TruGolf Holdings, Inc 8-K, filed Oct 9, 2026
TruGolf Holdings, Inc. (TRUG)
About this 8-K
TruGolf Holdings, Inc filed this 8-K on October 9, 2026, reporting on events of October 8, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 5.02: Director or officer change, or executive pay
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
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Washington, D.C. 20549
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CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Consummation of Polymath Acquisition
As previously disclosed, on August 17, 2026, TruGolf Holdings, Inc., a Nevada corporation (the “Company”), entered into an Acquisition Agreement (the “Acquisition Agreement”) with 18141991 Canada Inc., a corporation incorporated under the federal laws of Canada and a wholly owned subsidiary of the Company (“SubCo”), and Polymath Research Inc., a corporation incorporated under the federal laws of Canada (“Polymath”). On October 8, 2026, the parties consummated the transaction set forth in the Acquisition Agreement.
Pursuant to the Acquisition Agreement, Polymath and SubCo amalgamated under the Canada Business Corporations Act and continued as one corporation (“Amalco”). Upon completion of the amalgamation, each of Polymath and SubCo ceased to exist as a separate entity, the assets and liabilities of each continued as assets and liabilities of Amalco, and Amalco became a wholly owned subsidiary of the Company.
Each outstanding option to purchase Polymath shares, whether vested or unvested, was assumed by the Company and converted into an option to purchase shares of the Company’s Class A common stock on substantially the same terms and conditions, including applicable vesting, forfeiture and post-termination exercise provisions. The number of shares subject to each replacement option and the exercise price of each replacement option were adjusted based on the exchange ratio, subject to applicable tax rules, and the replacement options are governed by the Company’s Equity Incentive Plan.
Following the closing, the Company is required to prepare and file with the Securities and Exchange Commission a proxy statement for a meeting of its stockholders to consider and vote on, among other matters, the conversion of the Series B preferred stock issued in the Concurrent Financing into shares of Class A common stock, the increase in the number of shares under the Company’s current Equity Incentive Plan and/or the adoption of the 2026 Equity Incentive Plan and any necessary charter amendment or related stockholder matters (the “Shareholder Approval”).
The Acquisition Agreement provides for certain post-closing capital allocation arrangements. From and after the effective date, the Company must reserve $2,500,000 from its working capital for the operation of Polymath’s business, the Company’s public company compliance costs and Polymath’s transaction expenses, with the remaining working capital reserved for operation of the Company’s golf-related business. The Company also agreed to allocate 20% of proceeds from future equity financings, excluding funds raised in the initial $3,000,000 tranche (stated value) of the Concurrent Financing (discussed below), to golf-related operations, subject to a cap and other limitations set forth in the Acquisition Agreement. In addition, within six months after closing, the Company must use commercially reasonable efforts to complete financings totaling $500,000 to be applied toward golf-related operations from specified financing sources.
Summary of Series C Preferred Stock
At the effective time of the amalgamation, Polymath shareholders received, on a pro rata basis, 257,494 shares of the Company’s Class A common stock and 136,956 shares of newly designated Series C convertible preferred stock (the “Series C preferred stock”). The Class A common stock consideration equaled 19.99 % of the Company’s issued and outstanding Class A common stock immediately before the effective time, and the Series C preferred stock consideration was determined under a formula based on a $140,000,000 reference amount minus the value of the Class A common stock issued to the Polymath shareholders (such remaining amount, the “Series C Preferred Value”).
On September 8, 2026, the parties entered into an amendment to the Acquisition Agreement (the “Amendment”), pursuant to which the number of shares of Series C preferred stock to be issued was fixed at the Series C Preferred Value divided by $1,000. Each share of Series C preferred stock has a stated value of $1,000 per share. The Amendment provides that the Series C preferred stock is convertible into shares of the Company’s Class A common stock at a conversion ratio equal to the stated value divided by the originally agreed to conversion price of $3.94 per share, subject to adjustment as set forth in the certificate of designation for the Series C preferred stock. In connection with the consummation of the transaction, the parties agreed to amend the conversion price to $11.82 per share.
Effective as of 5:00 p.m. Eastern time on the second business day after the Company has obtained stockholder approval for the conversion of the Series C preferred stock for purposes of Nasdaq Rules 5635(a) and 5635(b) and has obtained Nasdaq approval of a new listing application filed after completion of the acquisition contemplated by the Acquisition Agreement, each outstanding share of Series C preferred stock will automatically convert into a number of shares of Class A common stock equal to the stated value of the Series C preferred stock divided by the conversion price. Following stockholder approval, and subject to the beneficial ownership and other limitations set forth in the certificate of designation, holders may also elect to convert shares of Series C preferred stock into Class A common stock at the conversion price by delivering a notice of conversion to the Company.
Until Nasdaq approval has been obtained, the Company may not effect, and a holder may not convert, any portion of the Series C preferred stock to the extent that, after giving effect to the conversion, the aggregate ownership of all holders would exceed 19.99% of the number of shares of Class A common stock outstanding immediately after giving effect to the conversion. Any shares issued in excess of this limitation will be deemed null and void and cancelled ab initio, and the applicable holder will not have the power to vote or transfer those excess shares. The beneficial ownership limitation may not be waived and applies to successor holders of the Series C preferred stock. No shares of Series C preferred stock may convert into Class A common stock before the required stockholder approval and Nasdaq approval have been obtained.
Holders of Series C preferred stock are entitled to receive dividends on an as-converted basis, without regard to the beneficial ownership limitation, equal to and in the same form and manner as dividends actually paid on shares of Company Class A common stock. Except as provided in the certificate of designation, no other dividends are payable on the Series C preferred stock, and the Company may not pay dividends on Class A common stock, other than dividends payable in Class A common stock, unless it simultaneously pays the corresponding dividend on the Series C preferred stock.
The Series C preferred stock has no voting rights, except as otherwise provided in the certificate of designation or required by the Nevada Revised Statutes. So long as any shares of Series C preferred stock are outstanding, the Company may not take certain actions without the affirmative vote or written consent of holders of a majority of the outstanding shares of Series C preferred stock, including adversely changing the rights of the Series C preferred stock, issuing additional Series C preferred stock or changing the authorized number of shares of Series C preferred stock other than by conversion, consummating certain fundamental transactions or other business combinations, issuing Class A common stock or securities that convert into Class A common stock other than as contemplated by the Acquisition Agreement, or entering into any agreement with respect to the foregoing.
With respect to distributions of assets upon liquidation, dissolution or winding up, the Series C preferred stock ranks senior to any class or series of capital stock created after the designation of the Series C preferred stock that expressly ranks junior to the Series C preferred stock, on parity with the Class A and Class B common stock and any class or series of capital stock created after such designation that expressly ranks on parity with the Series C preferred stock, and junior to the Company’s Series A preferred stock (as defined below) and any class or series of capital stock created after such designation that expressly ranks senior to the Series C preferred stock. Upon a liquidation, dissolution or winding up of the Company, and subject to the prior and superior rights of any senior securities, each holder of Series C preferred stock is entitled to receive, before any distribution to holders of junior securities, the amount that would be paid on the shares of Class A common stock underlying the Series C preferred stock on an as-converted basis, without regard to the beneficial ownership limitation, plus any declared but unpaid dividends.
The conversion price of the Series C preferred stock is subject to adjustment for stock dividends, stock splits, combinations and similar events affecting the Class A common stock. In the event of certain fundamental transactions, holders of Series C preferred stock will be entitled, upon subsequent conversion, to receive the securities, cash or other property that the holders would have received had the Series C preferred stock been converted immediately before the fundamental transaction, without regard to the beneficial ownership limitation.
So long as any shares of Series C preferred stock remain outstanding, the Company and its subsidiaries are subject to certain negative covenants absent the affirmative vote of holders of a majority of the outstanding shares of Series C preferred stock, including restrictions on incurring or guaranteeing indebtedness, permitting liens, repaying indebtedness, redeeming or repurchasing capital stock or paying cash dividends or distributions, disposing of assets outside the ordinary course or as otherwise contemplated by the Acquisition Agreement, engaging in materially different lines of business, and entering into certain affiliate transactions.
The foregoing descriptions of the Acquisition Agreement and Amendment and the Series C preferred stock do not purport to be complete and are qualified in their entirety by reference to the full text of the Acquisition Agreement and Amendment and the Series C preferred stock, copies of which are filed as Exhibits 2.2, 2.1 and 3.3 to this Current Report on Form 8-K. The Acquisition Agreement and Amendment have been included to provide investors with information regarding their terms. It is not intended to provide any other factual information about the Company, SubCo, or Polymath. The representations, warranties, and covenants contained in the Acquisition Agreement and Amendment were made only for the purposes of the Acquisition Agreement and Amendment as of the specific dates therein, were solely for the benefit of the parties to the Acquisition Agreement and Amendment, and may be subject to limitations agreed upon by the contracting parties.
Concurrent Financing
As previously disclosed, on August 17, 2026, the Company entered into a Second Amendment, Waiver and Exchange Agreement (“Waiver and Exchange Agreement”) with the holders of the Company’s Series A preferred stock (the “Series A preferred stock”), pursuant to which the Company agreed to issue new warrants (the “Series B preferred warrants”) to purchase shares of the Company’s newly designated Series B preferred stock (the “Series B preferred stock”) in exchange for outstanding warrants to purchase shares of Series A preferred stock. The closing of the exchange occurred upon completion of the acquisition of Polymath. A description of the Series B preferred warrants is set forth in the Form 8-K filed August 18, 2026, which description is incorporated herein by reference.
The exchange was effected in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. Upon issuance of the new Series B preferred warrants, the exchanged Series A preferred warrants were cancelled, and the new Series B preferred warrants are immediately exercisable for shares of Series B preferred stock, which will be convertible into shares of the Company’s Class A common stock at the holder’s option following issuance, subject to the beneficial ownership limitation and the applicable 19.9% limitations imposed by the Nasdaq Marketplace Rules, as described below.
On October 8, 2026, the Company entered into a Third Amendment, Waiver and Exercise Agreement (“Exercise Agreement”) with the holders of the Company’s Series B preferred warrants. Pursuant to the Exercise Agreement, certain holders of Series B preferred warrants agreed to exercise their Series B preferred warrants to purchase 3,278 shares of Series B preferred stock for an aggregate exercise price of $2,950,000 (stated value of $3,278,000) in exchange for additional Series B preferred warrants to purchase 3,000 additional shares of Series B preferred stock.
In connection with the exchange, the Company entered into a Registration Rights Agreement pursuant to which the Company agreed to file a resale registration statement covering the shares of Class A common stock issuable upon conversion of the Series B preferred stock issued or issuable upon exercise of the new Series B preferred warrants. The Registration Rights Agreement requires the Company to file the initial registration statement within 30 calendar days after the closing date of the acquisition of Polymath and to use reasonable best efforts to cause it to become effective by the applicable effectiveness deadline.
Description of the Series B Preferred Stock
In connection with the closing of the exchange, the Company filed a Certificate of Designation establishing the Series B preferred stock (the “Series B COD”). Each share of Series B preferred stock will have a stated value of $1,000, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions, and similar events.
The Series B preferred stock will rank junior to any senior preferred stock (other than the Series A preferred stock), pari passu with any parity stock, and senior to the Company’s junior stock with respect to dividends, distributions, and payments upon liquidation, dissolution, or winding up. The Series B COD restricts the Company from authorizing or issuing senior preferred stock, parity stock, or certain junior stock with a redemption or repayment date before the second anniversary of the initial issuance date, unless the required holders consent.
The Series B preferred stock will accrue dividends from the initial issuance date at a rate of 10% per annum, computed on the basis of a 360-day year and twelve 30-day months. If dividends are paid in shares of Class A common stock, the dividends are recalculated at a deemed rate of 12.5% per annum. Dividends are payable in arrears on the first trading day of each fiscal quarter and may be paid, subject to the terms of the Series B COD, in shares of Class A common stock, in cash, in a combination of cash and shares, or by increasing the stated value of the Series B preferred stock.
Each share of Series B preferred stock will be convertible, at the holder’s option, into shares of Class A common stock at any time after the initial issuance date, provided that no holder may convert to the extent that, after giving effect to the conversion, the aggregate ownership of shares of Class A common stock acquired upon conversion of the Series B preferred stock of all the holders of Series B preferred stock would exceed 19.9% of the number of shares of Class A common stock outstanding immediately after giving effect to the conversion. The number of shares of Class A common stock issuable upon conversion will generally be determined by dividing the applicable conversion amount by the conversion price. The initial conversion price is $10.00 per share, subject to adjustment under the Series B COD (as described below). The conversion amount includes the stated value, any additional amount, any make-whole amount, and any other amounts owed to the holder under the Series B COD or the other exchange documents. The make-whole amount (the “Make-Whole Amount”) generally equals the additional dividends that would accrue on the converted, redeemed, or repaid Series B preferred stock through the five-year anniversary of the applicable issuance date. The Make-Whole Amount is convertible into Class A common stock at the “Alternate Conversion Price” which is equal to the lesser of (i) the conversion price, and (ii) 90% of the lowest volume weighted average price (“VWAP”) of the Class A common stock during the five consecutive trading days immediately prior to such conversion (subject to a floor price of $0.73). If at the time of a conversion the Alternate Conversion Price is determined to be the floor price because such floor price is greater than 90% of the then five-day VWAP of a share of Class A common stock, then the stated value of the remaining Series B preferred stock will automatically increase as described in the Series B COD.
The Series B COD includes a beneficial ownership limitation that prohibits the Company from effecting a conversion to the extent that, after giving effect to the conversion, the holder and its attribution parties would beneficially own more than 4.99% of the outstanding shares of common stock. A holder may increase or decrease its beneficial ownership limitation by notice to the Company, but any increase may not exceed 9.99% and will not become effective until the 61st day after delivery of the notice. The beneficial ownership limitation may not be waived and applies to successor holders of the shares of Series B preferred stock.
The Series B COD contains anti-dilution and adjustment provisions. If the Company issues or is deemed to issue common stock below the then-applicable conversion price, subject to specified exclusions, the conversion price will be reduced to the new issuance price. If the Company issues variable price securities, holders may have the right to substitute the variable price for the conversion price for purposes of a particular conversion. The Series B COD also includes (i) a 12-month reset under which, if the conversion price exceeds the 30-trading-day average VWAP ending immediately before the reset date, the conversion price automatically lowers to that reset price and (ii) a reset under which, if the conversion price exceeds the Minimum Price (as defined in the Nasdaq Marketplace Rules) on the date that the company forces an exercise of the Series B preferred warrant after it has obtained the Shareholder Approval for the conversion of the Series B preferred stock, the conversion price automatically lowers to that reset price.
The Series B COD provides that if any stock split, stock dividend, stock combination, recapitalization or other similar transaction involving the Class A common stock occurs, the conversion price shall be reduced to 120% of the quotient determined by dividing (x) the sum of the VWAP of the Class A common stock for each of the five trading days with the lowest VWAP of the Class A common stock during the fifteen consecutive trading day period ending and including the trading day immediately preceding the sixteenth trading day after such event date, divided by (y) five. On September 29, 2026, the Company completed a reverse stock split, and, as such, the conversion price of the Series B preferred stock will be reduced on October 19, 2026 pursuant to such provision.
The Series B COD provides for multiple triggering events, including failures to pay dividends or other amounts when due, certain failures to reserve sufficient authorized shares, breaches of transaction documents, failure to comply with specified covenants, any Series B preferred stock remaining outstanding on or after January 8, 2030, certain changes of control without required holder consent, and the occurrence of a material adverse effect. Upon a triggering event, holders may have alternate conversion rights using an alternate conversion price, and the alternate conversion mechanics include a required premium component in the conversion amount.
The Series B COD includes covenants restricting the Company and its subsidiaries from, among other things, incurring non-permitted indebtedness, redeeming or repurchasing capital stock or paying cash dividends on capital stock, transferring assets outside permitted categories, and changing the nature of the business.
The holders of the Series B preferred stock generally will have no voting rights, except as required by Nevada law and as otherwise provided in the Series B COD.
The foregoing descriptions of the Waiver and Exchange Agreement, the Exercise Agreement, the Series B COD, the Series B preferred warrant, and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the Waiver and Exchange Agreement, the Exercise Agreement, the Series B COD, the Series B preferred warrant, and the Registration Rights Agreement, copies of which are filed as Exhibits 10.1, 10.3, 3.1, 3.2 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The disclosure set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference.
The foregoing descriptions of the Acquisition Agreement and Amendment and the Series C preferred stock do not purport to be complete and are qualified in their entirety by reference to the full text of the Acquisition Agreement and Amendment and the Series C preferred stock, copies of which are filed as Exhibits 2.2, 2.1 and 3.3 to this Current Report on Form 8-K. The Acquisition Agreement and Amendment have been included to provide investors with information regarding their terms. It is not intended to provide any other factual information about the Company, SubCo, or Polymath. The representations, warranties, and covenants contained in the Acquisition Agreement and Amendment were made only for the purposes of the Acquisition Agreement and Amendment as of the specific dates therein, were solely for the benefit of the parties to the Acquisition Agreement and Amendment, and may be subject to limitations agreed upon by the contracting parties.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The issuance of the securities pursuant to the Acquisition Agreement and the issuance of the new Series B preferred warrants pursuant to the Waiver and Exchange Agreement and Exercise Agreement, were made pursuant to an exemption from registration provided by Section 4(a)(2) or Regulation S of the Securities Act of 1933, as amended. The shares of Series B preferred stock issuable upon exercise of the new Series B preferred warrants, and the shares of Class A common stock issuable upon conversion of such Series B preferred stock, have not been registered under the Securities Act and will be issued pursuant to applicable exemptions from registration under the Securities Act of 1933.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 8, 2026, Humphrey Polanen resigned from the Company’s Board of Directors effective on such date. Mr. Polanen’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
On October 8, 2026, David Hackett was appointed to the Company’s Board of Directors effective on such date. In connection with his appointment, the Company and Mr. Hackett entered into an agreement pursuant to which the Company will pay Mr. Hackett a cash fee of $100,000 for his first year of Board service and $75,000 for each year thereafter, and subject to approval of an increase in the number of shares available pursuant to the Company’s Equity Incentive Plan, the Company has agreed to grant Mr. Hackett options to purchase 46,666 shares of the Company’s common stock at an exercise price equal to the fair market value of the shares on the grant date. There are no arrangements or understandings between Mr. Hackett and any other person pursuant to which Mr. Hackett was selected as a director. There are no family relationships between Mr. Hackett and any director or executive officer of the Company, and Mr. Hackett has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
David Hackett, a current director of Polymath, has over 25 years of financial and management leadership, guiding start-ups through operations, technology, regulatory reporting, corporate governance, public financing and M&A in Canada and the U.S. Mr. Hackett is a CPA and Chartered Accountant with an MBA from Western University’s Ivey School of Business. He currently serves on the board of Vertical Data Inc.
On October 8, 2026, Natalie Hirsch was appointed to serve as Chief Financial Officer and Chief Operating Officer, and Steven Passey, the Company’s former Chief Financial Officer, was appointed to serve as the Company’s Vice President – Finance of the Company’s golf division. Ms. Hirsch also serves as the Interim Chief Executive Officer of Polymath.
Natalie Hirsch is a finance and operations leader with more than 15 years of experience across public and private companies in fintech, enterprise software, and e-commerce. As CFO of Polymath for the past two years, Ms. Hirsch drives strategic planning, financial modeling, and scaling operations to fuel growth in the tokenization space. Previously, Ms. Hirsch served as Interim CEO and COO of AnalytixInsight Inc. (TSXV), overseeing global operations and serving on the board of its Italian fintech subsidiary. Before that, she spent more than four years at Coinsquare as Vice President of Operations, where she played a key role in establishing and scaling one of Canada’s first regulated investment dealers and alternative trading systems (ATS) for digital assets, helping bridge the gap between traditional capital markets and emerging blockchain infrastructure. A CPA, CA and PMP, Ms. Hirsch holds an MBA with honors from Tel Aviv University’s Recanati School of Business and a Master’s in Management & Professional Accounting from the Rotman School of Management at the University of Toronto.
Effective October 8, 2026, the Company entered into an Employment Agreement (the “Employment Agreement”) with Natalie Hirsch as the Chief Financial Officer and the Chief Operating Officer. The Company has agreed to pay a base salary of $275,000 per annum, with a bonus of up to 50% of the base salary based upon the achievement of agreed upon performance milestones. The Company also agreed to grant 133,000 stock options which vest as to 25% on each of the four anniversaries of the date of grant, subject to approval of an increase in the number of shares available pursuant to the Company’s Equity Incentive Plan. Ms. Hirsch will participate in the Company’s benefit programs. The Employment Agreement is for an indefinite term and may be terminated by the Company without cause by the payment of four months of the base salary (which increases to six months after one year of employment). Ms. Hirsch may resign on four weeks’ notice to the Company. If there is a “change of control” as defined in the Employment Agreement and Ms. Hirsch is terminated or resigns for good reason (as defined in the Employment Agreement), then the Company is obligated to pay her twelve months of base salary. The Employment Agreement also contains standard non-solicitation, non-compete, confidentiality and intellectual property provisions protecting the Company.
The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement, a copy of which is filed as Exhibit 10.4 to the Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01. Other Events
As of October 8, 2026, approximately $3.49 million of stated value of Series A preferred stock remain outstanding.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses or Funds Acquired.
The Company intends to file the financial statements required to be filed pursuant to Item 9.01(a) of Form 8-K by amendment to this Report not later than 71 calendar days after the date this Report is required to be filed.
(b) Pro Forma Financial Information.
The Company intends to file the pro forma financial information required to be filed pursuant to Item 9.01(b) of Form 8-K by amendment to this Report not later than 71 calendar days after the date this Report is required to be filed.
(d) Exhibits.
*Schedules and exhibits have been omitted pursuant to Item 601(a)(4) and (a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the SEC upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: October 9, 2026 | TRUGOLF HOLDINGS, INC. | |
| By: | /s/ Natalie Hirsch | |
| Name: | Natalie Hirsch | |
| Title: | Chief Financial Officer | |
Exhibit 3.3
trugolf holdings inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 78.195 AND 78.1955 OF THE
NEVADA REVISED STATUTES
TruGolf Holdings, Inc., a Nevada corporation (the “Corporation”), in accordance with the provisions of Section 78.195 and 78.1955 of the Nevada Revised Statutes (the “NRS”) does hereby certify that, in accordance with the NRS, the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board”), on October 7, 2026:
WHEREAS, the undersigned, Brenner Adams, Interim Chief Executive Officer of the Corporation, hereby certifies that the following resolutions were duly adopted by the Board pursuant to the authority conferred upon the Board by the Corporation’s Articles of Incorporation, as amended and/or restated from time to time (the “Articles”), and the NRS, including without limitation NRS 78.195 and NRS 78.1955, which authorize the Board to fix by resolution the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of one or more series of the Corporation’s preferred stock, par value $0.001 per share (the “Preferred Stock”).
RESOLVED, that pursuant to the authority vested in the Board by the Articles and the NRS, a series of the Corporation’s Preferred Stock is hereby created and designated as “Series C Non-Voting Convertible Preferred Stock,” and the Board hereby fixes the number of shares, the designations, preferences, limitations and relative rights thereof as follows:
SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Acquisition Agreement” means the Acquisition Agreement, dated August 17, 2026, by and among the Corporation, Polymath Research Inc. and other parties named therein;
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with (as such terms are used in and construed under Rule 144 under the Securities Act of 1933), a Person. With respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder;
“Aggregate Ownership” means the aggregate number of shares of Common Stock that were acquired upon conversion of the Series C Preferred Stock by all Holders of Series C Preferred Stock;
“Alternate Consideration” has the meaning ascribed to such term in Section 7(b);
“Articles” has the meaning ascribed to such term in the recitals;
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the date hereof, directly or indirectly managed or advised by a Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of a Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with a Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Corporation’s Common Stock would or could be aggregated with a Holder’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively a Holder and all other Attribution Parties to the Maximum Percentage;
“Automatic Conversion” has the meaning ascribed to such term in Section 6(a)(i);
“Automatic Conversion Shares” has the meaning ascribed to such term in Section 6(a)(i);
“Available Convertible Series C Preferred Stock” means the amount of shares of Series C Preferred Stock that are available for conversion from time to time without exceeding the Maximum Percentage;
“Business Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or Canada or any day on which banking institutions in the State of Nevada, the State of Utah or Province of Ontario are authorized or required by law or other governmental action to close;
“Board” has the meaning ascribed to such term in the recitals;
“Certificate of Designation” means the certificate of designation for the Series C Preferred Stock;
“Certificate of Incorporation” means the certificate of incorporation for the Corporation, as amended;
“Commission” means the U.S. Securities and Exchange Commission;
“Common Stock” means the Corporation’s class A common stock, par value of $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed;
“Conversion Approval” has the meaning ascribed to such term in Section 6(a)(i);
“Conversion Date” has the meaning ascribed to such term in Section 6(a)(ii)(2);
“Conversion Price” means $11.82, subject to adjustment as provided herein;
“Conversion Ratio” has the meaning ascribed to such term in Section 6(b);
| 2 |
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Preferred Stock in accordance with the terms hereof;
“Converted Stock” has the meaning ascribed to such term in Section 6(a)(i);
“Corporation” has the meaning ascribed to such term in the recitals;
“DRS” has the meaning ascribed to such term in Section 6(d)(i);
“DTC” has the meaning ascribed to such term in Section 6(a)(ii)(1);
“Distributions” has the meaning ascribed to such term in Section 5(a);
“DWAC Delivery” has the meaning ascribed to such term in Section 6(a)(ii)(1);
“Excess Shares” has the meaning ascribed to such term in Section 6(c);
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;
“Fundamental Cash Transaction” has the meaning ascribed to such term in Section 7(b);
“Fundamental Transaction” has the meaning ascribed to such term in Section 7(b);
“Group” means a “group” as that term is used in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder;
“Holder” means any holder of Series C Preferred Stock;
“Holders” mean all holders owning Series C Preferred Stock;
“Junior Securities” has the meaning ascribed to such term in Section 5(a);
“Liens” has the meaning ascribed to such term in Section 10(b);
“Liquidation” has the meaning ascribed to such term in Section 5(b);
“Maximum Percentage” has the meaning ascribed to such term in Section 6(c);
“Nasdaq” means The Nasdaq Stock Market LLC;
“Nasdaq Approval” means receipt by the Corporation of approval from Nasdaq for a new listing application filed after completion of the acquisition contemplated in the Acquisition Agreement;
“Notice of Conversion” has the meaning ascribed to such term in Section 6(a)(ii)(1);
“NRS” has the meaning ascribed to such term in the recitals;
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“Optional Conversion” has the meaning ascribed to such term in Section 6(a)(ii)(1);
“Parity Securities” has the meaning ascribed to such term in Section 5(a);
“Person” means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind;
“Preferred Stock” has the meaning ascribed to such term in the recitals;
“Pro-rata Conversion Percentage” means the Holder’s percentage of ownership of shares of Series C Preferred Stock owned by such Holder compared to the aggregate number of shares of Series C Preferred Stock issued to the Holders, as determined at the date of issuance of the Series C Preferred Stock;
“Reported Outstanding Share Number” has the meaning ascribed to such term in Section 6(c);
“Senior Securities” has the meaning ascribed to such term in Section 5(a);
“Series C Preferred Stock” has the meaning ascribed to such term in Section 2(a);
“Series C Preferred Stock Register” has the meaning ascribed to such term in Section 2(b);
“Share Delivery Date” has the meaning ascribed to such term in Section 6(d)(i);
“Stated Value” shall have the meaning set forth in Section 2(a);
“Stockholder Approval” means approval of the holders of the Common Stock for the conversion of the Series C Preferred Stock into Common Stock for the purposes of Nasdaq Rule 5635(a) and 5635(b);
“Trading Day” means a day on which the principal Trading Market is open for business; and
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
Section 2. Designation, Amount and Par Value; Assignment.
(a) The series of preferred stock designated by this Certificate of Designation shall be designated as the Corporation’s Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) and the number of shares so designated shall be 140,000. Each share of Series C Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,000 (the “Stated Value”).
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(b) The Corporation shall maintain a register of shares of the Series C Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series C Preferred Stock Register”), in the name of the Holders thereof from time to time, including the name, address, and electronic mail address of each such Holder. The Corporation may deem and treat the registered Holder of shares of Series C Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. Shares of Series C Preferred Stock may be issued solely in book entry form or, if requested by any Holder, such Holder’s shares may be issued in certificated form. The Corporation shall register the transfer of any shares of Series C Preferred Stock in the Series C Preferred Stock Register, upon surrender of the certificates (if applicable) evidencing such shares to be transferred, duly endorsed by the Holder thereof, to the Corporation at its address specified herein. Upon any such transfer, a new certificate (if applicable) evidencing the shares of Series C Preferred Stock so transferred shall be issued to the transferee and a new certificate evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder, in each case, within three Business Days. The provisions of this Certificate of Designation are intended to be for the benefit of all Holders from time to time and shall be enforceable by any such Holder.
Section 3. Dividends. Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of the Series C Preferred Stock (on an as if converted to Common Stock basis, without regard to the beneficial ownership limitation set forth in Section 6(c)) equal to and in the same form, and in the same manner, as dividends (other than dividends on shares of the Common Stock payable in the form of Common Stock) actually paid on shares of the Common Stock when, as and if such dividends (other than dividends payable in the form of Common Stock) are paid on shares of the Common Stock. Other than as set forth in the previous sentence or as set forth in this Certificate of Designation, no other dividends shall be paid on shares of Series C Preferred Stock, and the Corporation shall pay no dividends (other than dividends payable in the form of Common Stock) on shares of the Common Stock unless it simultaneously complies with the previous sentence.
Section 4. Voting Rights; Amendments.
(a) Except as otherwise provided herein or as otherwise required by the NRS, the Series C Preferred Stock shall have no voting rights. However, as long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of Series C Preferred Stock: (i) alter or change adversely the powers, preferences or rights given to the Series C Preferred Stock or alter or amend this Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or bylaws of the Corporation, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series C Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise, (ii) issue further shares of Series C Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series C Preferred Stock, (iii) consummate either: (A) any Fundamental Transaction or (B) any merger or consolidation of the Corporation with or into another entity or any stock sale to, or other business combination in which the stockholders of the Corporation immediately before such transaction do not hold at least a majority of the capital stock of the Corporation immediately after such transaction, (iv) issue any shares of Common Stock or any securities exercisable or convertible into shares of Common Stock (other than the transactions to be consummated in connected with this Acquisition Agreement), or (v) enter into any agreement with respect to any of the foregoing.
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(b) Any vote required or permitted under Section 4(a) may be taken at a meeting of the Holders of the Series C Preferred Stock or through the execution of an action by written consent in lieu of such meeting, provided that the consent is executed by Holders representing a majority of the outstanding shares of Series C Preferred Stock, unless a higher percentage is required by the NRS, in which case the written consent of the Holders of not less than such higher percentage shall be required.
Section 5. Rank; Liquidation.
(a) The Series C Preferred Stock shall rank: (i) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to the Series C Preferred Stock (“Junior Securities”); (ii) on parity with the Common Stock and any other class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series C Preferred Stock (the “Parity Securities”); and (iii) junior to the Series A Convertible Preferred Stock and any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to the Series C Preferred Stock (“Senior Securities”), in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntarily or involuntarily (all such distributions being referred to collectively as “Distributions”).
(b) Subject to the prior and superior rights of the holders of any Senior Securities of the Corporation, upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each Holder shall be entitled to receive, in preference to any Distributions of any of the assets or surplus funds of the Corporation to the holders of the Junior Securities, and pari passu with any Distribution to the holders of the Parity Securities, an equivalent amount of Distributions as would be paid on the Common Stock underlying the Series C Preferred Stock, determined on an as if converted to Common Stock basis (without regard to the beneficial ownership limitation set forth in Section 6(c)), plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of any class of Junior Securities. If, upon any such Liquidation, the assets of the Corporation shall be insufficient to pay the Holders of shares of the Series C Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Corporation shall be distributed ratably to the Holders and holders of Parity Securities in accordance with the respective amounts that would be payable on all such securities if all amounts payable thereon were paid in full. A Fundamental Transaction shall not be deemed a Liquidation unless the Corporation expressly declares that such Fundamental Transaction shall be treated as if it were a Liquidation.
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Section 6. Conversion.
(a) Automatic and Optional Conversions. The shares of Series C Preferred Stock shall be convertible into shares of Common Stock as follows:
(i) Automatic Conversion. Effective as of 5:00 p.m. (Eastern time) on the second Business Day after the date on which the Corporation has obtained the Stockholder Approval and the Corporation has obtained the Nasdaq Approval (the “Conversion Approval”), each share of Series C Preferred Stock then outstanding shall automatically convert (the “Automatic Conversion”) into a number of shares of Common Stock equal to the Conversion Ratio. The shares of Common Stock issued upon the Automatic Conversion are referred to as the “Automatic Conversion Shares” and shares of Series C Preferred Stock that are converted in the Automatic Conversion are referred to as the “Converted Stock”. The Automatic Conversion Shares shall be issued as follows:
(1) Converted Stock that is registered in book entry form shall be automatically cancelled upon the Automatic Conversion and converted into the corresponding Automatic Conversion Shares, which shares shall be issued in book entry form and without any action on the part of the Holders;
(2) Converted Stock that is issued in certificated form shall be deemed converted into the corresponding Automatic Conversion Shares on the date of Automatic Conversion and the Holder’s rights as a holder of such shares of Converted Stock shall cease and terminate on such date, excepting only the right to receive the Automatic Conversion Shares upon the Holder tendering to the Corporation (or its designated agent) the stock certificate(s) (duly endorsed) representing such certificated Converted Stock; and
(3) notwithstanding the cancellation of the Converted Stock upon the Automatic Conversion, Holders of Converted Stock shall continue to have any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert the Converted Stock.
(ii) Optional Conversion.
(1) Subject to the beneficial ownership and other limitations set forth in Section 6(c) at any time and from time to time as of 5:00 p.m. (Eastern time) after the issuance of the Series C Preferred Stock, each Holder may, at its option, effect conversions other than the Automatic Conversion of shares of Series C Preferred Stock such that each share of Series C Preferred Stock shall convert into a number of shares of Common Stock equal to the Conversion Ratio (each, an “Optional Conversion”) by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”), duly completed and executed. Provided the Corporation’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion Shares shall be credited to the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC Delivery”).
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(2) The date on which an Optional Conversion shall be deemed effective (the “Conversion Date”) shall be the Trading Day that the Notice of Conversion, completed and executed, is sent via email to, and received during regular business hours by, the Corporation; provided, that the original certificate(s) (if any) representing such shares of Series C Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation within two (2) Trading Days thereafter. In all other cases, the Conversion Date shall be defined as the Trading Day on which the original certificate(s) (if any) representing such shares of Series C Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.
(b) Conversion Ratio. The “Conversion Ratio” for each share of Series C Preferred Stock shall mean the number of shares of Common Stock equal to the Stated Value divided by the Conversion Price, subject to adjustment as provided herein.
(c) Beneficial Ownership Limitation. Notwithstanding anything to the contrary contained herein and until the Corporation has obtained the Conversion Approval, the Corporation shall not effect any conversion of the Series C Preferred Stock, and a Holder shall not have the right to convert any portion of the Series C Preferred Stock, pursuant to the terms and conditions of this Certificate of Designation and any such conversion shall be null and void and treated as if never made, to the extent that, after giving effect to such conversion, the Aggregate Ownership of all Holders would be in excess of 19.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holders and the Holders’ respective Attribution Parties shall include the aggregate number of shares of Common Stock held by the Holders and the Holders’ respective Attribution Parties plus the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock subject to the Notice of Conversion with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, unconverted Series C Preferred Stock beneficially owned by the Holders or any of the Holders’ respective Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including, without limitation, any convertible notes or convertible preferred stock or warrants) beneficially owned by the Holders or the Holders’ respective Attribution Parties subject to a limitation on conversion or exercise analogous to the limitation contained herein. For purposes of this Section 6(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Series C Preferred Stock, in determining the number of outstanding shares of Common Stock the Holders may acquire upon the conversion of the Holders’ respective Series C Preferred Stock without exceeding the Maximum Percentage, the Holders may rely on the number of outstanding shares of Common Stock as reflected in (A) the Corporation’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K or other public filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation, or (C) any other written notice by the Corporation or the Corporation’s transfer agent setting forth the number of shares of Common Stock outstanding (any of the foregoing, as applicable, the “Reported Outstanding Share Number”). In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including shares of Series C Preferred Stock, by the Holders or the Holders’ respective Attribution Parties since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of Common Stock to any Holder upon conversion of any such Holder’s Series C Preferred Stock results in the Holders and the such Holders’ respective Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of shares of Common Stock so issued by which such Holder’s and such Holder’s Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and such Holder shall not have the power to vote or to transfer the Excess Shares. No prior inability to convert all or a portion of such Holder’s Series C Preferred Stock pursuant to this Section 6(c) shall have any effect on the applicability of the provisions of this Section 6(c) with respect to any subsequent determination of conversion. The provisions of this Section 6(c) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(c) to the extent necessary to correct this Section 6(c) or any portion of this Section 6(c) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 6(c) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 6(c) may not be waived and shall apply to a successor holder of such Holder’s Series C Preferred Stock. Each Holder hereby acknowledges and agrees that the Corporation shall be entitled to rely on the representations and the other information set forth in any Notice of Conversion and shall not be required to independently verify whether any conversion of Series C Preferred Stock would cause the Aggregate Ownership of the Holders (together with the Holders’ respective Attribution Parties) to collectively beneficially own in excess of the Maximum Percentage of the number of shares of Common Stock outstanding after giving effect to such conversion or otherwise trigger the provisions of this Section 6(c). For the purposes of any Optional Conversion, the amount of shares of Series C Preferred Stock that any Holder may convert into shares of Common Stock is limited to such Holder’s Pro-rata Conversion Percentage multiplied by the Available Convertible Series C Preferred Stock. The Corporation agrees that it will monitor and calculate the Available Convertible Series C Preferred Stock and notify the Holders if the Holders can complete an Optional Conversion due to there being Available Convertible Series C Preferred Stock.
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(d) Mechanics of Conversion
(i) Delivery of Certificate or Electronic Issuance Upon Conversion. Not later than three (3) Trading Days after the applicable Conversion Date, or if the Holder requests the issuance of physical certificate(s), three (3) Trading Days after receipt by the Corporation of the original certificate(s) representing such shares of Series C Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Corporation shall either: (a) deliver, or cause to be delivered, to the converting Holder a physical certificate or direct registration statement (a, “DRS”) representing the number of Conversion Shares being acquired upon the conversion of shares of Series C Preferred Stock, or (b) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer such Conversion Shares by crediting the account of the Holder’s prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion such certificate(s) or DRS for the Conversion Shares are not delivered to or as directed by or, in the case of a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Corporation at any time on or before its receipt of such certificate or certificates for Conversion Shares or electronic receipt of such shares, as applicable, in which event the Corporation shall promptly return to such Holder any original Series C Preferred Stock certificate delivered to the Corporation and such Holder shall promptly return to the Corporation any Common Stock certificates or otherwise direct the return of any shares of Common Stock delivered to the Holder through the DWAC system, representing the shares of Series C Preferred Stock unsuccessfully tendered for conversion to the Corporation.
(ii) Obligation Absolute. Subject to Section 6(c) and Section 6(d)(iii) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, the Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Series C Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares. Subject to Section 6(c) and Section 6(d)(iii) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, in the event a Holder shall elect to convert any or all of its Series C Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series C Preferred Stock of such Holder shall have been sought and obtained by the Corporation. In the absence of such injunction, the Corporation shall, subject to Section 6(c) and Section 6(d)(iii) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, issue Conversion Shares upon a properly noticed conversion.
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(iii) Reservation of Shares Issuable Upon Conversion. The Corporation covenants that at all times, it will reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of outstanding shares of Series C Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series C Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series C Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
(iv) Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of the Series C Preferred Stock. As to any fraction of a share which a Holder would otherwise be entitled to receive upon such conversion, the Corporation shall pay a cash adjustment in respect of such fractional share of Common Stock in an amount equal to such fraction multiplied by the Fair Value. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series C Preferred Stock the Holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.
(v) Transfer Taxes. The issuance of certificates for shares of the Common Stock upon conversion of the Series C Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such shares of Series C Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.
(e) Status as Stockholder. Upon each Conversion Date, (i) the shares of Series C Preferred Stock being converted shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a holder of such converted shares of Series C Preferred Stock shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series C Preferred Stock. In no event shall the Series C Preferred Stock convert into shares of Common Stock above the Maximum Percentage prior to the Conversion Approval.
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Section 7. Certain Adjustments.
(a) Stock Dividends and Stock Splits. If the Corporation, at any time while this Series C Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series C Preferred Stock) with respect to the then outstanding shares of Common Stock; (B) subdivides outstanding shares of Common Stock into a larger number of shares; or (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately after such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
(b) Fundamental Transaction. If, at any time while any Series C Preferred Stock is outstanding, (A) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (B) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (C) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of the Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and such offer has been accepted by the holders of a majority of the outstanding Common Stock, (D) the Corporation, directly or indirectly, in one or more transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (E) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each, a “Fundamental Transaction”), then, upon any subsequent conversion of this Series C Preferred Stock the Holders shall have the right to receive, in lieu of the right to receive Conversion Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of common stock or other equity securities of the successor or acquiring corporation of the Corporation, if it is the surviving corporation, and any other or additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Series C Preferred Stock is then convertible immediately prior to such Fundamental Transaction (without regard to any beneficial ownership limitation set forth in Section 6(c) above, which shall cease to be applicable at the time of and following the Fundamental Transaction). For purposes of any such subsequent conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration they receive upon any conversion of this Series C Preferred Stock following such Fundamental Transaction. Notwithstanding the foregoing, in the event the Alternate Consideration consist solely of cash (a “Fundamental Cash Transaction”), the Holders shall exercise their conversion rights under this Series C Preferred Stock and such exercise will be deemed effective immediately prior to the consummation of such Fundamental Cash Transaction. If Holders do not so convert this Series C Preferred Stock, this Series C Preferred Stock shall automatically convert pursuant to Section 6(a) above, without any action by Holders and without regard to the beneficial ownership limitation set forth in Section 6(c) above immediately prior to the consummation of such Fundamental Cash Transaction. The Corporation shall provide the Holders with written notice of the Fundamental Cash Transaction (together with such reasonable information as the Holders may request in connection with such contemplated transaction giving rise to such notice), which is to be delivered to the Holders not less than 10 days prior to the closing of the Fundamental Cash Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new certificate of designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7(b) and insuring that this Series C Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
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(c) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
Section 8. Redemption. The shares of Series C Preferred Stock shall not be redeemable; provided, however, that the foregoing shall not limit the ability of the Corporation to purchase or otherwise deal in such shares to the extent otherwise permitted hereby and by law.
Section 9. Transfer. A Holder may transfer such shares of Series C Preferred Stock in whole, or in part, together with the accompanying rights set forth herein, held by such holder without the consent of the Corporation; provided that such transfer is in compliance with applicable securities laws. The Corporation shall in good faith (i) do and perform, or cause to be done and performed, all such further acts and things, and (ii) execute and deliver all such other agreements, certificates, instruments and documents, in each case, as any holder of Series C Preferred Stock may reasonably request in order to carry out the intent and accomplish the purposes of this Section 9.
Section 10. Covenants. Without the affirmative vote of the Holders of a majority of the then outstanding shares of Series C Preferred Stock:
(a) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness other than the proposed changes with the indebtedness;
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(b) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Corporation or any of its subsidiaries (collectively, “Liens”), other than the Liens in existence as of the date of the Acquisition Agreement;
(c) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any indebtedness (other than as contemplated in the Acquisition Agreement or as described in the Parent Disclosure Letter to the Acquisition Agreement) whether by way of payment in respect of principal of (or premium, if any) or interest on, such indebtedness;
(d) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital;
(e) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Corporation or any subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Corporation and its subsidiaries in the ordinary course of business consistent with its past practice, (ii) sales of inventory and product in the ordinary course of business, and (iii) as contemplated in the Acquisition Agreement;
(f) the Corporation shall not, and the Corporation shall cause each of its subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Corporation and each of its subsidiaries on the date of the Acquisition Agreement or any business substantially related or incidental thereto;
(g) the Corporation shall maintain and preserve, and cause each of its subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the failure to become or remain duly qualified or in good standing could not reasonably be expected to result in a material adverse effect;
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(h) the Corporation shall not, nor shall it permit any of its subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its subsidiaries than would be obtainable in a comparable arm’s length transaction with a person that is not an affiliate thereof; and
(i) at all times any Series C Preferred Stock remain outstanding, the Corporation shall have engaged an independent auditor to audit its financial statements that is registered with (and in compliance with the rules and regulations of) the Public Company Accounting Oversight Board.
Section 11. Stockholder Meeting. As soon as practicable after the issuance of the Series C Preferred Stock and in compliance with the policies of and direction from Nasdaq, the Corporation shall hold a meeting of its stockholders to obtain the Stockholder Approval. In connection with such shareholder meeting, the Corporation shall provide each stockholder with a proxy statement and shall use its best efforts to obtain the Stockholder Approval and to cause its board of directors to recommend to the stockholders that they approve such proposal. If, despite the Corporation’s reasonable best efforts, the Stockholder Approval is not obtained, the Company shall cause an additional shareholder meeting to be held on or prior to sixty (60) days after the previous shareholder meeting was held. If, despite the Corporation’s reasonable best efforts the Stockholder Approval is not obtained after such subsequent shareholder meetings, the Company shall cause an additional shareholder meeting to be held semi-annually thereafter until the Stockholder Approval is obtained.
Section 12. Noncircumvention. The Corporation hereby covenants and agrees that the Company will not, by amendment of its organizational documents or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the rights and restrictions of the Series C Preferred Stock, and will at all times in good faith carry out all the provisions of the Series C Preferred Stock and take all action as may be required to protect the rights of the Holders hereunder.
Section 13. Miscellaneous.
(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, via email or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 60 North 1400 West, Centerville, Utah, 84014, Attention: Chief Financial Officer; email: stevep@trugolf.com and natalie.hirsch@polymath.network or such other email address or mailing address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 13(a). Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by email at the email address of such Holder appearing on the books of the Corporation, or if no such email address appears on the books of the Corporation, sent by a nationally recognized overnight courier service addressed to each Holder, at the principal place of business or principal residence of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section 13(a) prior to 5:30 p.m. (Eastern time) on any date, (ii) the date immediately following the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section 13(a) between 5:30 p.m. and 11:59 p.m. (Eastern time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
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(b) Lost or Mutilated Series C Preferred Stock Certificate. If a Holder’s Series C Preferred Stock certificate is mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series C Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership thereof, reasonably satisfactory to the Corporation and, in each case, customary and reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Corporation may prescribe.
(c) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series C Preferred Stock granted hereunder may be waived as to all shares of Series C Preferred Stock (and the Holders thereof) upon the written consent of the Holders of not less than a majority of the shares of Series C Preferred Stock then outstanding, unless a higher percentage is required by the NRS, in which case the written consent of the Holders of not less than such higher percentage shall be required.
(d) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
(e) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
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(f) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.
(g) Status of Converted Series C Preferred Stock. If any shares of Series C Preferred Stock shall be converted or repurchased or otherwise be acquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series C Preferred Stock.
(h) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation and the Acquisition Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit any Holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation. The Corporation covenants to each Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like(and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Corporation (or the performance thereof). The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Corporation therefore agrees that, in the event of any such breach or threatened breach, each Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The Corporation shall provide all information and documentation to a Holder that is requested by such Holder to enable such Holder to confirm the Corporation’s compliance with the terms and conditions of this Certificate of Designation.
(i) Attorneys Fees. If a Holder takes action to enforce the provisions of this Certificate of Designation, the non-prevailing party in such litigation shall pay the other parties the reasonable attorneys’ fees of one law firm and taxable costs.
(j) Construction; Headings. This Certificate of Designation shall be deemed to be jointly drafted by the Corporation and the Holders and shall not be construed against any such Person as the drafter hereof. The headings of this Certificate of Designation are for convenience of reference and shall not form part of, or affect the interpretation of, this Certificate of Designation. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Certificate of Designation instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Certificate of Designation.
(k) Governing Law; Exclusive Jurisdiction. This Certificate of Designation shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Certificate of Designation shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or that would cause the application of the laws of any jurisdictions other than the State of Nevada. Each Holder as a condition of acquiring Series C Preferred Stock and the Corporation hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in Clark County, Nevada for the adjudication of any dispute arising under this Certificate of Designation, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained in this Section 23 shall limit, or shall be deemed or construed to limit, any provision of Section 22. The Corporation and each Holder hereby irrevocably waive any right each may have to, and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection with or arising out of this Certificate of Designation or any transaction contemplated hereby.
(l) Amendment. This Certificate of Designation or any provision hereof may be modified or amended or the provisions hereof waived with the written consent of the Corporation and the Holders of a majority of the shares of Series C Preferred Stock then outstanding, provided that this Section 13(l) shall not apply to the beneficial ownership limitations under Section 6(c) as to any Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
********************
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 7th day of October, 2026.
| TRUGOLF HOLDINGS, INC. | ||
| By: | /s/ Brenner Adams | |
| Name: | Brenner Adams | |
| Title: | Interim Chief Executive Officer | |
Signature Page – Certificate of Designation
ANNEX A
NOTICE OF CONVERSION
(TO
BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES
OF SERIES C PREFERRED STOCK)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series C Preferred Stock indicated below, [represented by stock certificate No(s). [●]]/[represented in book-entry form], into shares of common stock, par value $0.001 per share (the “Common Stock”), of TruGolf Holdings, Inc., a Nevada corporation (the “Corporation”), as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series C Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Nevada on __________, 2026.
As of the date hereof, the Aggregate Ownership of the Holders, including the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series C Preferred Stock beneficially owned by the Holders or any of their respective Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by the Holders or any of their respective Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6(c) of the Certificate of Designation, is less that 19.99%. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission.
Conversion calculations:
Date to Effect Conversion:_______________________________________________
Number of shares of Series C Preferred Stock owned prior to Conversion: _________
Number of shares of Series C Preferred Stock to be Converted: _________________
Number of shares of Common Stock to be Issued: ____________________________
Address for delivery of physical certificates: ________________________________
or
For DWAC Delivery:
DWAC Instructions:
Broker no: _________
Account no: ___________
| [HOLDER] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
Annex A
Exhibit 10.3
THIRD AMENDMENT, WAIVER AND EXERCISE AGREEMENT
This Third Amendment, Waiver and Exercise Agreement (the “Agreement”) is entered into as of October 8, 2026, by and among TruGolf Holdings, Inc., a Nevada corporation with offices located at 60 North 1400 West, Centerville, Utah 84014 (the “Company”) and the investor signatory hereto (the “Holder”), with reference to the following facts:
A. Prior to the date hereof, (a) the Company and the Holder and/or certain other investors (the “Other Holders”, and together with the Holder, the “Holders”) entered into that certain Securities Purchase Agreement, dated February 2, 2024 (as may be amended, modified, restated, restructured or supplemented from time to time, each a “Securities Purchase Agreement”), pursuant to which the Holder purchased, among other things, certain senior convertible notes (as amended, modified or waived prior to the date hereof, the “Notes”) and certain warrants to purchase shares of Common Stock (as defined in the Securities Purchase Agreement) (the “Warrants”, together with the Notes, the “Original Securities”), and (b) the Company and each Holder entered into that certain Amendment and Exchange Agreement, dated as of April 22, 2025 (as may be amended, modified, or waived, from time to time, the “Series A Exchange Agreement”, and collectively with those identical agreements executed by and between the Company and the Other Holders, the “Series A Exchange Agreements”), pursuant to which, among other things, the Holder acquired in exchange for the Original Securities, (i) certain shares (the “Series A Preferred Shares”) of a series of convertible preferred stock of the Company designated as Series A Preferred Stock, $0.0001 par value per share (the “Series A Preferred Stock”), the terms of which are set forth in the Fourth Article, Section B., Section (3) of the Company’s Amended and Restated Articles of Incorporation dated March 11, 2026 (the “Series A Certificate of Designation”), which Series A Preferred Stock are convertible into shares of Common Stock, in accordance with the Series A Certificate of Designation (the “Series A Preferred Conversion Shares”) and (ii) certain warrants to purchase shares of Series A Preferred Stock (the “Series A Preferred Warrants”, and collectively with the Series A Preferred Shares, the “Series A Securities”).
B. Prior to the date hereof, the Company and the Holder entered into that certain Second Amendment, Waiver and Exchange Agreement, dated August 17, 2026 (the “Series B Exchange Agreement”, and together with the similar agreements executed with any other holder of securities of the Company, the “Series B Exchange Agreements”), pursuant to which, among other things, (i) the Company authorized a new series of convertible preferred stock of the Company designated as Series B Convertible Preferred Stock, $0.0001 par value, the terms of which are set forth in the certificate of designation for such series of preferred stock (the “Series B Certificate of Designation”) in the form attached to the Series B Exchange Agreement as Exhibit A (together with any convertible preferred shares issued in replacement thereof in accordance with the terms thereof, the “Series B Preferred Stock”), which Series B Preferred Stock are convertible into shares of Common Stock, in accordance with the terms of the Series B Certificate of Designation and (ii) the Company issued to the Holder a warrant to purchase such aggregate number of shares of Series B Preferred Stock as set forth on the signature page of the Holder attached to the Series B Exchange Agreement, in the form attached thereto as Exhibit B (the “Existing Series B Preferred Warrants”, and such shares of Series B Preferred Stock issuable pursuant to the terms of the Existing Series B Preferred Warrants, including, without limitation, upon exercise or otherwise, collectively, the “Existing Series B Warrant Preferred Shares”, and such shares of Common Stock issuable upon the conversion of the Existing Series B Warrant Preferred Shares, collectively, the “Existing Series B Warrant Preferred Conversion Shares”, collectively, with the Series A Preferred Conversion Shares, the “Conversion Shares”), in exchange for certain Series A Preferred Warrants previously issued to the Holder. Capitalized terms not defined herein shall have the meaning as set forth in the Series B Exchange Agreement.
C. Prior to the date hereof, [***] assigned a portion of the Series A Preferred Warrants to [***] under that certain Joinder and Assignment Agreement, dated as of October 7, 2026 attached hereto as Exhibit A, pursuant to which the assignee thereunder became a “Holder” under the Transaction Documents and the Exchange Documents.
D. The Company desires that the Holder exercise certain of the Existing Series B Preferred Warrants into such aggregate number of Existing Series B Warrant Preferred Shares as set forth on the signature page of the Holder attached hereto (the “Existing Warrant Exercise”, and such aggregate number of Existing Series B Warrant Preferred Shares issuable in such Existing Warrant Exercise, the “Existing Preferred Warrant Share Amount”);
E. As consideration for the Existing Warrant Exercise, the Company desires to issue to the Holder a new warrant (the “New Preferred Warrant”), in the form of the Existing Series B Preferred Warrants, exercisable into such aggregate number of shares of Series B Preferred Stock as set forth on the signature page of the Holder attached hereof (the “New Preferred Warrant Share Amount”).
F. Concurrently herewith, the Company has also requested that each other Holder enter into amendment and exercise agreements in form and substance identical to this Agreement (each, as may be amended, modified, or waived, from time to time, a “Other Exercise Agreement”, and collectively, the “Other Exercise Agreements”, and together with this Agreement, the “New Exercise Agreements”, and collectively with the Series A Exchange Agreements and the Series B Exchange Agreements, the “Exchange and Exercise Agreements”).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:
1. Existing Warrant Exercise; Issuance of New Preferred Warrants.
(a) General. In consideration for the Holder consummating the Existing Warrant Exercise and the mutual covenants, representations and warranties herein, the Company shall issue to the Holder the New Preferred Warrant pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act, to purchase up to the New Preferred Share Amount of Series B Preferred Stock (the “New Preferred Warrant Shares”, and the shares of Common Stock issuable upon conversion of the New Preferred Warrant Shares (without regard to any limitations on conversion set forth in the Series B Certificate of Designation), the “New Warrant Preferred Conversion Shares”, and together with the New Preferred Warrant and the New Preferred Warrant Shares, the “New Securities”) (collectively, the “Exercise Transactions”). Upon due execution and delivery of this Agreement by the Company and the Holder on the Effective Date, the Holder shall be deemed to have delivered an Exercise Notice with respect to the Existing Warrant Exercise (the cash amount to be paid in the Exiting Preferred Warrant Exercise, the “Existing Preferred Warrant Exercise Price”); provided, that, notwithstanding anything in the Existing Preferred Warrants to the contrary, the Company hereby instructs the Holder to net fund the payment of the Existing Preferred Warrant Exercise Price by the Legal Fee Amount (as defined below) and to pay the Legal Fee Amount directly to Kelley Drye & Warren LLP. The closing (the “Closing”) of the Exercise Transactions shall take place by electronic exchange of executed documents. The date and time of the Closing (the “Closing Date”) shall be on such date as is mutually agreed to by the Company and Holder.
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(b) Closing. Subject to the conditions set forth in Section 2 below, the closing of the Exercise Transactions shall take place via the electronic exchange of documents, securities and signatures, one (1) Business Day (as defined in the Series B Certificate of Designation) after the initial date such conditions are satisfied or waived by the respective parties (or at such other time and place as the Company and the Holder mutually agree) (the “Closing” and such date, the “Closing Date”).
2. Closing Conditions to the Closing.
(a) Conditions to the Holder’s Obligations at the Closing. The obligation of the Holder to consummate the Closing is subject to the fulfillment (or waiver, at the sole option of the Holder), to the Holder’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:
(i) Exercise Documents. The Company shall have duly executed and delivered to the Holder this Agreement, the New Registration Rights Agreement, copies of those certain Consents and Waivers (collectively, the “Consents”, and individually, each a “Consent”), dated as of October 8, 2026, by and among the Company and the applicable Consenting Holder (as defined in each Consent), and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time (collectively, the “Exercise Documents”) to which it is a party and the Company shall have issued to the Holder the New Preferred Warrants and the Existing Preferred Warrant Share Amount of Existing Series B Preferred Warrant Shares (the “Exercise Preferred Shares”), on the books and records of the Company.
(ii) Representations and Warranties. Each and every representation and warranty of the Company set forth herein shall be true and correct in all material respects (except where qualified by materiality or material adverse effect, which shall be true and correct in all respect) as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Holder shall have received a certificate, duly executed by the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Holder in the form acceptable to the Holder.
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(iii) Issuance of Securities. At the Closing, the Company shall issue the New Preferred Warrants and the Exercise Preferred Shares on the books and records of the Company, with certificates with respect thereto delivered to the Holder no later than five (5) Trading Days after the Closing Date.
(iv) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.
(v) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Holder, and the Holder shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the Exercise Transactions, including without limitation, those required by the Principal Market (defined hereafter), if any.
(vi) No RTO Triggering Event or Default. On each Trading Day during the fifteen (15) Trading Days immediately preceding the Closing Date and the Closing Date, (A) no RTO Triggering Event (as defined in the New Preferred Warrants) or event that with the passage of time or giving of notice would constitute an RTO Triggering Event shall have occurred (in each case, excluding any RTO Triggering Event waived in writing by the Holder) and (B) no material breach or default by the Company under any Exercise Document shall have occurred or be continuing, and (C) no event shall have occurred or exist that, with the passage of time, the giving of notice or both, would constitute any of the foregoing.
(vii) Eligible Market. On each Trading Day (as defined in the Series B Certificate of Designation) during the fifteen (15) Trading Days immediately preceding the Closing Date and the Closing Date, the Common Stock (I) shall be designated for quotation or listed on an Eligible Market (as defined in the Series B Certificate of Designation) and (II) shall not have been suspended.
(viii) Good Standing Certificate. The Company shall have delivered to the Holder a certificate evidencing the Company’s good standing issued by the Secretary of State (or comparable office) of the State of Nevada and a certificate of existence from each jurisdiction in which the Company conducts business and is required to qualify to do business as a foreign corporation, as of a date within ten (10) days of the Closing Date.
(ix) Certified Charter. The Company shall have delivered to the Holder a certified copy of the Articles of Incorporation (as defined below) as certified by the Nevada Secretary of State within ten (10) days of the Closing Date.
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(x) Secretary Certificate. The Company shall have delivered to the Holder a certificate, in the form acceptable to the Holder, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 5(b) below as adopted by the Company’s board of directors in a form reasonably acceptable to the Holder, (ii) the Articles of Incorporation of the Company and (iii) the Bylaws (as defined below) of the Company, each as in effect at the Closing.
(xi) Transfer Agent Certificate. The Company shall have delivered to such Holder a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.
(xii) Listing. The New Warrant Preferred Conversion Shares (A) shall be designated for quotation or listed (as applicable) on the Principal Market (as defined in the Series B Certificate of Designation) and (B) except as otherwise disclosed in the SEC Documents with respect to the Principal Market, shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(xiii) Filings with Principal Market. The Company shall have filed the Listing of Additional Shares with the Principal Market to list or designate for quotation (as the case may be) the New Warrant Preferred Conversion Shares.
(xiv) Other. The Company and its Subsidiaries shall have delivered to such Holder such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Holder or its counsel may reasonably request.
(b) Conditions to the Company’s Obligations to the Closing. The obligation of the Company to consummate the Closing is subject to the fulfillment (or waiver, at the sole option of the Company), to the Company’s reasonable satisfaction, prior to or at the Closing in question, of each of the following conditions:
(i) Representations and Warranties. The representations and warranties of the Holder set forth herein shall be true and correct in all material respects (except where qualified by materiality or material adverse effect, which shall be true and correct in all respect) as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Holder shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Holder at or prior to the Closing Date.
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(ii) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.
(iii) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall have received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request.
3. Waiver; Acknowledgement and Consent.
(a) Waivers.
(i) The Holder hereby waives, in part, Section 16 of the Series B Exchange Agreement, such that the Required Reserve Amount (as defined in the Series B Exchange Agreement) shall be deemed to be (x) prior to the Shareholder Approval Date (as defined in the Series B Exchange Agreement), 5,400,000 Conversion Shares [***], and (y) from and after the Shareholder Approval Date, (a) 100% of the maximum number of shares of Existing Series B Warrant Preferred Shares and New Preferred Warrant Shares issuable upon exercise of the Existing Series B Preferred Warrants and the New Preferred Warrants and (b) 100% of the maximum number of the shares of Conversion Shares issuable upon conversion of the Series A Preferred Shares, Existing Series B Preferred Warrant Preferred Shares and the New Preferred Warrant Shares (collectively, the “Preferred Shares”) then outstanding (assuming for purposes hereof that (x) the Preferred Shares are convertible at the Floor Price (as defined the applicable Certificate of Designation) then in effect, (y) dividends on the Preferred Shares shall accrue through the maturity date thereof and will be converted in shares of Common Stock at a dividend conversion price equal to the Floor Price then in effect, and (z) any such conversion shall not take into account any limitations on the conversion of the Preferred Shares set forth in the applicable Certificate of Designation).
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(ii) The parties hereto hereby waive, in part, the Series A Certificate of Designation, such that following any conversion of all of the outstanding Series A Preferred Shares of a Holder (each, a “Final Conversion”), to the extent such Holder is entitled to receive a fraction of a Series A Preferred Share in accordance therewith as a result of an increase in the Stated Value (as defined in the Series A Certificate of Designation) of such remaining Series A Preferred Shares arising as a result of such Final Conversion (such aggregate amount, each, a “Final True-Up Amount”), in lieu thereof, the Company shall have the right, at its sole option, on or prior to the Share Delivery Deadline (as defined in the Series A Certificate of Designation) of such Final Conversion, to either (A) pay such Holder a cash amount equal to such Final True-Up Amount or (B) subject to Section 4(d)(i) of the Series A Certificate of Designation, deliver to such Holder such aggregate number of additional shares of Common Stock equal to the quotient of (x) such Final True-Up Amount, divided by (y) the Conversion Price (as defined in the Series A Certificate of Designation) (or Alternate Conversion Price (as defined in the Series A Certificate of Designation), as applicable) in such Final Conversion.
(iii) The parties hereto hereby waive, in part, the Series A Certificate of Designation, such that Section 8(d) thereof shall be restated as follows:
“If at any time and from time to time on or after the Subscription Date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 8(a) above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event (each, a “Stock Combination Adjustment Date”), the Conversion Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 8(a) above) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made. Notwithstanding the foregoing, if the Holder requests to convert any Preferred Shares on any given date during a Stock Combination Measuring Period, solely with respect to such Preferred Shares being converted on such applicable Conversion Date, (a) such applicable Stock Combination Adjustment Date shall be deemed to mean such Conversion Date, (b) such applicable Stock Combination Measuring Period shall be deemed to have ended on the Trading Day immediately prior to such Conversion Date and (c) the applicable Event Market Price for such converted Preferred Shares shall be calculated pursuant to this Section 8(d). For the avoidance of doubt, following the calculation of the Event Market Price pursuant to this Section 8(d), the Company’s obligations with regard to such converted Preferred Shares shall be deemed satisfied and no additional Event Market Price shall apply to such converted Preferred Shares.”
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(iv) The parties hereto hereby waive, in part, the Series A Certificate of Designation, such that Section 32(ff) thereof shall be restated as follows:
““Event Market Price” means, with respect to any Stock Combination Event Date, 120% of the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five (5) Trading Days with the lowest VWAP of the Common Stock during the fifteen (15) consecutive Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date (such period, the “Stock Combination Measuring Period”), divided by (y) five (5). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such applicable Stock Combination Measuring Period.”
(b) Acknowledgement and Consent. The Holder acknowledges and agrees that, from and after the Effective Date: (i) the Existing Series B Warrant Preferred Conversion Shares issuable upon conversion of the Existing Series B Warrant Preferred Shares and New Warrant Preferred Conversion Shares issuable upon conversion of the New Warrant Preferred Shares or otherwise pursuant to the terms of the Series B Certificate of Designation; provided, that the terms of the Series B Certificate of Designation are not amended, modified or changed on or after the Effective Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the date hereof) shall be deemed to be Excluded Securities under the Series A Certificate of Designation; (ii) the Exercise Preferred Shares, the Existing Series B Preferred Warrants and the New Preferred Warrant; provided, that the terms of the Series B Certificate of Designation are not amended, modified or changed on or after the Effective Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the date hereof) shall be deemed to be Excluded Securities under the Series A Certificate of Designation; and (iii) neither of the securities described in clause (i) nor clause (ii) of this Section 3(b) shall be deemed to be Variable Price Securities under the Series A Certificate of Designation.
4. Amendments.
(a) Ratifications. Except as otherwise expressly provided herein, the Exchange and Exercise Agreements and each other Exchange Document (as defined in the Exchange and Exercise Agreements), is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Effective Date: (i) all references in the Exchange and Exercise Agreements to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to such Exchange Agreement shall mean the applicable Exchange Agreement as amended by this Agreement and the Consents, and (ii) all references in the other Transaction Documents, to the applicable “Exchange Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to such Exchange Agreement shall mean the Exchange Agreement as amended by this Agreement and the Consents.
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(b) Amendments to Exchange Documents. On and after the Effective Date, each of the Exchange Documents (as defined in the Series B Exchange Agreements) (including, without limitation, the New Registration Rights Agreement) are hereby amended as follows:
(i) The defined term “New Preferred Warrant Shares” (as defined in each Series B Exchange Agreement) shall be amended to include the New Warrant Preferred Shares.
(ii) The defined term “New Warrant Preferred Conversion Shares” (as defined in each Series B Exchange Agreement) shall be amended to include the New Warrant Preferred Conversion Shares.
(iii) The defined terms “Transaction Documents” and “Exchange Documents” are hereby each amended to include this Agreement and the Exercise Documents.
(iv) The defined term “Warrants” is hereby amended to include the New Preferred Warrants.
(v) The defined term “Warrant Shares” is hereby amended to include New Warrant Preferred Shares.
5. Representations and Warranties of the Company. The Company represents and warrants to the Holder, as of the date hereof and as of the Closing Date, as follows:
(a) Organization and Qualification. The Company is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it was formed, and has the requisite power and authority to own its properties and to carry on its business as now being conducted and as presently proposed to be conducted. The Company is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Exercise Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Exercise Documents (as defined below). Other than the Persons (as defined below) set forth on Schedule 4(a) hereto the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, (A) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (B) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary”. “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof.
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(b) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations (including, without limitation, the issuance of the New Preferred Warrants and Exercise Preferred Shares in accordance with the terms hereof, the reservation and issuance of the New Warrant Preferred Shares in accordance with the terms hereof and the reservation and issuance of the New Warrant Preferred Conversion Shares in accordance with the terms of the Series B Certificate of Designation) under the Exercise Documents. The execution and delivery of the Exercise Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the New Preferred Warrants, in accordance with the terms hereof, the reservation and issuance of the New Warrant Preferred Shares in accordance with the terms of this Agreement and the New Preferred Warrants, and the reservation and issuance of the New Warrant Preferred Conversion Shares in accordance with the terms of this Agreement and the Series B Certificate of Designation, have been duly authorized by the Board of Directors of the Company and, other than such filings required under applicable securities or “Blue Sky” laws of the states of the United States (the “Required Approvals”) no further filing, consent, or authorization is required by the Company or of its Board of Directors or its shareholders. This Agreement and the other Exercise Documents have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(c) Issuance of New Securities. The issuance of the New Preferred Warrants are duly authorized and, upon issuance in accordance with the terms of this Agreement, the New Preferred Warrants shall be duly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issue thereof. Upon exercise of the Existing Series B Preferred Warrants into the Exercise Preferred Shares in accordance with the Existing Series B Preferred Warrants and the Series B Certificate of Designation, the New Warrant Preferred Shares issued to the Holder, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of shares of Series B Preferred Stock. Upon exercise of the New Preferred Warrants into the New Warrant Preferred Shares in accordance with the New Preferred Warrants and the Series B Certificate of Designation, the New Warrant Preferred Shares issued to the Holder, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of shares of Series B Preferred Stock. Upon conversion of the New Warrant Preferred Shares in accordance with the Series B Certificate of Designation, the Common Stock issued to the Holder upon such conversion of the New Warrant Preferred Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and issuance by the Company of the New Preferred Warrants are exempt from registration under the 1933 Act. As of the Effective Date, the Company shall have reserved from its duly authorized capital stock not less than the Required Reserve Amount (as defined below) for issuances of New Warrant Preferred Conversion Shares pursuant to the Series B Certificate of Designation and New Warrant Preferred Shares issuable pursuant to the New Warrant Preferred Shares.
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(d) Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and issuance by the Company of the New Preferred Warrants is exempt from registration under the 1933 Act, pursuant to the exemption provided by Section 4(a)(2) thereof, and applicable state securities laws.
(e) No Conflict; Required Filings and Consents.
(i) The execution, delivery and performance of the Exercise Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation, any certificate of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party for which a consent or waiver has not been obtained, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq Capital Market (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.
(ii) Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the Required Approvals), any Governmental Entity or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exercise Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the date hereof, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Exercise Documents. Except as disclosed in the SEC Documents, the Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
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(f) Acknowledgment Regarding Holder’s Acquisition of New Securities. The Company acknowledges and agrees that the Holder is acting solely in the capacity of an arm’s length purchaser with respect to the Exercise Documents and the transactions contemplated hereby and thereby and that the Holder is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) to its knowledge, an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”)) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that the Holder is not acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Exercise Documents and the transactions contemplated hereby and thereby, and any advice given by the Holder or any of its representatives or agents in connection with the Exercise Documents and the transactions contemplated hereby and thereby is merely incidental to the Holder’s purchase of the New Securities. The Company further represents to the Holder that the Company’s and each Subsidiary’s decision to enter into the Exercise Documents to which it is a party has been based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
(g) No Placement Agent. Other than as described to the Holder by the Company, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of the New Securities. The Company shall pay, and hold the Holder harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.
(h) No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the New Securities to require approval of shareholders of the Company under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering of any of the New Securities to be integrated with other offerings of securities of the Company.
(i) Dilutive Effect. The Company understands and acknowledges that the number of New Warrant Preferred Conversion Shares will increase in certain circumstances. The Company further acknowledges that its obligation to issue the New Warrant Preferred Conversion Shares upon conversion of the New Warrant Preferred Shares in accordance with this Agreement and the Series B Certificate of Designation is, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
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(j) Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to the Holder as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the New Securities and the Holder’s ownership of the New Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
(k) SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the Securities and Exchange Commission (the “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Holders or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Holders which is not included in the SEC Documents (including, without limitation, information in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financial Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
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(l) Absence of Certain Changes. Since the date of the Company’s most recent financial statements contained in a Form 10-K or Form 10-Q, as applicable, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent financial statements contained in a Form 10-K or Form 10-Q, as applicable, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up.
(m) No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents, no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on the Holder’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, except as set forth in the SEC Documents, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) except as set forth in the SEC Documents, the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
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(o) Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:
(i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions With Affiliates. Except as set forth in the SEC Documents, no current or former employee, partner, director, officer or shareholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through an Eligible Market (as defined in the Series B Certificate of Designation)), nor does any such Person receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. No employee, officer, shareholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).
(r) Equity Capitalization.
(i) Definitions:
(1) “Common Stock” means (x) the Company’s Class A shares of common stock, $0.0001 par value per share, and (y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(2) “Preferred Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may be designated by the board of directors of the Company in a certificate of designation and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designation).
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(ii) Authorized and Outstanding Capital Stock. Schedule 4(r)(ii) sets forth as of the date hereof, the authorized, issued and outstanding capital stock of the Company as well as all outstanding equity linked securities, including all options, warrants, restricted stock units, Common Stock Equivalents. No shares of Common Stock are held in the treasury of the Company. “Common Stock Equivalents” mean any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
(iii) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. The SEC Documents disclose all securities that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, except as set forth in the SEC Documents, no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that all Common Stock Equivalents (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws).
(iv) Existing Securities; Obligations. Except as set forth in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) except as set forth on Schedule 4(r)(iv), there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the New Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
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(v) Organizational Documents. The SEC Documents disclose true, correct and complete copies of the Company’s Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Common Stock Equivalents and the material rights of the holders thereof in respect thereto.
(s) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, except as set forth in the SEC Documents or on Schedule 4(s), (i) has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
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(t) Litigation. There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, which could result, individually or in the aggregate, in a Material Adverse Effect, other than as set forth on Section 5(t) of the Disclosure Schedules attached hereto. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. Except as set forth in the SEC Documents, neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
(u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
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(v) Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No current (or former) executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(w) Title.
(i) Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.
(ii) Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the date hereof. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
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(x) Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted and presently proposed to be conducted. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y) Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii) No Hazardous Materials:
(A) have been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental Laws; or
(B) are present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
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(iii) Neither the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv) None of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”) list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(z) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code.
(aa) Internal Accounting and Disclosure Controls. Except as set forth in the SEC Documents, the Company and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. Except as set forth in the SEC Documents, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Except as set forth in the SEC Documents, neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
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(bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(cc) Investment Company Status. The Company is not, and upon consummation of the sale of the New Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
(dd) Acknowledgement Regarding Holder’s Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Exercise Documents, in accordance with the terms thereof, the Holder has not been asked by the Company or any of its Subsidiaries to agree, nor has the Holder agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the New Securities for any specified term provided that the Holder will not engage in any Short Sales (as defined herein); (ii) the Holder shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iii) the Holder may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion, exercise or exchange, as applicable, of the New Securities as and when required pursuant to the Exercise Documents for purposes of effecting trading in the Common Stock of the Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the Exercise Documents pursuant to the 8-K Filing (as defined below) the Holder may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period that the New Securities are outstanding, including, without limitation, during the periods that the value and/or number of the New Warrant Preferred Conversion Shares deliverable with respect to the New Warrant Preferred Shares are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing shareholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Series B Certificate of Designation or any other Exercise Document or any of the documents executed in connection herewith or therewith.
(ee) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the New Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the New Securities, (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
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(ff) U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the New Warrant Preferred Shares are held by any of the Holders, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon the Holder’s request.
(gg) Transfer Taxes. On the date hereof, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance and transfer of the New Preferred Warrant and Exercise Preferred Shares to be issued to the Holder hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(hh) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ii) Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(jj) Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
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(kk) Management. During the past five-year period, no current officer or director of the Company or any of its Subsidiaries has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(2) Engaging in any particular type of business practice; or
(3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
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(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(ll) Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(mm) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which would be reasonably likely to affect the Company’s ability to perform any of its obligations under any of the Exercise Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(nn) No Additional Agreements. The Company does not have any agreement or understanding with the Holder with respect to the transactions contemplated by the Exercise Documents other than as specified in the Exercise Documents.
(oo) Public Utility Holding Act None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(pp) Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal Power Act, as amended.
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(qq) Cybersecurity. The Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants that would reasonably be expected to have a Material Adverse Effect on the Company’s business. The Company and its Subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(rr) Compliance with Data Privacy Laws. The Company and its Subsidiaries are, and at all prior times were, in compliance with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company and its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance with the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
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(ss) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Holders or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Exercise Documents. The Company understands and confirms that each of the Holders will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Holders regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct as of the date furnished and does not contain any untrue statement of a material fact or omit to state any material fact as of the date furnished necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to the Holder pursuant to or in connection with this Agreement and the other Exercise Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. The Company acknowledges and agrees that the Holder has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 6 below.
6. Representations and Warranties of Holders. The Holder represents and warrants to the Company, as of the date hereof and as of the Closing Date, as follows:
(a) Organization and Authority. The Holder has the requisite power and authority to enter into and perform its obligations under this Agreement. The execution and delivery of this Agreement by the Holder and the consummation by Holder of the transactions contemplated hereby has been duly authorized by Holder’s board of directors or other governing body. This Agreement has been duly executed and delivered by Holder and constitutes the legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its terms.
(b) Ownership of Existing Series B Preferred Warrants. The Holder owns the Existing Series B Preferred Warrants to be exercised in the Existing Warrant Exercise free and clear of any Liens (other than the obligations pursuant to this Agreement, the Transaction Documents, the Exchange Documents, the Exercise Documents and applicable securities laws).
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(c) Reliance on Exemptions. The Holder understands that the New Securities are being offered and exchanged in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth herein and in the Exercise Documents in order to determine the availability of such exemptions and the eligibility of the Holder to acquire the New Securities.
(d) Validity; Enforcement. This Agreement and the Exercise Documents to which the Holder is a party have been duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(e) No Conflicts. The execution, delivery and performance by the Holder of this Agreement and the Exercise Documents to which the Holder is a party, and the consummation by the Holder of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Holder, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.
(f) Transfer or Resale. The Holder understands that: (i) the New Securities have not been and, except as provided in the New Registration Rights Agreement, are not being registered under the 1933 Act or any state securities laws, are and will be offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such New Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides the Company with reasonable assurance that such New Securities can be sold, assigned or transferred pursuant to Rule 144; (ii) any sale of the New Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the New Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) except as set forth in the New Registration Rights Agreement, if any, neither the Company nor any other Person is under any obligation to register the New Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the New Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the New Securities, subject to the requirements of applicable laws, and such pledge of New Securities shall not be deemed to be a transfer, sale or assignment of the New Securities hereunder, and the Holder effecting a pledge of New Securities shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exercise Document, including, without limitation, this Section 6(f).
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7. Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York City Time, on the first (1st) Business Day after the date of this Agreement, file a Current Report on Form 8-K describing the terms of the transactions contemplated hereby in the form required by the 1934 Act and attaching the Exercise Documents, to the extent they are required to be filed under the 1934 Act, that have not previously been filed with the SEC by the Company (including, without limitation, this Agreement and the form of New Preferred Warrant) as exhibits to such filing (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided up to such time to the Holder by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement with respect to the transactions contemplated by the Exercise Documents or as otherwise disclosed in the 8-K Filing, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Holder or any of their affiliates, on the other hand, shall terminate. Neither the Company, its Subsidiaries nor the Holder shall issue any press releases or any other public statements with respect to the transactions contemplated hereby without the consent of the other party; provided, however, the Company shall be entitled, without the prior approval of the Holder, to make a press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith or (ii) as is required by applicable law and regulations (provided that in the case of clause (i) the Holder shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the Holder (which may be granted or withheld in the Holder’s sole discretion), except as required by applicable law, the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of the Holder in any filing, announcement, release or otherwise.
8. No Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf shall, directly or indirectly, make any offers or sales of any security (as defined in the Securities Act) or solicit any offers to buy any security or take any other actions, under circumstances that would require registration of the New Securities under the Securities Act or cause this offering of the New Securities to be integrated with such offering or any prior offerings by the Company for purposes of Regulation D under the Securities Act.
9. Listing. The Company shall promptly make all filings necessary for the listing or designation for quotation (as applicable) of all of the New Warrant Preferred Conversion Shares upon the Principal Market (subject to official notice of issuance). The Company shall maintain the Common Stock’s authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 9.
10. Fees. The Company shall reimburse (i) Kelley Drye & Warren LLP, as counsel to one or more Holders, an aggregate non-accountable amount equal to $80,000, (ii) Orical LLC, an aggregate non-accountable amount equal to $5,000, (iii) RPCK Rastegar Panchal, LLP, an aggregate non-accountable amount equal to $20,0000 (collectively, clause (i) through clause (iii) above, the “Legal Fee Amount”) for all costs and expenses incurred by such counsel, respectively, in connection with preparing and delivering this Agreement and any prior Exchange and Exercise Agreement (including, without limitation, all legal fees and disbursements in connection therewith, and due diligence in connection with the transactions contemplated thereby) and other amounts, which shall be net funded by a reduction of the Existing Preferred Warrant Exercise Price.
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11. Blue Sky. The Company shall make all filings and reports relating to the Exercise Transactions as required under applicable securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.
12. Effective Date. Except as otherwise provided herein, this Agreement shall be deemed effective as of such date that Company and the Holder shall have duly executed and delivered this Agreement (the “Effective Date”).
13. No Commissions. Other than as has been disclosed to the Holders by the Company, neither the Company nor the Holder has paid or given, or will pay or give, to any person, any commission, fee or other remuneration, directly or indirectly, in connection with the transactions contemplated by this Agreement.
14. Conversion and Exercise Procedures. The form of Conversion Notice (as defined in the Series B Certificate of Designation) included in the Series B Certificate of Designation and the form of Exercise Notice (as defined in the New Preferred Warrants) sets forth the totality of the procedures required of the Holder in order to convert the New Warrant Preferred Shares and exercise the New Preferred Warrants, respectively. No legal opinion or other information or instructions shall be required of the Holder to convert the New Warrant Preferred Shares or exercise the New Preferred Warrants. The Company shall honor conversions of the New Warrant Preferred Shares and shall deliver the New Warrant Preferred Conversion Shares in accordance with the terms, conditions and time periods set forth in the Series B Certificate of Designation. The Company shall honor exercises of the New Preferred Warrants and shall deliver the New Warrant Preferred Shares in accordance with the terms, conditions and time periods set forth in the New Preferred Warrants. Without limiting the preceding sentences, no ink-original Conversion Notice or Exercise Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Conversion Notice or Exercise Notice form be required in order to convert the New Warrant Preferred Shares or exercise the New Preferred Warrant, as the case may be.
15. Reservation of Shares. So long as any portion of the New Preferred Warrants or the New Warrant Preferred Shares remains outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than (a) 100% of the maximum number of New Warrant Preferred Shares issuable upon exercise of the New Preferred Warrants and (b) 100% of the maximum number of the New Warrant Preferred Conversion Shares issuable upon conversion of the New Warrant Preferred Shares then outstanding (assuming for purposes hereof that (x) the New Warrant Preferred Shares are convertible at the Floor Price (as defined the Series B Certificate of Designation) then in effect, (y) dividends on the New Warrant Preferred Shares shall accrue through January 8, 2030 and will be converted in shares of Common Stock at a dividend conversion price equal to the Floor Price then in effect, and (z) any such conversion shall not take into account any limitations on the conversion of the New Warrant Preferred Shares set forth in the Series B Certificate of Designation) (the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock or Series B Preferred Stock, as applicable, reserved pursuant to this Section 16 be reduced other than proportionally in connection with any conversion of the New Warrant Preferred Shares or exercise of any New Preferred Warrants, as applicable. If at any time the number of shares of Common Stock or Series B Preferred Stock, as applicable, authorized and reserved for issuance by the Company is not sufficient to meet the applicable Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares of Common Stock to meet the Company’s obligations pursuant to the Exercise Documents, in the case of an insufficient number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the applicable Required Reserve Amount.
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16. Pledge of New Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the New Securities may be pledged by an Holder in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the New Securities, subject to the requirements of applicable laws. The pledge of New Securities shall not be deemed to be a transfer, sale or assignment of the New Securities hereunder, and no Holder effecting a pledge of New Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exercise Document, including, without limitation, Section 6(f) hereof; provided that an Holder and its pledgee shall be required to comply with the provisions of Section 6(f) hereof in order to effect a sale, transfer or assignment of New Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the New Securities may reasonably request in connection with a pledge of the New Securities to such pledgee by the Holder.
17. Shareholder Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of the requisite shareholders (the “Shareholder Consent”) to obtain the Shareholder Approval (as defined below), inform the shareholders of the Company of the receipt of the Shareholder Consent by preparing and filing with the SEC, as promptly as practicable after the date hereof, but prior to the forty-fifth (45th) calendar day after the date hereof (or, if such filing is delayed by a court or regulatory agency, in no event later than ninety (90) calendar days after the date hereof), an information statement with respect thereto or (y) provide each shareholder entitled to vote at a special meeting of shareholders of the Company (the “Shareholder Meeting”), which shall be promptly called and held not later than ninety (90) days after the date hereof (the “Shareholder Meeting Deadline”), a proxy statement, in each case, in a form reasonably acceptable to the Holders. Kelley Drye & Warren LLP and Venturist Law, Ltd., at the expense of the Company, with the Company obligated to reimburse the expenses of Kelley Drye & Warren LLP incurred in connection therewith in an amount not to exceed $5,000 and the expenses of Venturist Law, Ltd. incurred in connection therewith in an amount not to exceed $5,000, respectively. The proxy statement, if any, shall solicit each of the Company’s shareholder’s affirmative vote at the Shareholder Meeting for approval of resolutions (“Shareholder Resolutions”) providing for the issuance of all of the New Securities in compliance with the rules and regulations of the Nasdaq Capital Market (without regard to any limitations on conversion set forth in the Series B Certificate of Designation) (such affirmative approval being referred to herein as the “Shareholder Approval”, and the date such Shareholder Approval is obtained, the “Shareholder Approval Date”), and the Company shall use its reasonable best efforts to solicit its shareholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the shareholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Shareholder Approval by the Shareholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Shareholder Approval is not obtained on or prior to the Shareholder Meeting Deadline, the Company shall cause an additional Shareholder Meeting to be held on or prior to sixty (60) days after the Shareholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Shareholder Approval is not obtained after such subsequent shareholder meetings, the Company shall cause an additional Shareholder Meeting to be held semi-annually thereafter until such Shareholder Approval is obtained.
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18. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
19. Register; Transfer Agent Instructions; Legend.
(a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each Holder), a register for the New Preferred Warrants in which the Company shall record the name and address of the Person in whose name the New Preferred Warrants has been issued (including the name and address of each transferee), the number of New Warrant Preferred Shares issuable upon exercise of any New Preferred Warrants held by such Person and the number of New Warrant Preferred Conversion Shares issuable upon conversion of the New Warrant Preferred Shares held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of the Holder or its legal representatives.
(b) Transfer Agent Instructions. On or prior to the date hereof, the Company shall issue irrevocable instructions to its transfer agent (the “Transfer Agent”) and, prior to obtaining any subsequent transfer agent, the Company shall issue irrevocable instructions to any subsequent transfer agent, in each case, in a form acceptable to the Holder (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at the Depository Trust Company (“DTC”), registered in the name of the Holder or its respective nominee(s), for the New Warrant Preferred Conversion Shares in such amounts as specified from time to time by the Holder to the Company upon the conversion of the New Warrant Preferred Shares. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 21(b) will be given by the Company to its Transfer Agent with respect to the New Warrant Preferred Conversion Shares, and that the New Warrant Preferred Conversion Shares shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Exercise Documents. If the Holder effects a sale, assignment or transfer of the New Warrant Preferred Conversion Shares, subject to applicable laws, the Company shall permit the transfer and shall promptly instruct its Transfer Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by the Holder to effect such sale, transfer or assignment. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 21(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 21(b) that the Holder shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue each legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Transfer Agent as follows: (i) upon each conversion of the New Warrant Preferred Shares (unless such issuance is covered by a prior legal opinion previously delivered to the Transfer Agent), and (ii) on each date a registration statement with respect to the issuance or resale of any of the New Warrant Preferred Conversion Shares is declared effective by the SEC. Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated with the issuance of such opinions or the removal of any legends on any of the New Warrant Preferred Conversion Shares shall be borne by the Company.
(c) Legends. The Holder understands that the New Preferred Warrants have been issued (or will be issued in the case of the New Warrant Preferred Shares and the New Warrant Preferred Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the New Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE][CONVERTIBLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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(d) Removal of Legends. Certificates evidencing New Securities shall not be required to contain the legend set forth in Section 21(c) above or any other legend (i) while a registration statement covering the resale of such New Securities is effective under the 1933 Act, (ii) following any sale of such New Securities pursuant to Rule 144 (assuming neither the transferor nor the transferee is an affiliate of the Company), (iii) if such New Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that the Holder provides the Company with reasonable assurances that such New Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Holder’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Holder provides the Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such sale, assignment or transfer of the New Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing with respect to such New Securities, the Company shall no later than one (1) Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date the Holder delivers such legended certificate representing such New Securities to the Company) following the delivery by the Holder to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such New Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may be required above in this Section 21(d), as directed by the Holder, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such New Securities are New Warrant Preferred Conversion Shares, credit the aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program (“FAST”), issue and deliver (via reputable overnight courier) to the Holder, a certificate representing such New Securities that is free from all restrictive and other legends, registered in the name of the Holder or its designee (the date by which such credit is so required to be made to the balance account of the Holder’s or the Holder’s nominee with DTC or such certificate is required to be delivered to the Holder pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to the Holder or the Holder’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of New Securities or the removal of any legends with respect to any New Securities in accordance herewith.
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(e) Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered) to the Holder (or its designee) by the Required Delivery Date, if the Transfer Agent is not participating in FAST, a certificate for the number of New Warrant Preferred Conversion Shares to which the Holder is entitled and register such New Warrant Preferred Conversion Shares on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of New Warrant Preferred Conversion Shares submitted for legend removal by the Holder pursuant to Section 21(d) above (a “Delivery Failure”), then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Required Delivery Date and to which the Holder is entitled, and (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the date of the delivery by the Holder to the Company of the applicable New Warrant Preferred Conversion Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder submitted for legend removal by the Holder pursuant to Section 21(d) above, and if on or after such Trading Day the Holder acquires (in an open market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure (a “Buy-In”), then the Company shall, within one (1) Trading Day after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any, for the shares of Common Stock so acquired) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit the Holder’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to the Holder a certificate or certificates or credit the balance account of the Holder or the Holder’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of New Warrant Preferred Conversion Shares that the Company was required to deliver to the Holder by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Series B Certificate of Designation) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Holder to the Company of the applicable New Warrant Preferred Conversion Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Delivery Failure, this Section 21(e) shall not apply to the applicable Holder the extent the Company has already paid such amounts in full to the Holder with respect to such Delivery Failure pursuant to the analogous sections of the Series B Certificate of Designation.
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(f) FAST Compliance. While the New Warrant Preferred Shares or New Preferred Warrants remain outstanding, the Company shall maintain a transfer agent that participates in the DTC Fast Automated Securities Transfer Program.
20. Variable Securities. Until the later of (x) the two (2) year anniversary of the Closing Date and (y) the date that no Series A Preferred Shares, New Warrant Preferred Shares or New Preferred Warrants remain outstanding, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement (as defined below) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any Common Stock Equivalents (as defined below) either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Common Stock Equivalents, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Common Stock Equivalents or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement (including, without limitation, an equity line of credit) whereby the Company may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). The Holder shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. “Subsequent Placement” refers to the Company or any of its Subsidiaries, directly or indirectly, issuing, offering, selling, granting any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Common Stock Equivalents, any debt, any preferred stock or any purchase rights). The prohibition described in this Section 22 shall not be applicable to a traditional “at-the-market” offering within the meaning of Rule 415(a)(4) of the 1933 Act of the Company.
21. No Short Sales. The Holder hereby agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with it, will engage in any Short Sales with respect to securities of the Company, excluding any sales marked “short exempt” or deemed “short” as a result of any breach by the Company of any term or condition of any Transaction Document (including, without limitation, the Series A Certificate of Designation and the Series B Certificate of Designation). For purposes of this Section, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.
22. Reporting of Sales. The Holder will provide the Company, on the first day of each week for the period commencing on the date of the execution of this Agreement and ending on the date of the closing of the Polymath Acquisition, a reconciliation of the sales of shares of Common Stock by the Holder for the previous week.
23. Post-Closing Conditions; Transfer Agent Instructions. Instruction Letter. On or prior to five (5) Business Days after the Closing Date, the Company shall have executed and duly delivered to the Holder a copy of the Irrevocable Transfer Agent Instructions which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
[The remainder of the page is intentionally left blank.]
| 35 |
IN WITNESS WHEREOF, Holder and the Company have executed this Agreement as of the date set forth above.
| COMPANY: | ||
| TRUGOLF HOLDINGS, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Notice Address: | |
IN WITNESS WHEREOF, Holder and the Company have executed this Agreement as of the date set forth above.
| HOLDER: | ||
| By: | ||
| Name: | ||
| Title: | ||
| Notice Address: | |
| Aggregate Number of Exercise Preferred Shares to be issued upon exercise of Existing Series B Warrants: | |
| Aggregate Number of New Preferred Warrant Shares issuable upon exercise of the New Preferred Warrants: | |
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made this 8 of October, 2026 (the “Effective Date”).
BETWEEN:
TRUGOLF HOLDINGS, INC. having an address at 60 North 1400 West, Centerville, Utah, 84014 (email: [***])
(the “Company”)
AND:
NATALIE HIRSCH, having an address at [***] (email: [***])
(the “Employee”)
WHEREAS:
| A. | The Company wishes to employ the Employee on the terms and conditions set out below; and |
| B. | The Employee wishes to be so employed by the Company. |
NOW THEREFORE for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows.
SECTION
1
EMPLOYMENT
| 1.1 | Employment. |
The Company shall employ the Employee and the Employee shall perform services on behalf of the Company as its employee as provided herein during the Period of Active Employment (as defined herein).
| 1.2 | Period of Active Employment. |
In this Agreement, “Period of Active Employment” means the period beginning on the Effective Date, or such later date as mutually agreed by the Parties (the “Start Date”) and terminating on the date on which the first of the following occurs:
| (a) | the termination of the Employee’s employment by the Company pursuant to Section 4.1; | |
| (b) | the termination of the Employee’s employment by the Employee pursuant to Section 4.2; |
| (c) | the termination of the Employee’s employment by the Company pursuant to Section 4.3; | |
| (d) | the date specified in a notice given under Section 4.4; | |
| (e) | the date specified in a notice given under Section 4.5; or | |
| (f) | the death of the Employee as referenced in Section 4.6. |
SECTION
2
POSITION
| 2.1 | Capacity and Services. |
The Company shall employ the Employee in the position of Chief Financial Officer (CFO) and Chief Operating Officer (COO), reporting to the Company’s Chief Executive Officer (CEO) and the Board of Directors of the Company (the “Board”). In that position, the Employee shall perform the duties outlined in Schedule “B” attached hereto and have such authority as is normally associated with the position and as may be assigned, delegated or limited by the Company from time to time. Objectives and key results (“OKRs”) for the Employee will be defined by the Company on an annual basis and agreed to by the Employee and approved by the Board in its discretion. The Employee will perform all duties and responsibilities in a manner consistent with applicable laws and the Employee’s employment hereunder shall be subject to the policies of the Company as such policies may be implemented or amended from time to time. The Employee acknowledges that the Employee is a fiduciary and has fiduciary obligations to the Company, which are not extinguished by this Agreement.
| 2.2 | Full Time and Attention. |
The Employee shall faithfully serve the Company and use best efforts to promote the interests and goodwill of the Company. The Employee shall devote the Employee’s full business time and energy to the Company and shall not engage in any other business, occupation or professional activity or become a director, employee, consultant or agent of any other entity during the Employee’s employment with the Company, except with the express written consent of the Company, which consent shall not be unreasonably withheld for non-competitive, civic or charitable opportunities that do not impact the Employee’s performance of the duties or obligations hereunder.
| 2.3 | Prohibited Investments. |
The Employee shall not be an investor, shareholder, joint venturer or partner in any enterprise, association, company, joint venture or partnership (each, an “Investment”) in any of the following circumstances:
| (a) | if the Investment conflicts with the interests of the Company or any of its or their affiliated or related entities; |
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| (b) | if the Investment requires the Employee’s involvement in the management or operation of the Investment; or | |
| (c) | if the Employee’s involvement or activities with the Investment interferes with the performance of the Employee’s duties and obligations hereunder. |
The Employee shall identify and inform the Company of any potential conflicts that may arise as a result of an Investment by the Employee and the Employee shall, to the best of the Employee’s efforts, reduce or eliminate any such conflict. The Company reserves the right, acting reasonably, to determine whether any Investment conflicts with or is otherwise inconsistent with the Company’s interests in which case the Employee shall be required to eliminate any such conflict.
SECTION
3
COMPENSATION AND BENEFITS
| 3.1 | Base Salary. |
The annual gross base salary of the Employee shall be US$275,000 (the “Base Salary”) which Base Salary shall be paid by the Company as to US$250,000 in cash and as to US$25,000 in PolyX tokens. The PolyX tokens will be issued to the Employee as mutually agreed to by the Employee and the Company.
| 3.2 | Stock Options. |
Subject to approval of the Compensation Committee of the Board, the Company agrees to grant to the Employee stock options (the “Options”) to acquire an aggregate of 133,333 shares (the “Shares”) of the Company’s common stock at an exercise price equal to the fair market value of the Shares on the date of grant (the “Grant Date”). The Options will vest as to 25% on the first anniversary of the Grant Date and as to 25% on each of the second, third and fourth anniversary of the Grant Date, provided that no options will vest until the Company has obtained approval of its shareholders for the increase in the shares subject to the Company’s equity incentive plan.
| 3.3 | Bonus and Equity Incentive Programs. |
The Employee shall be eligible for an annual target bonus of up to 50% of the Base Salary during the Period of Active Employment, based on achieving annual OKRs and subject to such applicable terms and conditions of any bonus plan or other agreement (the “Bonus Plan”) as determined by the Company in its sole discretion. The Employee shall be eligible to participate in the Company’s equity incentive plan (the “Equity Plan”, and together with the Bonus Plan, the “Incentive Plans”) during any Period of Active Employment, subject to the terms and conditions under the Equity Plan, in the sole discretion of the Company.
| 3.4 | Benefits. |
The Employee shall be eligible to participate in group benefits plan, conditional on the Employee qualifying therefore in accordance with the terms and conditions of the plan, including with respect to waiting periods, if any. In addition, the Employee hereby consents to the deduction from the Employee’s salary of any employee premiums as may be required with respect to any benefits plan implemented by the Company. The Employee acknowledges and agrees that the Company has no obligation to provide the Employee with any benefits and may, at any time and from time to time, modify, suspend or discontinue any or all benefits provided to its employees generally or for any group thereof.
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| 3.5 | Vacation. |
The Employee shall be entitled to take four (4) weeks of vacation per calendar year pro-rated based on the number of days in any partial year. The taking and timing of vacations shall be in accordance with the Company’s policies and practices for employees, as such may be implemented and amended by the Company from time to time, and the business needs of the Company. The Employee may carry over any unused vacation days to the next year.
| 3.6 | Expenses. |
The Company shall reimburse the Employee for the Employee’s travel and other expenses or disbursements reasonably and necessarily incurred or made in connection with the Company’s business. Expenses will be reimbursed in accordance with policies and practices approved by the Company, as such may be implemented and amended by the Company from time to time. The Employee shall furnish statements and receipts for all such expenses prior to reimbursement.
| 3.7 | Statutory Deductions and Withholdings. |
Compensation will be provided in accordance with the Company’s regular payroll practices and procedures. The Company may withhold from any amounts payable under this Agreement, including federal or provincial taxes and other statutory deductions as are required by applicable law to be so withheld or deducted.
SECTION
4
TERMINATION AND RESIGNATION
| 4.1 | Termination for Cause. |
The Company may immediately terminate the employment of the Employee at any time for cause by written notice to the Employee. For the purposes of this Agreement, “cause” means just cause at common law. If the Company terminates the employment of the Employee for cause under this Section 4.1, the Company shall not be obligated to make any further payments under this Agreement or otherwise, subject only to the express minimum requirements of the Ontario Employment Standards Act, 2000, as amended (the “ESA”) and any amounts which may be due and remaining unpaid at the time of the termination of employment.
| 4.2 | Resignation by Employee. |
The Employee shall give the Company not less than four (4) weeks’ written notice of the resignation of the Employee’s employment hereunder; however, it is understood and agreed that the Company shall be entitled to waive all or part of that notice and accept the Employee’s resignation at an earlier effective date, subject to applicable laws and the payment of compensation and the continuation of benefits during the notice period.
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| 4.3 | Termination Without Cause. |
The Company may terminate the Employee’s employment without cause at any time by providing the Employee with four (4) months of notice or four (4) months of Base Salary in lieu of such notice (or any combination thereof at the Company’s election) and, after one (1) year of full-time service, six (6) months of notice or six (6) months of Base Salary (or any combination thereof at the Company’s election)(the “Notice Period”). In addition, subject to insurer approval and any required exclusions, the Company will continue any health and dental benefits for which the Employee is eligible at the time of dismissal during the Notice Period. Notwithstanding the foregoing, in no case shall the Employee receive less than the minimum notice or pay in lieu of notice, severance pay, benefit continuation and any other benefit, that is expressly required by the ESA, such that if the minimum requirements of the ESA provide for greater entitlements than otherwise provided under this Section 4.3, the minimum requirements of the ESA shall be provided to the Employee. The Employee will be required to execute a release document in favour of the Company in order to receive any payments or benefits in excess of those required by the ESA.
| 4.4 | Change of Control. |
For the purposes of this Agreement, “Change of Control” means: (i) any person or group acquiring beneficial ownership of more than fifty percent (50%) of the voting securities of the Company; (ii) a merger, consolidation, amalgamation or similar transaction following which the holders of the Company’s voting securities immediately prior thereto hold less than fifty percent (50%) of the voting securities of the resulting entity; (iii) a sale, transfer or disposition of all or substantially all of the assets of the Company or of the Business (as defined herein); or (iv) individuals constituting the Board ceasing for any reason to constitute a majority of the Board within any twelve (12) month period (excluding directors whose election was approved by a majority of the then-incumbent Board). “Good Reason” means, without the Employee’s written consent: (i) a material diminution in the Employee’s title, duties, authority or reporting line (including ceasing to be Chief Financial Officer or Chief Operating Officer of the Company); (ii) a material reduction in Base Salary or target bonus opportunity; (iii) a requirement to relocate the Employee’s normal place of work outside of Toronto, and in each case if the Employee has given written notice within ninety (90) days of the occurrence of any of (i), (ii) or (iii) (each, an “Event”) and the Company has failed to cure such Event within thirty (30) days.
If, at any time during the period ending twelve (12) months after the occurrence of an Event, the Company terminates the Employment without cause or the Employee resigns for Good Reason, then, notwithstanding any other provision of this Agreement, the Employee shall be entitled to an amount equal to twelve (12) months of Base Salary.
| 4.5 | Disability. |
In this Agreement, “Disability” means a physical or mental incapacity of the Employee that has prevented the Employee from performing the duties customarily assigned to the Employee for 180 calendar days, whether or not consecutive, out of any 12 consecutive months and that in the opinion of the Company, acting on the basis of advice from a duly qualified medical practitioner, is likely to continue to a similar degree. If the Company determines that the Employee has suffered a Disability that cannot be accommodated, the Company may terminate the Employee’s employment by written notice given to the Employee. If the Employee’s employment terminates by reason of notice given under this Section 4.5, the Employee shall receive all amounts required by the ESA including, without limitation, any amounts which may be due and remaining unpaid at the time of the termination of employment.
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| 4.6 | Death. |
In the event of the Employee’s death, the Employee’s employment shall be deemed to have terminated on the date of the Employee’s death and the Company shall pay the Employee’s estate any amounts which may be due and remaining unpaid at the time of the termination of employment
| 4.7 | Cooperation. |
The Employee acknowledges and agrees that their role with the Company is unique and essential, and that they have fiduciary and other obligations to the Company that survive the termination of this Agreement and the Employee’s employment. Following the termination of the Employee’s employment for whatever reason, the Employee agrees that the Employee shall, upon request, respond to inquiries and provide reasonable assistance to the Company in respect of transition and related matters.
| 4.8 | Resignation as Director or Officer. |
Notwithstanding any provision of this Agreement or any other agreement or document to the contrary, upon the cessation of the employment, the Employee will be deemed to have resigned as a director and officer of the Company and any of its subsidiaries, as applicable, on the date of cessation of the employment with the Company, and shall promptly execute any reasonable documents to effect such resignations. The Company shall promptly make any required filings (and provide copies to the Employee on request), maintain directors’ and officers’ liability insurance on a run-off basis for not less than six (6) years to the extent available on reasonable commercial terms.
SECTION
5
REPRESENTATIONS AND WARRANTIES
| 5.1 | Representations and Warranties. |
The Employee represents and warrants to the Company that the execution and performance of this Agreement will not result in or constitute a default, breach, or violation, or an event that, with notice or lapse of time or both, would be a default, breach, or violation, of any understanding, agreement or commitment, written or oral, express or implied, to which the Employee is a party or by which the Employee or the Employee’s property is bound. The Employee shall defend, indemnify and hold the Company harmless from any liability, expense or claim (including legal fees on a full indemnity basis, without reduction for tariff rates or similar reductions) by any person or entity in any way arising out of, relating to, or in connection with any incorrectness or breach of the representations and warranties in this Section 5.1.
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SECTION
6
NON-COMPETITION, CONFIDENTIALITY AND PROPRIETARY RIGHTS
| 6.1 | Definitions. For the purposes of this Section 6: |
| (a) | “Business” means the Company’s business of developing a securities purposed Blockchain for the financial industry and other business that Company engages in from time to time; | |
| (b) | “Competitive Business” means any person or entity other than Company that does or is planning to do any portion of the Business; | |
| (c) | “Prohibited Services” means any development, executive management, supervisory or strategic work in circumstances where the Employee had, or had access to, Confidential Information that could be used in performing such work and if used could be advantageous to a Competitive Business or detrimental to Company; | |
| (d) | “Restricted Area” means within a radius of fifty (50) kilometres from Company’s Toronto, Ontario, Canada office; and | |
| (e) | “Restricted Period” means the period beginning on the date that the Employee’s Period of Active Employment ceases for whatever reason and ending six (6) months thereafter. |
| 6.2 | Non-Solicitation. |
During Employee’s Period of Active Employment and for a period of twelve (12) months thereafter, the Employee will not, either individually or in partnership or jointly or in conjunction with any other person, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, solicit business from any customer, client or supplier of the Company or its affiliated or related entities with whom the Employee had business contact or about which the Employee received confidential information on behalf of the Company or its affiliated or related entities in either case during the twelve (12) month period immediately prior to the end of the Period of Active Employment on behalf of a person, entity or organization that is a Competitive Business, or attempt to direct any such customer, client or supplier away from the Company or its related or affiliated entities or to discontinue or alter any one or more of their relationships with the Company or its related or affiliated entities.
| 6.3 | Non-Solicitation of Employees and Contractors. |
During Employee’s Period of Active Employment and for a period of twelve (12) months thereafter, the Employee will not, either individually or in partnership or jointly or in conjunction with any other person or entity, as principal, agent, consultant, contractor, employer, employee or in any other manner, directly or indirectly, solicit, induce or entice away or in any other manner persuade or attempt to persuade any officer, employee, consultant or agent of the Company or its affiliated or related entities whom the Employee supervised (directly or indirectly) or had business contact with on behalf of the Company or its affiliated or related entities in either case during the twelve (12) month period immediately prior to the end of the Period of Active Employment to discontinue or alter any one or more of their relationships with the Company or its subsidiaries or related entities.
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| 6.4 | Confidentiality. |
Except in the normal and proper course of the Employee’s duties hereunder, the Employee will not use for the Employee’s own account or disclose to anyone else, during or after the Period of Active Employment, any confidential or proprietary information or material relating to the Company’s operations or Business which the Employee obtains from the Company or its officers or employees, agents, suppliers or customers or otherwise by virtue of the Employee’s employment by the Company. Confidential or proprietary information or material includes, without limitation, the following types of information or material, in whatever form, both existing and contemplated, regarding the Company or any subsidiary or other affiliate of the Company: corporate information, including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trade-mark and trade name applications, and any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings; operational and scientific information, including trade secrets; software; technical information, including technical drawings and designs; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations and any other information which is proprietary to the Company (collectively, the “Confidential Information”).
| 6.5 | Intellectual Property. |
The Employee shall execute and comply with the Intellectual Property Assignment Agreement attached hereto as Schedule “A”, which shall form part of this Agreement.
| 6.6 | Privacy. |
The Employee acknowledges and agrees that the Employee will take all necessary steps to protect and maintain the confidentiality of personal information of the employees, consultants, customers and suppliers of the Company and its affiliated and related entities obtained in the course of the Employee’s employment with the Company. The Employee shall at all times comply, and shall assist the Company to comply, with all applicable privacy laws. The Employee acknowledges and agrees that the disclosure of the Employee’s personal information may be required as part of the ongoing operations of the Business, as required by law, as part of the Company’s audit process, as part of a potential business or commercial transaction or as part of the Company’s management of the employment relationship, and the Employee hereby grants consent as may be required by applicable privacy laws to the use and disclosure of personal information for those purposes.
| 6.7 | Return of Property. |
The Employee agrees that all property and documents (including, without limitation, hardware, software and information in machine-readable form) of any nature pertaining to activities of the Company or any affiliate or related entity of the Company, including, without limitation, Confidential Information, in the Employee’s possession now or at any time during the Period of Active Employment, are and shall be the property of the Company or such subsidiary or other related entity, and that all such documents and all copies of them shall be surrendered to the Company whenever requested by the Company.
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| 6.8 | Acknowledgement. |
The Employee acknowledges that the Employee’s services are unique and extraordinary. The Employee also acknowledges that the Employee’s position will give or has given the Employee access to Confidential Information of substantial importance to the Company and the Business. The Employee acknowledges that, in connection with the Employee’s employment by the Company, the Employee will receive or will become eligible to receive substantial benefits and compensation. The Employee acknowledges that the Employee’s continued employment by the Company and all compensation and benefits and potential compensation and benefits to the Employee from such employment will be conferred by the Company upon the Employee only because and on condition of the Employee’s willingness to commit the Employee’s best efforts and loyalty to the Company, including protecting the Company’s right to have its Confidential Information protected from non-disclosure by the Employee and abiding by the confidentiality, non-competition, non-solicitation and other provisions herein. The Employee understands and agrees that the restrictions and covenants as set forth in this Section 6 and the Employee’s agreement to them by executing this Agreement, are of the essence to this Agreement and constitute a material inducement to Company to enter into this Agreement and to employ the Employee, and that Company would not enter into this Agreement absent such an inducement. The Employee understands the Employee’s duties and obligations as set forth in this Section 6 and agrees that such duties and obligations would not unduly restrict or curtail the Employee’s legitimate efforts to earn a livelihood following any termination of the Employee’s employment with the Company. The Employee agrees that the restrictions contained in Section 6 are reasonable and valid and all defences to the strict enforcement thereof by the Company are waived by the Employee. The Employee further acknowledges that irreparable damage would result to the Company if the provisions of Sections 6 are not specifically enforced, and agrees that the Company shall be entitled to any appropriate legal, equitable, or other remedy, including injunctive relief, in respect of any failure or continuing failure to comply with the provisions of Sections 6.
| 6.9 | Rights and Remedies. |
All rights and remedies of the Parties are separate and cumulative, and none of them, whether exercised or not, shall be deemed to be to the exclusion of any other rights or remedies or shall be deemed to limit or prejudice any other legal or equitable rights or remedies which either of the Parties may have in relation to this Section 6.
SECTION
7
MISCELLANEOUS COVENANTS
| 7.1 | Entire Agreement. |
This Agreement (including Schedule “A” hereto) constitutes the entire agreement between the Parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written.
| -9- |
| 7.2 | Amendment. |
No amendment of this Agreement shall be effective unless made in writing and signed by the Parties.
| 7.3 | Waiver. |
Any purported waiver of any default, breach or non-compliance under this Agreement shall not be effective unless in writing and signed by the Party to be bound by the waiver. No waiver shall be inferred from or implied by any failure to act or delay in acting by a Party in respect of any default, breach or non-observance or by anything done or omitted to be done by the other Party. The waiver by a Party of any default, breach or non-compliance under this Agreement shall not operate as a waiver of that Party’s rights under this Agreement in respect of any continuing or subsequent default, breach or non-observance (whether of the same or any other nature).
| 7.4 | Severability. |
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
| 7.5 | Governing Law. |
This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated, in all respects, as an Ontario contract.
| 7.6 | Successors and Assigns. |
This Agreement shall enure to the benefit of, and be binding on, the Parties and their respective heirs, administrators, executors, successors and permitted assigns. The Company shall have the right to assign this Agreement to any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company provided only that the Company must first require the successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The Employee by the Employee’s signature hereto expressly consents to such assignment. The Employee shall not assign or transfer, whether absolutely, by way of security or otherwise, all or any part of the Employee’s rights or obligations under this Agreement without the prior consent of the Company, which may be arbitrarily withheld.
| 7.7 | Headings. |
The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement
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| 7.8 | Counterparts. |
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
SECTION
8
EMPLOYEE’S ACKNOWLEDGEMENT
| 8.1 | Acknowledgement. |
The Employee acknowledges that:
| (a) | the Employee has had sufficient time to review the Agreement thoroughly; | |
| (b) | the Employee has read and understands the terms of the Agreement and the obligations hereunder; | |
| (c) | the Employee has been given an opportunity to obtain independent legal advice concerning the interpretation and effect of the Agreement; and | |
| (d) | the Employee has received a fully executed original copy of the Agreement. |
IN WITNESS WHEREOF the Parties have executed this Agreement.
TRUGOLF
HOLDINGS, INC.
| Per: | /s/ Brenner Adams | |
| Name: | Brenner Adams |
|
| Title: | Interim Chief Executive Officer |
| /s/ Natalie Hirsch | |
| NATALIE HIRSCH |
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SCHEDULE
“A”
INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
This Intellectual Property Assignment Agreement (this “Agreement”) is made effective as of _________________, 2026 between TruGolf Holdings, Inc. (the “Company”) and Natalie Hirsch (the “Employee”), and is a Schedule to an Employment Agreement between the Company and the Employee of the same date (such agreement referred to herein as, the “Employment Agreement”).
In consideration of, and as a condition of employment under the Employment Agreement, the Employee hereby represents, covenants and agrees with the Company as follows:
| 1. | Disclosure of Developments. The Employee agrees to and will make full and prompt disclosure in writing to the Company or any affiliate designated by the Company of all technology, inventions, discoveries, designs, developments, methods, modifications, improvements, processes, algorithms, databases, computer programs, formulae, techniques, trade secrets, ideas, concepts, research, proposals, writings, works of authorship, graphics or images, audio or visual works and other works of authorship, materials and all other work product of any nature whatsoever, whether or not patentable or copyrightable, that are (or have been) created, prepared, produced, authored, edited, modified, made, conceived or reduced to practice by the Employee (alone or jointly with others): (i) during the term of the Employment Agreement, whether or not in the course of performing the Employee’s job duties, or (ii) in preparation for or anticipation of the Employee performing job duties and relating to the Company’s business or anticipated development activities, whether or not patentable, copyrightable, registrable or protectable as trade secrets (collectively, the “Developments”). |
| 2. | Assignment of Company Developments. |
| (a) | The Employee acknowledges and agrees that the Company is the sole and exclusive owner of all right, title and interest in and to all Developments that (i) relate to the business of the Company or any of its affiliates or any customer of or supplier to the Company or any of its affiliates or any of the products or services being researched, developed, manufactured or sold by the Company or any of its affiliates or which may be used with such products or services; (ii) result from work performed by the Employee for the Company or any of its affiliates; or (iii) result from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company or its affiliates (collectively, “Company Developments”), including all patents, trademarks (and goodwill associated therewith), copyrights, trade secrets, and other intellectual property rights therein or thereto arising in any and all jurisdictions worldwide and under any international conventions and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations therefor, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof or therein (“Intellectual Property Rights”), including the right to right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. |
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| (b) | The Employee hereby irrevocably assigns and transfers to the Company, all of Employee’s right, title and interest in and to all Company Developments and all Intellectual Property Rights therein or thereto, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company’s or its affiliates’ rights, title or interest in any Developments or Intellectual Property Rights so as to be less in any respect than that the Company and its affiliates would have had in the absence of this Agreement. If for any reason any Company Developments or any Intellectual Property Rights therein or thereto are not assigned to the Company as set forth in this Section 2(b), the Employee hereby grants to the Company and its affiliates a non-exclusive, transferable, royalty-free, fully paid-up, irrevocable, worldwide right and license (with the full right to sublicense through multiple tiers) to use, copy, display, perform, transmit, make derivative works of, make, have made, modify, sell, offer for sale, import and otherwise distribute such Company Developments. |
| 3. | Moral Rights. To the extent any copyrights are assigned under this Agreement, the Employee hereby irrevocably waives, to the extent permitted by applicable law, any and all claims the Employee may now or hereafter have in any jurisdiction to all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as “moral rights” with respect to all Company Developments and all Intellectual Property Rights therein or thereto. |
| 4. | No License. The Employee understands that this Agreement does not, and shall not be construed to grant the Employee any license or right of any nature with respect to any Development or Intellectual Property Rights or any Confidential Information, materials, software or other tools made available to the Employee by the Company or its affiliates. |
| 5. | Prior Developments. The Employee represents and warrants that in performing his obligations under the Employment Agreement that: (a) he will not violate the terms or conditions of any intellectual property assignment or any agreement relating to the use and/or disclosure of confidential information, trade secrets, know-how, software or other intellectual or industrial property of any former or existing employer or client or any other third party; or (b) he will not use confidential information, trade secrets, know-how, software or other intellectual or industrial property of any former or existing employer or client or any other third party that is or are not generally available to the public or has not been legally transferred to the Company. |
| 6. | Injunctive Relief. The Employee understands that in the event of a breach or threatened breach of this Agreement by the Employee, the Company may suffer irreparable harm and will therefore be entitled to injunctive relief to enforce this Agreement. |
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| 7. | Further Assurances. The Employee agrees to cooperate fully with the Company and its affiliates, at the Company’s expense, both during and after the term of the Employment Agreement, with respect to the (i) procurement, perfection and transfer to the Company or its affiliates of the Company Developments as well as any Intellectual Property Rights therein or thereto and (ii) maintenance, protection and enforcement of the same. Without limiting the generality of the foregoing, the Employee agrees to give testimony and execute and deliver to the Company or its affiliates, both during and after the term of the Employment Agreement, all papers and documents, including without limitation copyright applications, patent applications, declarations, oaths, assignments of priority or other rights, affidavits, waivers, and powers of attorney, which the Company or its affiliates may deem necessary or desirable in order to procure or protect its rights and interests in or to any Company Development. |
| 8. | Power of Attorney. The Employee hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Employee’s behalf in his/her name and to do all other lawfully permitted acts to transfer the Company Developments to the Company and further the transfer, prosecution, issuance and maintenance of all Intellectual Property Rights therein or thereto, to the fullest extent permitted by law, if the Employee does not promptly cooperate with the Company’s request (without limiting the rights that the Company shall have in such circumstances by operation of law). This power of attorney is coupled with an interest and shall not be affected by the Employee’s subsequent incapacity. |
| 9. | Incorporation. Sections 7 and 8 of the Employment Agreement are hereby incorporated by reference into this Agreement, mutatis mutandis. |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
TRUGOLF HOLDINGS, INC.
| Per: | ||
| Name: | ||
| Title: |
| NATALIE HIRSCH |
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SCHEDULE “B”
DUTIES
Chief Financial Officer and Chief Operating Officer
The Role:
| 1. | Be a trusted financial partner to senior leadership in achieving the Company’s financial goals and scaling the company. Actively participate in corporate strategy discussions, oversee capital strategy, and identify and evaluate financial risks and opportunities based on data and analysis. |
| 2. | Develop annual financial plan and operating budget each year. Monitor and drive flawless monthly reporting and interim year forecasts as necessary. Drive successful implementation of KPIs and key management visibility tools. |
| 3. | Manage the day-to-day accounting and financial functions of the company, including crypto currency bookkeeping, transfer pricing, loan agreements, accounts payable and receivable, preparation of balance sheet, income statement and cash flow statement, payroll, exchange rate matters, preparation of taxes (both income tax and HST filings), financial statement, and assisting with audits. |
| 4. | Manage financial records in accordance with all legal, compliance, and contractual requirements, and respond to information/audit requests of clients, financial institutions, insurers, governmental agencies, and other entities as may be required. |
| 5. | Communicate with the company’s public accountant for all tax and financial statement related matters. |
| 6. | Lead financial analysis and due diligence on new contracts, clients, partnerships, and/or acquisitions. |
| 7. | Collaborate with senior leadership to manage relationships with lenders, investors, external accounting firms, insurance firms, attorneys, investment managers, and other business consultants. |
| 8. | Hire, train, and lead the finance/accounting team. |
| 9. | Work with senior leadership on matters relating to compensation. Provide guidance on financial limits and industry compensation levels. |
| 10. | Manage the Human Resources function within the organization until such time that a full-time HR resource is required. |
| 11. | Work with the senior leadership team on M&A, fund-raising, and company activities. |
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