Item 1.01. Entry into a Material Definitive Agreement.
The Merger Agreement
On September 29, 2022, SilverSun Technologies, Inc., a Delaware corporation
("SilverSun" or the "Company"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"), by and among the Company, Rhodium Enterprises
Acquisition Corp., a Delaware corporation and direct wholly owned subsidiary of
the Company ("Merger Sub I"), Rhodium Enterprises Acquisition LLC, a Delaware
limited liability company and direct wholly owned subsidiary of the Company
("Merger Sub II"), and Rhodium Enterprises, Inc., a Delaware corporation
("Rhodium"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, among other things, (i) Merger Sub I shall be merged with and
into Rhodium (the "First Merger") in accordance with Delaware General
Corporation Law (the "DGCL"). As a result of the First Merger, Merger Sub I
shall cease to exist, and Rhodium shall continue as the surviving corporation of
the First Merger (the "First Surviving Company"), and (ii) immediately following
the First Merger, Rhodium shall be merged with and into Merger Sub II (the
"Second Merger" and together with the First Merger, the "Mergers") in accordance
with the DGCL and the Delaware Limited Liability Company Act ("DLLCA"). As a
result of the Second Merger, Rhodium shall cease to exist, and Merger Sub II
shall continue as the surviving company of the Second Merger (the "Surviving
Company") and as a direct, wholly owned subsidiary of SilverSun which will
operate the pre-Merger business of Rhodium through its management of Rhodium
Technologies LLC, a Delaware limited liability company ("Technologies").
Upon consummation of the Mergers, SilverSun will be structured as an umbrella
partnership C-corporation and will have two classes of common stock outstanding,
the SilverSun Class A common stock and the SilverSun Class B common stock. The
holders of shares of SilverSun Class A common stock and Class B common stock
will be entitled to one vote for each share of Class A common stock and Class B
common stock, respectively, held of record on all matters on which stockholders
are entitled to vote generally. The SilverSun legacy stockholders and option
holders (collectively, the "SilverSun Legacy Stockholders") will retain
approximately 6.22% of the outstanding SilverSun Class A common stock (on a
fully diluted basis) which, following the Mergers will be approximately 3.2% of
outstanding SilverSun common stock. The Rhodium legacy stockholders and equity
holders (collectively, the "Rhodium Legacy Stockholders") will receive
approximately 93.78% of the SilverSun Class A common stock (on a fully diluted
basis) which, following the Mergers, will be approximately 96.8% of the
SilverSun common stock. Imperium Investment Holdings LLC, a Wyoming limited
liability company and the existing holder of 100% of Rhodium Class B common
stock will hold 100% of the SilverSun Class B common stock following the
consummation of the Mergers. Upon consummation of the Mergers, SilverSun will
become the managing member of Technologies. The parties to the Merger Agreement
have agreed that for all purposes of the Merger Agreement: (i) the agreed pro
forma net equity value of SilverSun after giving effect to the Mergers is
$671,875,172 (the "Pro Forma Valuation"), (ii) based on such Pro Forma
Valuation, the agreed value of the consideration to be received by the Rhodium
Legacy Stockholders is $650,375,000 (the "Rhodium Valuation") and the agreed
value attributable to the SilverSun Legacy Stockholders is $21,500,172, and
(iii) the holders of Rhodium's simple agreements for future equity ("Rhodium
SAFEs") outstanding immediately prior to the First Effective Time shall receive
SilverSun Class A common stock at the First Effective Time based on the Rhodium
Valuation. Following the Mergers, SilverSun's Class A common stock shall be
listed on The Nasdaq Stock Market LLC ("Nasdaq") and SilverSun shall be renamed
Rhodium Enterprises, Inc.
In connection with the Merger Agreement and the Mergers, the following, among
other things, shall take place:
(i) Subject to shareholder approval, SilverSun shall, prior to the effective
time of the First Merger (the "First Effective Time"), file an amended and
restated certificate of incorporation (the "Amended and Restated
Certificate of Incorporation") to change its name, effect the Reverse Stock
Split (as defined below), set forth the rights and preferences of such
shares of SilverSun Class A common stock and SilverSun Class B common stock
as well as the number of shares being authorized.
(ii) SilverSun shall effect a reverse stock split (the "Reverse Stock Split") of
its common stock at a ratio to be determined by Rhodium and effected by
SilverSun prior to the effective time of the Second Merger.
(iii) Prior to the First Effective Time and immediately following the Reverse
Stock Split, by virtue of filing the Amended and Restated Certificate of
Incorporation and without any additional action on the part of any
SilverSun, Merger Sub I, or Merger Sub II (collectively, the "SilverSun
Entities"), Rhodium or the holders of any securities of SilverSun or
Rhodium, including holders of SilverSun common stock, each share of
SilverSun common stock issued and outstanding immediately prior to the
filing of the Amended and Restated Certificate of Incorporation shall
automatically be converted into one validly issued, fully paid and
nonassessable share of SilverSun Class A common stock.
(iv) At the First Effective Time and by virtue of the First Merger, each share
of Rhodium Class A common stock issued and outstanding immediately prior to
the First Effective Time (other than any dissenting shares and certain
excluded Rhodium shares) will automatically be converted into the right to
receive a number of shares of SilverSun Class A common stock based upon the
"Class A Exchange Ratio" (as such term is defined in the Merger Agreement).
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(v) At the First Effective Time and by virtue of the First Merger, each share
of Rhodium Class B common stock issued and outstanding immediately prior to
the First Effective Time (other than any dissenting shares and certain
excluded Rhodium shares) will automatically be converted into the right to
receive a number of shares of SilverSun Class B common stock based upon the
"Class B Exchange Ratio" (as such term is defined in the Merger Agreement).
(vi) At the First Effective Time and by virtue of the First Merger, each share
of Merger Sub I common stock issued and outstanding immediately prior to
the First Effective Time, will automatically be converted into and
exchanged for one validly issued, fully paid and nonassessable share of
common stock of the First Surviving Company.
(vii) Each Rhodium warrant that is outstanding and unexercised as of immediately
prior to the First Effective Time shall be converted into and become a
warrant to purchase SilverSun Class A common stock and SilverSun shall
assume each such Rhodium warrant in accordance with its terms.
(viii) Each holder of a Rhodium SAFE that is outstanding as of immediately prior
to the First Effective Time shall, at the closing of the Mergers (the
"Closing"), receive a certain number of validly issued, fully paid and
nonassessable shares of SilverSun Class A common stock equal to the
Purchase Amount (as such term is defined in the Merger Agreement) divided
by the per share price implied by the Rhodium Valuation.
(ix) At the effective time of the Second Merger (the "Second Effective Time")
and by virtue of the Second Merger, and without any additional action on
the part of any SilverSun Entities, Rhodium or the holders of any
securities of SilverSun, Rhodium, or the First Surviving Company, each
share of capital stock of the First Surviving Company shall be cancelled
and each limited liability company interest of Merger Sub II issued and
outstanding immediately prior to the Second Effective Time shall be
converted into and become one validly issued, fully paid and (to the extent
applicable) non-assessable limited liability company interest of the
Surviving Company, with the same rights, powers, and privileges as the
limited liability company interests of the Surviving Company.
Governance
Effective as of the Second Effective Time, the officers and directors of
SilverSun will resign and the officers of Rhodium immediately prior to the First
Effective Time will be, from and after the First Effective Time, the officers of
SilverSun until their successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal. As of the First Effective
Time, SilverSun will take all action necessary to (i) cause (A) the number of
members of the SilverSun board of directors (the "SilverSun Board") to be fixed
at seven and (B) cause to be appointed to the SilverSun Board, as directors,
seven people chosen by Rhodium in its sole discretion. In addition, as of the
Second Effective Time, all pre-Merger employment agreements entered into by
SilverSun shall be terminated.
Conditions to the Mergers
The obligations of each of the Company, Rhodium, Merger Sub I and Merger Sub II
to consummate the Mergers and the other transactions contemplated by the Merger
Agreement are subject to specified conditions, including, among other matters:
(i) Rhodium having obtained the approval of its shareholders to adopt the Merger
Agreement and the transactions contemplated by the Merger Agreement, including
the Mergers; (ii) SilverSun having obtained the approval of its shareholders to
adopt the Merger Agreement and the transactions contemplated by the Merger
Agreement, including the Mergers; (iii) the SEC having declared the Registration
Statement (as defined below)to be effective, and no stop order concerning the
Registration Statement being in effect; (iv) the Form 10 (as defined below)
having become effective and no stop order concerning the Form 10 being in
effect; (v) the shares of SilverSun Class A common stock to be issued to
shareholders of Rhodium pursuant to the Merger Agreement having been approved
for listing on Nasdaq pursuant to Nasdaq Rules 5635(b) and 5635(d), subject only
to official notice of issuance; (vi) the parties to the Merger Agreement having
received all approvals with any governmental body necessary to consummate the
transactions contemplated by the Merger Agreement, including, but not limited
to, the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (vii) there
having been no material adverse effects respecting SilverSun or Rhodium; (viii)
the parties to the Merger Agreement having performed, in all material respects,
all of the obligations and covenants required to be performed by such party at
or before the Closing; (ix) the representations and warranties of SilverSun,
Merger Sub I, and Merger Sub II, and Rhodium, respectively, being true and
correct, subject to the limitations set forth in the Merger Agreement; and (x)
none of the parties to the Merger Agreement being subject to any decree, order
or injunction of a U.S. court of competent jurisdiction that prohibits the
consummation of the Mergers.
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Termination
The Merger Agreement may be terminated at any time before the Second Effective
Time, whether before or after obtaining the requisite vote of SilverSun
shareholders, by mutual written consent of SilverSun and Rhodium.
The Merger Agreement may be terminated, and the transactions abandoned, by
either SilverSun or Rhodium at any time before the First Effective Time, by
written notice from one to the other if (i) the Closing has not occurred on or
before March 31, 2023 (the "Termination Date"), except that the right to
terminate the Merger Agreement for this reason is not available to any party who
is then in material breach of the Merger Agreement; (ii) the requisite vote of
SilverSun shareholders has not been obtained by reason of the failure to obtain
the required vote at the SilverSun Shareholders' Meeting (or any adjournment or
postponement of such meeting) duly convened for such purpose, except that the
right to terminate the Merger Agreement for this reason shall not be available
to SilverSun where the failure to obtain the requisite vote has been caused by
the action or failure to act of any of the SilverSun Entities or such action or
failure to act constitutes a material breach by any of the SilverSun Entities of
the Merger Agreement; or (iii) any law or order is enacted, issued, promulgated
or entered by a governmental authority of competent jurisdiction (including
Nasdaq) that permanently enjoins, or otherwise prohibits the consummation of the
transactions, and (in the case of any order) such order has become final and
non-appealable.
The Merger Agreement may be terminated, and the transactions abandoned, by
Rhodium at any time before the First Effective Time, if (i) there has been a
Parent Adverse Recommendation Change (as such term is defined in the Merger
Agreement); (ii) the SilverSun Board approves, endorses, solicits or recommends
to stockholders a Superior Proposal (as such term is defined in the Merger
Agreement), or a tender offer, exchange offer or other transaction for any
outstanding shares of capital stock of a SilverSun Entity is commenced before
obtaining the requisite vote of SilverSun shareholders and the SilverSun Board
fails to recommend against acceptance of such Superior Proposal, tender offer,
exchange offer or other transaction by its stockholders within ten business days
after commencement of such Superior Proposal, tender offer, exchange offer or
other transaction; (iii) there has been a material breach of the no solicitation
provision of the Merger Agreement by the SilverSun Entities; (iv) any SilverSun
Entity breaches any of its representations, warranties, covenants or agreements
contained in the Merger Agreement, which breach (a) would give rise to the
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
2.1* Agreement and Plan of Merger, dated
September 29, 2022, by and among
SilverSun Technologies, Inc.,
SilverSun Acquisition Corp.,
SilverSun Acquisition LLC and Rhodium
Enterprises, Inc.**
10.1* Form of Separation and Distribution
Agreement by and among SilverSun
Technologies, Inc. and SWK
Technologies Holdings, Inc.
10.2* Voting and Support Agreement of
SilverSun Technologies, Inc. dated
September 29, 2022
10.3* Voting and Support Agreement of
Rhodium Enterprises, Inc. dated
September 29, 2022
104 Cover Page Interactive Data File
(formatted as Inline XBRL)
*Filed herewith
** Certain schedules and similar attachments have been omitted in reliance on
Item 601(a)(5) of Regulation S-K. The Company will provide, on a supplemental
basis, a copy of any omitted schedule or attachment to the SEC or its staff
upon request.
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