Item 1.01 Entry Into Material Definitive Agreement.
On January 30, 2023 Vado Corp. (the “Company”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with Socialcom, Inc, d/b/a AudienceX, a California corporation (“AX”) and the shareholders of AX signatory thereto who collectively own 19,363,959 shares of AX common stock, or approximately 96.6% of the outstanding shares of AX common stock. On February 17, 2023, the parties amended and restated the Exchange Agreement. The Exchange Agreement as amended and restated provides that, upon the terms and subject to the conditions set forth therein, the Company will issue the AX shareholders signatory thereto a total of 169,434,641 shares of the Company’s common stock, representing approximately 96% of the shares of the Company’s common stock to be outstanding after giving effect to such issuance, in exchange for all of the shares of AX common stock held by such AX shareholders (the “Exchange”). The closing of the Exchange (the “Closing”) is conditioned upon AX shareholders collectively owning at least 19,363,959 shares of AX common stock executing the Exchange Agreement.
Under the Exchange Agreement, in connection with and subject to the Exchange, the Company agreed, among other things, to the following covenants and closing conditions: (i) enter into an agreement with David Lelong, the sole officer and director and majority shareholder of the Company, for the cancellation of 93 million shares of common stock held by him at the Closing, (ii) issue 22,793,540 options to purchase common stock of the Company to AX directors, officers, employees and consultants under a newly adopted equity incentive plan of the Company in exchange for the cancellation of 2,604,976 outstanding AX stock options held by such persons, and (iii) execute a binding agreement for a financing resulting in gross proceeds to the Company of $1,500,000. In the furtherance of the foregoing, Mr. Lelong, in his capacity as the sole member of the Board of Directors and majority shareholder of the Company, approved and adopted the 2023 Equity Incentive Plan of the Company, under which the Company is authorized to grant and issue up to 30 million shares of common stock and common stock equivalents to the Company’s directors, officers, employees and consultants for services rendered or to be rendered by such persons.
In addition, on January 30, 2023 in connection with the Exchange Agreement, the Company entered into a Stock Purchase Agreement (the “SPA”) and an Investor Rights Agreement (“IRA”) with an accredited investor (the “Investor”), which is also an AX shareholder, and amended and restated those agreements on February 17, 2023, pursuant to which the Company agreed to sell the Investor up to 50,000 shares of the Company’s Series A Convertible Preferred Stock (the “Series A”), which subject to beneficial ownership limitations is convertible into up to 1,000,000 shares of the Company’s common stock, at a purchase price of $30 per share of Series A in two equal tranches, with the first tranche closing simultaneously with the Closing of the Exchange and the second tranche closing on the 90th day after the Closing. Under the IRA the Company agreed to register for resale by the Investor the shares of the Company’s common stock issued or issuable to the Investor under the Series A and the Exchange Agreement on a registration statement to be filed with the Securities and Exchange Commission (the “SEC”). Under the IRA, at any time after 180 days following the Closing, the Investor may request the Company to prepare a registration statement on Form S-1 (or Form S-3, if available to the Company at such time) and the Company will be obligated to file such registration statement with the SEC within 120 days after such request, and to use its commercially reasonable efforts to cause the registration statement to be declared effective by the SEC as soon as practicable thereafter, subject to certain exceptions and limitations.
Subject to the terms of the Exchange Agreement, the Closing of the Exchange is scheduled to take place on or before February 24, 2023, subject to the satisfaction or waiver of the conditions to Closing set forth in the Exchange Agreement. If the conditions to Closing have not been satisfied by that deadline, the Company and AX may extend the Closing to a later date by mutual agreement. Effective at the Closing, the number of directors of the Company will be fixed at three, and Jason Wulfsohn and Reeve Benaron will be appointed to serve on the Board of Directors. Upon or immediately prior to the Closing, David Lelong shall have tendered his resignation as the sole officer of the Company, and the Company’s Board of Directors will appoint Jason Wulfsohn and Ryan Carhart as the Company’s Chief Executive Officer and Chief Financial Officer, respectively, effective upon the Closing. Immediately following the Closing, the AX shareholders who executed the Exchange Agreement as of that time will collectively own approximately 96% of the issued and outstanding shares of the Company’s common stock, and AX will continue as a subsidiary of the Company. AX is a digital marketing and services company focused on delivering integrated advertising and technology performance solutions to independent agencies and brands through its omnichannel trading desk platform. However, there is no assurance the Closing will occur.
The Exchange Agreement contains customary representations and warranties, customary covenants and conditions to Closing and additional conditions to Closing including as described above and as more particularly set forth therein.
The foregoing description of the Exchange Agreement, the SPA, the IRA, the Plan and the transactions contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the full text of such document, forms of which are filed as Exhibits 10.1 through 10.4, respectively, of this Current Report on Form 8-K.