly Report on Form 10-Q or Annual
Report on Form 10-K, as the case may be, with such Going Private Earnout being the number of shares of Future Health Common Stock equal
to the product of (a) 20,000,000 multiplied by (b) the difference of (A) the Consolidated Revenues (determined in accordance with
GAAP) of Future Health in the most recent fiscal quarter included in such Form 10-Q or Form 10-K less (B) $88,000,000, being the
agreed quarterly revenue for the first quarter of 2022, divided by (c) $62,000,000.
Pursuant
to the Business Combination Agreement, Future Health and Seller shall in connection with the Closing enter into a separate registration
rights agreement with respect to the Earnout Shares in form and substance satisfactory to each of them.
Representations and Warranties; Covenants
The
Business Combination Agreement contains representations and warranties and covenants of the parties thereto that are customary for transactions
of this type. The representations and warranties in the Business Combination Agreement include, among others, those relating to, (a) entity
organization and authority, (b) capitalization, (c) authorization to enter into the Business Combination Agreement, (d) legal compliance
and approvals, (e) financial statements and liabilities, (f) absence of changes, (g) litigation, (h) employee benefit matters, (i) labor
and employment matters, (j) taxes, (k) in the case of Excelera only, (1) sufficiency of assets, (2) real property, (3) intellectual property,
(4) environmental matters, (5) material contracts, (6) insurance, (7) material healthcare providers, (8) certain business practices, sanctions,
(9) data privacy and data protection, (10) interested party transactions, (11) Exchange Act, (12) information provided for private placements
and proxy statement, (13) healthcare and insurance laws and (14) healthcare and insurance permits, and (l) in the case of Future Health
only, (1) its public filings, (2) the PIPE Investment and FPA Investment (each as defined below), (3) its listing, (4) its investigation
and reliance, and (5) its trust account. The covenants in the Business Combination Agreement are customary for transactions of this type
and include, among others, those relating to, (a) pre-closing conduct of business by the parties, (b) financing efforts, (c) absence of
claims against the trust account, (d) not to solicit or negotiate with third parties regarding alternative transactions and comply with
certain related restrictions and to cease discussions regarding alternative transactions, (e) the filing of a registration statement on
Form S-4 or a proxy statement in connection with the Business Combination (the “Registration Statement”), (f)
filing all Tax Returns consistent with the Intended Tax Treatment, and (g) cooperation in obtaining necessary approvals from governmental
agencies.
No Survival
None
of the representations, warranties, covenants, obligations or other agreements in the Business Combination Agreement or in any certificate,
statement or instrument delivered pursuant to the Business Combination Agreement, including any rights arising out of any breach of such
representations, warranties, covenants, obligations, agreements and other provisions, shall survive the closing and all such representations,
warranties, covenants, obligations or other agreements shall terminate and expire upon the occurrence of the closing (and there shall
be no liability after the closing in respect thereof), except for those covenants and agreements contained therein that by their terms
expressly apply in whole or in part after the closing and then only with respect to any breaches occurring after the closing.
Conditions to
Consummation of the Business Combination Agreement
General
Conditions
The
consummation of the Business Combination is conditioned upon, among other things, (a) receipt of the Future Health stockholders’
approval, (b) if applicable, effectiveness of the Registration Statement filed by Future Health in connection with the Business Combination,
no stop order having been issued by the U.S. Securities and Exchange Commissions (the “SEC”) remaining in effect
with respect to the Registration Statement, and no proceeding seeking such a stop order having been pending before or threatened by the
SEC, (c) the absence of any governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the Business
Combination, (d) the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, (e) all required consents, approvals
and authorizations set forth on certain disclosure schedules having been obtained, (f) sale and issuance by Future Health of Future Health
Common Stock in an aggregate amount equal to the PIPE Commitment and Additional Shares, if applicable, shall have been consummated in
accordance with the terms of the Subscription Agreement and the Forward Purchase Agreement, (g) the shares of Future Health Common Stock
shall be listed on Nasdaq, or another national securities exchange mutually agreed to by the parties, as of the Closing Date, and (h)
the Spin-Out and the Contributions as defined and described in the Business Combination Agreement shall have been effected and completed.
Future Health’s
Conditions to Closing
The
obligations of Future Health to consummate the Business Combination are also conditioned upon, among other things, (a) customary closing
conditions, including, without limitation, Seller and Excelera’s delivery of certain agreements, including an employee leasing agreement,
office lease agreement, and laboratory services agreement, (b) no material adverse event having occurred with respect to Excelera, and
(c) occurrence of the Contributions to Excelera and adoption by Seller of the Plan of Liquidation each as described in the Business Combination
Agreement.
Seller’s
and Excelera’s Conditions to Closing
The
obligations of Seller and Excelera to consummate the Business Combination also are conditioned upon, among other things, (a) customary
closing conditions, including, without limitation, Future Health’s delivery of certain agreements, (b) receipt of Seller’s
stockholders’ approval, (c) termination of the Future Health Insider Agreement, (d) disbursement of the Future Health Trust Fund,
and (e) no material adverse event having occurred with respect to Future Health.
Termination
The
Business Combination Agreement allows the parties to terminate the Business Combination Agreement if certain customary conditions described
in the Business Combination Agreement are not satisfied, including, without limitation, each party’s right to terminate, subject
to certain limited exceptions, if the Business Combination is not consummated by December 9, 2022.
If
the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have any liability
or any further obligation under the Business Combination Agreement, except as set forth in Section 7.03, Section 7.10, Section 9.02 and
Article X of the Business Combination Agreement, or in the case of termination subsequent to a willful and material breach of the Business
Combination Agreement by a party thereto.
The foregoing summary of the
Business Combination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Business
Combination Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K, and is incorporated herein by reference.
PIPE Subscription Agreement
Simultaneous with entering
into the Business Combination Agreement, Future Health entered into a Subscription Agreement (the “Subscription Agreement”)
with an investor (the “PIPE Investor”), pursuant to which, among other things, the PIPE Investor agreed to purchase
an aggregate of 9,090,909 shares of Future Health Common Stock immediately prior to the Business Combination at a cash purchase price
of $11.00 per share, resulting in aggregate proceeds of $100,000,000 (the “PIPE Investment”) to be placed in
an escrow account by no later than 5 days following the delivery of PCAOB audited financials statements of Excelera.
The Subscription Agreement
contains customary representations, warranties, covenants, agreements of Future Health and the PIPE Investor. The Subscription Agreement
includes customary closing conditions. The PIPE Investor has the right to terminate the Subscription Agreement if the transactions contemplated
in the Business Combination Agreement have not been consummated by December 14, 2022.
The foregoing description
of the Subscription Agreement does not purport to be complete and is qualified in its entirety by the reference to the full text of the
Subscription Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by
reference.
Forward Purchase Agreement
Simultaneous with entering
into the Business Combination Agreement, Future Health entered into a Forward Purchase Agreement (the “Forward Purchase Agreement”)
with an investor (the “FPA Investor”), pursuant to which, among other things, the FPA Investor agreed to purchase
shares of Future Health Common Stock in open market purchases at an an aggregate purchase price of $20,000,000 (the “Forward
Purchase Shares”) following the execution of the Business Combination Agreement and prior to the date which is two (2) business
days prior to the date of special meeting of Future Health’s stockholders called in connection with the Business Combination (the
“Purchase Deadline”); provided, however, that in no event shall the FPA Investor be required to purchase Forward
Purchase Shares at a price in excess $11.00 per share. In the event the FPA Investor purchases less than $20,000,000 of Forward Purchase
Shares by the Purchase Deadline, the FPA Investor shall purchase from Future Health, immediately prior to the Business Combination, the
requisite number of additional shares at $11.00 per share to satisfy the unfulfilled portion of the $20,000,000 purchase commitment (the
Forward Purchase Shares together with the Additional Shares, the “FPA Investment”).
The Forward Purchase Agreement
contains customary representations, warranties, covenants and agreements of Future Health and the FPA Investor. The Forward Purchase Agreement
shall terminate on the earlier of (i) the closing of the Business Combination and (ii) the later of (x) December 14, 2022 and (y) if Future
Health’s stockholders approve an extension of the date by which Future Health must consummate a business combination, such later
date as approved by Future Health’s stockholders.
The foregoing description
of the Forward Purchase Agreement does not purport to be complete and is qualified in its entirety by the reference to the full text of
the Forward Purchase Agreement, a copy of which is attached as Exhibit 10.2 to this Current Report on Form 8-K, and is incorporated herein
by reference.
Lock-Up Agreement
Simultaneous with entering
into the Business Combination Agreement, Future Health, Future Health ESG Associates 1, LLC (the “Sponsor”),
BEA Holdings, LLC, M2 Enterprises Holdings, LLC, HC1.com, Inc., MB Equity, LLC, R. Mark Lubbers, Dr. F. John Mills and Dr. Nancy L. Snyderman
(collectively, the “Founders” and together with the Sponsor, the “Key Future Health Stockholders”),
the Seller, PIPE Investor, and the FPA Investor (collectively, the “Insiders”), collectively representing approximately
79% of the shares of Future Health expected to be outstanding immediately after Closing (the “Lock-Up Shares”), each
entered into a Lock-Up Agreement pursuant to which the Insiders have agreed not to sell, transfer, or exchange the Lock-Up Shares until
the earlier of:
(x) one year after the Closing
Date,
(y) the date on which Future
Health completes a liquidation, merger, capital stock exchange, reorganization or other similar transactions that result in all of Future
Health’s stockholders having the right to exchange their shares for cash, securities or other property, or
(z) with respect to 1/3 of
the Lock-Up Shares in each instance, the dates subsequent to the Closing on which price of the Future Health Common Stock equals or exceeds
a target price of $12.00, $13.00, and $14.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for a period of 20 trading days within any consecutive 30 trading day period, provided, that for the purpose of this
clause (z), multiple target prices may be met simultaneously.
The Lock-Up Agreement further
provides that each Insider shall in no event sell or transfer within any contiguous 90-day period more than 1/3 of the Lock-Up Shares
originally issued to him/her/it.
Notwithstanding the foregoing,
the Seller and its shareholders are permitted to sell up to twenty percent (20%) of the stock they receive in order to pay taxes relating
to the transaction and the subsequent liquidation of the Seller.
The
foregoing description of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the form of the Lock-Up Agreement, the form of which is attached as Exhibit 10.3 to this Current Report on Form 8-K, and is incorporated
herein by reference.
Amended and Restated Registration Rights Agreement
At
the closing of the Business Combination, the Sponsor, certain other stockholders of Future Health and Seller (collectively, the “Registration
Rights Holders”) and Future Health will enter into an Amended and Restated Registration Rights Agreement (the “Amended
and Restated Registration Rights Agreement”). Pursuant to the Amended and Restated Registration Rights Agreement, Future
Health will agree that, within 30 calendar days after the consummation of the Business Combination, it will file with the SEC a registration
statement registering the resale of certain securities held by or issuable to the Registration Rights Holders (the “Resale
Registration Statement”), and Future Health will use its commercially reasonable efforts to have such Resale Registration
Statement declared effective as soon as reasonably practicable after the filing thereof. In certain circumstances, certain holders can
demand up to three underwritten offerings, and certain holders will be entitled to piggyback registration rights.
The
foregoing description of the Amended and Restated Registration Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the form of the Amended and Restated Registration Rights Agreement, the form of which is attached
as Exhibit 10.4 to this Current Report on Form 8-K, and is incorporated herein by reference.
Sponsor Stockholder Support Agreement
Future Health has delivered
to Seller the Sponsor Stockholder Support Agreement (the “Sponsor Stockholder Support Agreement”), dated June
13, 2022, by and among Future Health, Seller, Excelera and the Key Future Health Stockholders pursuant to which, among other things, the
Key Future Health Stockholders agreed to support the approval and adoption of the transactions contemplated by the Business Combination
Agreement, including agreeing to vote all Future Health Common Stock owned by it in favor of the Business Combination, and to execute
and deliver any further document, agreement or instrument of assignment, transfer or conveyance as necessary to effectuate the purposes
thereof and as may be reasonably requested in writing by another party thereto
The foregoing description
of the Sponsor Stockholder Support Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Sponsor Stockholder Support Agreement, a copy of which is attached as Exhibit 10.5 to this Current Report on Form 8-K, and
is incorporated herein by reference.
Amendment to Underwriting Agreement
Simultaneously with the execution
of the Business Combination Agreement, Future Health and Cantor Fitzgerald & Co. (“Cantor”) entered into
an amendment (the “Underwriting Agreement Amendment”) to the Underwriting Agreement, dated as September 9, 2021
(the “Underwriting Agreement”), by and between Future Health and Cantor. Pursuant to the Underwriting
Agreement Amendment, Cantor agreed to accept 272,727 shares of Future Health Common Stock (the “Deferred Commission Shares”)
in exchange for a $3,000,000 reduction in the cash portion of deferred underwriting fees payable at closing of the Business Combination.
A copy of the Underwriting
Agreement Amendment is filed with this Current Report on Form 8-K as Exhibit 1.1 and is incorporated herein by reference, and the foregoing
description of the Underwriting Agreement Amendment is qualified in its entirety by reference thereto.
The Business Combination Agreement,
the Lock-Up Agreement, the Amended and Restated Registration Rights Agreement, the Subscription Agreement, the Forward Purchase Agreement,
the Sponsor Stockholder Support Agreement and the Amendment to Underwriting Agreement (the “Included Agreements”)
have been included to provide investors with information regarding their terms. They are not intended to provide any other factual information
about Future Health, Excelera or their affiliates. The representations, warranties, covenants and agreements contained in each Included
Agreement and the other documents related thereto were made only for purposes of such Included Agreement as of the specific dates therein,
were solely for the benefit of the parties to such Included Agreement, may be subject to limitations agreed upon by the contracting parties,
including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the
Included Agreements instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Included Agreements and
should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual
state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning
the subject matter of representations and warranties may change after the date of the Included Agreements, as applicable, which subsequent
information may or may not be fully reflected in Future Health’s public disclosures.