Item
1.01. Entry into a Material Definitive Agreement.
On August 17, 2021, COMSovereign Holding Corp.
(the “Company,” “we,” “us,” or “our company”) entered
into a Share Purchase Agreement dated as of August 17, 2021 (the “Purchase Agreement”) among our company, Saguna Networks
Ltd., a company organized under the laws of the State of Israel (“Saguna”), the holders of common shares of SNL that
are parties thereto, which hold approximately 97.6% of the voting power of the outstanding capital stock of Saguna, and Ben Weiss, solely
in his capacity as the representative of the shareholders of SNL, pursuant to which, subject to the terms and conditions of the Purchase
Agreement we will purchase all of the issued and outstanding share capital of SNL.
Pursuant to the terms of the Purchase Agreement,
at the completion of the transactions contemplated by the Purchase Agreement, we will acquire all of the issued and outstanding capital
stock and options to purchase capital stock of Saguna for a purchase price consisting of $38,157 in cash and an aggregate of approximately
6,487,159 shares of our common stock, par value $0.0001 per share (the “Common Stock”). Approximately 4,486,255 shares of
Common Stock of the acquisition consideration will be issued to lenders or other counterparties in satisfaction of certain outstanding
loan and contractual obligations of Saguna. In addition, we will pay certain of Saguna’s third-party expenses in connection with
the transactions contemplated by the Purchase Agreement in an amount not to exceed $70,000. An aggregate of approximately 1,297,432 shares
of the Common Stock issuable by us will be held in an escrow fund for purposes of satisfying any post-closing indemnification claims
of the current Saguna security holders under the Purchase Agreement.
Saguna, based
in Yokneam, Israel, is the software developer behind the award-winning SAGUNA Edge Cloud, which
transforms communication networks into powerful cloud-computing infrastructures for applications and services including augmented and
virtual reality, IoT, edge analytics, high-definition video, connected cars, autonomous drones and more. Saguna allows these next-generation
applications to run closer to the user in a wireless network, dramatically cutting down on latency, which is a fundamental and critical
requirement of 5G. Saguna’s Edge Cloud operates on general purpose computing hardware but can be optimized to support the latest
artificial intelligence (AI) and machine learning features through dedicated accelerators.
The Purchase Agreement contains customary representations,
warranties and covenants of our company, on one hand, and Saguna, on the other hand, including, among others, covenants by Saguna with
respect to the operations of Saguna during the period between execution of the Purchase Agreement and the completion of the transaction.
The Purchase Agreement also provides that each party will indemnify the other party for breaches of the warranties and covenants of such
party, as well as certain other matters, subject to certain specified limitations, including, among other things, limitations on the period
during which a party may make certain claims for indemnification and limitations on the amounts for which a party may be liable.
Pursuant to the Purchase Agreement, the completion
of the transaction is conditioned upon, among other things, our satisfaction and completion of the notification and bring along to the
non-signing Saguna shareholders in accordance with Section 341 of the Israeli Companies Law, 1999, and other customary closing conditions.
The notification and bring along of Section 341 of the Israeli Companies Law generally takes 30 days. The Purchase Agreement also provides
for limited termination rights, including, among others, by the mutual consent of our company and Saguna, upon certain breaches of representations,
warranties, covenants or agreements, and in the event the completion of the transaction has not been consummated before November 12, 2021,
subject to the ability of the parties to extend under certain circumstances.
The foregoing description of the Purchase Agreement
does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement,
a copy of which is attached hereto as Exhibit 10.1, which is incorporated herein by reference thereto.
The Purchase Agreement has been filed as an exhibit
hereto to provide investors and security holders with information regarding its terms and is not intended to provide any factual information
about our company or Saguna. The representations, warranties and covenants set forth in the Purchase Agreement were made solely between
the parties to the Purchase Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection
with negotiating its terms, including being qualified by confidential disclosures exchanged between the parties in connection with the
execution of the Purchase Agreement. Moreover, the representations and warranties may be subject to a contractual standard of materiality
that may be different from what may be viewed as material to investors or security holders, or may have been used for the purpose of allocating
risk between the parties to the Purchase Agreement rather than establishing matters as facts. Information concerning the subject matter
of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not
be fully reflected in our public disclosures. For the foregoing reasons, no person should rely on the warranties as statements of factual
information at the time they were made or otherwise.
