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 Termination of a Material Definitive Agreement.
Termination Agreement with Business Warrior
The mutual agreement of Business Warrior Corporation (“BZWR”) and Innovative Payment Solutions, Inc. (“IPSI”), to terminate the Agreement and Plan of Merger dated July 28, 2024, between BZWR and IPSI (the “Merger”). This decision reflects our shared understanding and agreement that discontinuing the merger is in the best interest of both parties. By signing below, both BZWR and IPSI acknowledge the termination of the Merger, and no further obligations or liabilities will be owed by either party as a result of this termination.
Merger Agreement with Business Warrior
Overview
On July 28, 2024, Innovative Payment Solutions, Inc., a Nevada corporation (“IPSI”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among IPSI, IPSI Merger Sub, Inc., a Delaware corporation and a newly formed, wholly-owned subsidiary of IPSI (“Merger Sub”) and Business Warrior Corporation, a Wyoming corporation (“Business Warrior”).
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Business Warrior (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”), with Business Warrior continuing as the surviving Wyoming corporation in the Merger and a wholly-owned subsidiary of IPSI.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”): (i) each outstanding share of common stock, par value $0.0001 per share, of Business Warrior (“Business Warrior Common Stock”), other than treasury shares and shares as to which appraisal rights have been exercised, will be automatically converted into the right to receive a number of shares of common stock, par value $0.0001 per share, of IPSI (“IPSI Common Stock”) equal to the Applicable Per Share Portion (as defined in the Merger Agreement) of the Merger Consideration (as defined below), (ii) each outstanding share of preferred stock of Business Warrior (“Business Warrior Preferred Stock”), other than treasury shares and shares as to which appraisal rights have been exercised, will be automatically converted into the right to receive a number of shares of IPSI Common Stock equal to the Applicable Per Share Portion (as defined in the Merger Agreement) of the Merger Consideration (as defined below) had such share of Business Warrior Preferred Stock been converted into shares of Business Warrior Common Stock immediately prior to the Effective Time and (iii) any other options, warrants or rights to subscribe for or purchase any capital stock of Business Warrior or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital stock of Business Warrior, if not exercised or converted prior to the Effective Time, shall be cancelled, retired and terminated.
Merger Consideration
Pursuant to the terms of the Merger Agreement, the consideration to be delivered to the holders of Business Warrior Common Stock and Business Warrior Preferred Stock in connection with the Merger (the “Merger Consideration") will be a number of newly issued shares of IPSI Common Stock representing forty-five percent (45%) of the IPSI Common Stock outstanding immediately following the Closing, and after giving effect to the conversion, exercise or cancellation of the Business Warrior Preferred Stock and other Business Warrior securities referred to above.
Representations and Warranties
The Merger Agreement contains representations and warranties of each of IPSI, Merger Sub and Business Warrior that are customary for similar transactions and that include certain qualifications and customary exceptions, as applicable. Additionally, many of the representations and warranties are qualified by specified exceptions or qualifications contained in the Merger Agreement, by information provided pursuant to certain disclosure schedules to the Merger Agreement, or by reference to materiality, Material Adverse Effect, or similar qualifiers. “Material Adverse Effect” as used in the Merger Agreement means with respect to IPSI or Business Warrior, any change or effect that is or would reasonably be expected to be materially adverse to (i) the business, operations, results of operations or financial condition of such or Business Warrior, as applicable, and its subsidiaries taken as a whole or (ii) the ability of IPSI or Business Warrior to timely consummate the Transactions.
1
No Survival or Indemnification
None of the party’s representations, warranties or pre-Closing covenants will survive Closing and no party has any post-Closing indemnification obligations.
Covenants of the Parties
The Merger Agreement includes customary covenants of the parties with respect to, among others things, (i) operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger, (ii) access to information, (iii) cooperation in the preparation of the registration statement on Form S-4 (as may be amended or supplemented from time to time, the “Registration Statement”) which IPSI is expected to file with the U.S. Securities and Exchange Commission (“SEC”) in connection with the Merger and the Transactions, (iv) use of reasonable best efforts to obtain regulatory approvals, (v) notification of the other party of certain breaches, (vi) Section 16 matters, (vii) indemnification of directors and officers and tail insurance and (viii) obtaining all requisite approvals of each party’s respective stockholders. Additionally, Business Warrior has agreed not to solicit or enter into a competing alternative transaction (an “Alternative Transactions”), subject to the fiduciary duties of the board of directors Business Warrior, in accordance with customary terms and provisions set forth in the Merger Agreement.
The parties agreed to take all necessary actions to cause IPSI’s board of directors immediately after Closing to consist of five directors, including: (i) two persons who are designated by IPSI prior to Closing, (ii) two persons who are designated by Business Warrior prior to Closing and (iii) one person mutually agreed upon by IPSI and Business Warrior.
Conditions to Consummation of the Merger; Convertible Note Exchange
Each party’s obligation to consummate the Merger is conditioned upon, among other things: (i) approval by IPSI stockholders of the amendment to its certificate of incorporation (“IPSI Stockholder Approval”), (ii) approval by Business Warrior stockholders of the Merger and related transactions and matters (“Business Warrior Stockholder Approval”), (iii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all other requisite regulatory approval, (iv) the absence of any applicable law or order that makes illegal, or prohibits or prevents, the Transactions and (v) the Registration Statement having become effective in accordance with the provisions of the Securities Act of 1933, as amended (“Securities Act”).
In addition, each party’s obligation to consummate the Merger is conditioned upon the following agreements being in full force and effect: (i) exchange agreements, to be entered into by and among IPSI, Business Warrior and each holder of the outstanding convertible notes of IPSI (the “IPSI Exchange Agreements”), pursuant to which each outstanding convertible note of IPSI will be exchanged for shares of newly-issued shares of Series A Convertible Preferred Stock of IPSI (the “IPSI Series A Preferred”) and (ii) exchange agreements, to be entered into by and among IPSI, Business Warrior and each holder of the outstanding convertible notes of Business Warrior (the “Business Warrior Exchange Agreements"), pursuant to which each outstanding convertible note of Business Warrior will be exchanged for shares of newly-issued shares of IPSI Series A Preferred. The designation of the IPSI Series A Preferred is subject to IPSI Stockholder Approval. Further, as of the date of this Current Report, the terms of the IPSI Series A Preferred remain subject to negotiation between IPSI, Business Warrior and the holders of such convertible notes. As previously disclosed by IPSI in a Current Report on Form 8-K filed on February 26, 2024, IPSI and Business Warrior have certain convertible note holders in common.
In addition, IPSI’s obligation to consummate the Merger is conditioned upon, among other things: (i) the representations and warranties of Business Warrior being true and correct on and as of the Closing Date (as defined in the Merger Agreement) as if made on the Closing Date (subject to certain exceptions and an overall “Material Adverse Effect” standard), (ii) Business Warrior having performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Merger Agreement to be performed or complied with by it on or prior to the Closing Date and (iii) receipt by IPSI of each Lock-Up Agreement (as defined below) and Employment Agreement (as defined in the Merger Agreement).
2
Business Warrior’s obligation to consummate the Merger is further conditioned upon, among other things: (i) the representations and warranties of IPSI being true and correct on and as of the Closing Date as if made on the Closing Date (subject to certain exceptions and an overall “Material Adverse Effect” standard) and (ii) IPSI and Merger Sub having performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Merger Agreement to be performed or complied with by it on or prior to the Closing Date.
Termination
The Merger Agreement may be terminated at any time prior to the Effective Time by either IPSI or Business Warrior if the Merger and related transactions are not consummated on or before the seven-month anniversary of the date of the Merger Agreement (the “Termination Date”), provided that the Termination Date shall be automatically extended to the nine-month anniversary of the Merger Agreement if the conditions to closing, other than receipt of IPSI Stockholder Approval and Business Warrior Stockholder Approval, effectiveness of the Registration Statement and that the IPSI Exchange Agreements and Business Warrior Exchange Agreements are in full force and effect, have been satisfied.
The Merger Agreement may also be terminated under certain other customary and limited circumstances at any time prior the Closing, including, among other reasons (i) by mutual written consent of IPSI and Business Warrior, (ii) by written notice by either IPSI or Business Warrior if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger, and such order or other action has become final and non-appealable, (iii) by written notice by Business Warrior of IPSI’s or Merger Sub’s uncured breach of a representation, warranty, or covenant contained in the Merger Agreement that would cause the related condition to closing to not be satisfied, (iv) by written notice by IPSI of Business Warrior’s uncured breach of a representation, warranty, or covenant contained in the Merger Agreement that would cause the related Closing condition to not be satisfied or a material breach of a Business Warrior Voting and Support Agreement, (v) by either IPSI or Business Warrior if Business Warrior holds its stockholder meeting to approve the Merger Agreement and the Merger, and Business Warrior Stockholder Approval is not obtained, (vi) by IPSI if Business Warrior’s board of directors has failed to recommend or shall have withdrawn, amended or modified in any respect materially adverse to IPSI its recommendation of the Merger Agreement or shall have recommended another proposal for an Alternative Transaction or accepted a Superior Proposal (as defined in the Merger Agreement) and (vii) by Business Warrior if, prior to receipt of Business Warrior Stockholder Approval, Business Warrior accepts a Superior Proposal, subject to the terms and conditions of the Merger Agreement.
Governing Law
The Merger Agreement is governed by the laws of the State of New York and the parties are subject to the jurisdiction of any New York state court or any federal court sitting in the State of New York in any action arising out of or relating to the Merger Agreement.
Certain Agreements Related to the Merger Agreement
Business Warrior Voting and Support Agreements
In connection with the execution of the Merger Agreement, on July 29, 2024, certain stockholders of Business Warrior, including Rhett Doolittle and Jonathan Brooks, the Chief Executive Officer and President, respectively, of Business Warrior (the “Business Warrior Holders”) entered into support agreements with IPSI (the “Business Warrior Voting and Support Agreements”), pursuant to which such Business Warrior Holders agreed, among other things, to vote all shares of capital stock of Business Warrior beneficially owned by the Business Warrior Holders (the “Business Warrior Shares”) in favor of the Merger and related transactions. Such Business Warrior Holders also agreed to take certain other actions in support of the Merger Agreement and related transactions (and any actions required in furtherance thereof) and refrain from taking actions that would adversely affect such Business Warrior Holders’ ability to perform their obligations under the Business Warrior Voting and Support Agreement. Pursuant to the Business Warrior Voting and Support Agreements, the Business Warrior Holders also agreed not to transfer the Business Warrior Shares during the period from and including the date of the Business Warrior Voting and Support Agreement and the first to occur of the Effective Time or the date on which the Business Warrior Support Agreement is terminated, except for certain permitted transfers where the recipient also agrees to comply with the Business Warrior Voting and Support Agreement.
3
Lock-Up Agreements
Concurrently with and effective upon the Closing, officers, directors and certain stockholders of Business Warrior (each, a “Significant Stockholder”) shall each enter into a Lock-Up Agreement with IPSI (each, a “Lock-Up Agreement”). Pursuant to the Lock-Up Agreements, with respect to the shares received as Merger Consideration, each Significant Stockholder may not, with limited exceptions, transfer shares, or publicly disclose the intention to transfer shares until the twelve-month anniversary of the Closing.
The foregoing descriptions of agreements and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement and form of Business Warrior Voting and Support Agreement, copies of which are filed with this Current Report on Form 8-K as Exhibits 2.1 and 10.1, respectively, and the terms of which are incorporated by reference herein.
Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and neither IPSI nor Business Warrior assume any obligation to, nor intend to, update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Neither IPSI nor Business Warrior gives any assurance that either IPSI or Business Warrior, or the combined company, will achieve its expectations.
Item 9.01 Financial Statements and Exhibits.
