Unusual Machines, Inc 8-K, filed Oct 23, 2026
Unusual Machines, Inc. (UMAC)
About this 8-K
Unusual Machines, Inc filed this 8-K on October 23, 2026, reporting on events of October 19, 2026.
Unusual Machines completed its Upgrade Energy acquisition on October 19, 2026, issuing Matthew Barnard 1,792,012 shares worth approximately $25.0 million and paying $1,000,000 cash, with up to $26,000,000 earn-out and total consideration up to $52,000,000; Barnard became Upgrade’s CEO. AI summary
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 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported)
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including
area code:
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| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
The information set forth in Item 2.01 of this Current Report on Form 8-K regarding the Registration Rights Agreement and the Employment Agreement is incorporated by reference into this Item 1.01.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 19, 2026 (the “Closing Date”), the Company completed the merger under which its wholly-owned subsidiary, Upgrade Energy LLC (“Upgrade”), acquired DroneNX LLC d/b/a Upgrade Energy as contemplated by the Merger Agreement entered into as of May 7, 2026. As consideration, the Company issued Matthew Barnard 1,792,012 shares of common stock, having an aggregate value of approximately $25.0 million based on a then market price of $13.9508 per share and paid him $1,000,000 in cash at closing. Mr. Barnard is also eligible to receive a post-closing earn-out payment of up to $26,000,000 in cash, payable if Upgrade’s revenue exceeds $10,000,000 during the first calculation period or, if not, then during the second calculation period (subject to pro rata reduction if revenue for the second calculation period does not exceed $10,000,000 in the second calculation period), for aggregate merger consideration of up to $52,000,000. The cash consideration was funded from the Company’s cash on hand. In connection with the closing, Mr. Barnard became Chief Executive Officer of Upgrade.
In connection with the closing, the Company entered into (i) an Employment Agreement with Mr. Barnard and (ii) a Registration Rights Agreement with Mr. Barnard.
The Employment Agreement has an initial term of two years and renews automatically for successive one-year terms unless either party gives at least 30 days’ notice of non-renewal. Mr. Barnard will receive an annual base salary of $300,000, which may be increased but not decreased during the term, and is eligible to participate in the Company’s employee benefit plans. If Mr. Barnard’s employment is terminated by the Company without cause or by Mr. Barnard for good reason (each as defined in the Employment Agreement), including in connection with certain terminations within 12 months following a change of control, he will be entitled, subject to executing a general release, to severance equal to six months of his then base salary, six months of continued benefits, pro rata vesting of previously granted equity awards and up to one year to exercise previously granted options. Upon a termination due to non-renewal by the Company, Mr. Barnard’s previously granted equity awards will fully vest and he will receive six months of continued benefits, and upon termination due to death or disability, his previously granted equity awards will fully vest.
Under the Registration Rights Agreement, the Company agreed to file, within 30 days after the closing, a registration statement on Form S-3 (or, if the Company is not then eligible, Form S-1) covering the resale of the shares of common stock issued as merger consideration and to use commercially reasonable efforts to cause such registration statement to become effective within 60 days after filing if reviewed by the SEC staff.
The Merger Agreement and the form of Registration Rights Agreement were previously filed as Exhibit 1.1 and Exhibit 1.1(a), respectively, to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 11, 2026 (the “Signing 8-K”). The foregoing descriptions are qualified in their entirety by reference to the Merger Agreement, filed as Exhibit 1.1 to the Signing 8-K, the Employment Agreement, filed as Exhibit 10.1 hereto, and the Registration Rights Agreement, filed as Exhibit 10.2 hereto, each of which is incorporated herein by reference.
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Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 2.01 regarding the issuance of 1,792,012 shares of the Company’s common stock to Mr. Barnard Representative is incorporated herein by reference. The shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and Rule 506 thereunder as a transaction not involving a public offering.
As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2025, on June 12, 2025, the Company entered into a Share Purchase Agreement (the “Rotor Lab Agreement”) to acquire 100% of the capital stock of Rotor Lab Pty Ltd, an Australian company (“Rotor Lab”), from its existing shareholders (the “Rotor Lab Sellers”), pursuant to which the Company agreed to issue to the Rotor Lab Sellers, among other consideration, Earnout Consideration (as defined in the Rotor Lab Agreement) of up to $3,000,000 of shares of the Company’s common stock. On October 20, 2026, the Company issued an aggregate of 137,260 shares of its common stock to the Rotor Lab Sellers as Earnout Consideration under the Rotor Lab Agreement, consisting of 82,356 shares issued to Andrew Robert Simpson and 54,904 shares issued to Vella Hardjadinata Corporation Pty Ltd, as trustee for the Vella Hardjadinata Family Trust. The shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and Regulation S promulgated thereunder, based on, among other things, the issuance of the shares to two non-U.S. persons located in Australia. The foregoing description of the Rotor Lab Agreement is qualified in its entirety by reference to the full text of the Rotor Lab Agreement, which was filed as Exhibit 10.1 to the Rotor Lab 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On the Closing Date, the Company issued a press release announcing the completion of its acquisition of Upgrade.
A copy of the press release is furnished as Exhibit 99.1 of this Current Report on Form 8-K.
The information in this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under such section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
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Item 8.01 Other Events.
The Description of Securities Registered Pursuant to Section 12 of the Exchange Act (the “Description of Securities”) attached as Exhibit 4.1 to this Current Report on Form 8-K is filed for the purpose of updating the Description of Securities contained in Exhibit 4.7 to our Annual Report on Form 10-K filed with the SEC on March 22, 2024.
The Description of Securities modifies and supersedes any prior Description of Securities of the Company in any registration statement or report filed with the SEC and will be available for incorporation by reference into certain of the Company’s filings with the SEC pursuant to the Securities Act, the Exchange Act, and the rules and forms promulgated thereunder.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Exhibit | |
| 2.1* | Agreement and Plan of Merger dated as of May 7, 2026, among the Company, Upgrade, DroneNX LLC, and Matthew Barnard (incorporated by reference from Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 11, 2026) | |
| 4.1 | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 | |
| 10.1 | Employment Agreement entered into as of October 19, 2026, between the Company and Matthew Barnard | |
| 10.2 | Registration Rights Agreement entered into as of October 19, 2026, between the Company and Matthew Barnard | |
| 99.1 | Press Release dated October 19, 2026 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished.
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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.
| Unusual Machines, Inc. | ||
| Date: October 23, 2026 | By: | /s/ Brian Hoff |
| Name: | Brian Hoff | |
| Title: | Chief Financial Officer | |
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Exhibit 4.1
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 510,000,000 shares, consisting of: (i) 500,000,000 shares of common stock, par value $0.01 per share (the “Common Stock”), and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”). As of October 23, 2026, there were 51,911,702 shares of Common Stock issued and outstanding and no shares of Preferred Stock issued or outstanding. The Common Stock is the only class of our securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), and is listed on the NYSE American under the symbol “UMAC”.
The following description summarizes the material terms of our capital stock. It does not purport to be complete and is qualified in its entirety by reference to our Articles of Incorporation, as amended (the “Articles”), and our Bylaws, as amended (the “Bylaws”), each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part, and to the applicable provisions of Chapter 78 of the Nevada Revised Statutes (the “NRS”). We encourage you to read the Articles, the Bylaws and the applicable provisions of the NRS for additional information.
Common Stock
Voting Rights. Holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of Common Stock do not have cumulative voting rights in the election of directors. Accordingly, holders of a majority of the voting power of the outstanding shares entitled to vote in any election of directors can elect all of the directors standing for election. The holders of one-third of the aggregate voting power of the outstanding shares of all classes of voting stock entitled to vote, present in person or represented by proxy, constitute a quorum at a meeting of stockholders. If a quorum is present, directors are elected by a plurality of the votes cast, and, except as otherwise required by the NRS, all other matters are decided by the affirmative vote of a majority of the aggregate voting power of the shares present in person or represented by proxy and entitled to vote on the matter. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn the meeting from time to time to a date within 60 days from the record date.
Dividend Rights. Subject to the preferential rights of holders of any outstanding series of Preferred Stock, holders of Common Stock are entitled to share equally and ratably in dividends and other distributions in cash, stock or property, when, as and if declared by our Board of Directors out of assets or funds legally available therefor. Distributions are subject to the limitations of the NRS.
Liquidation Rights. In the event of our liquidation, dissolution or winding up, whether voluntary or involuntary, holders of Common Stock are entitled to share equally and ratably in our assets and funds remaining available for distribution to stockholders after payment of, or provision for, our debts and other liabilities and subject to the liquidation preferences of any outstanding Preferred Stock.
Other Rights and Preferences. Holders of Common Stock have no preemptive, subscription, conversion or exchange rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. There are no provisions in the Articles or Bylaws discriminating against any existing or prospective holder of Common Stock as a result of such holder owning a substantial amount of Common Stock. The rights, preferences and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of Preferred Stock that our Board of Directors may designate and issue in the future. All outstanding shares of Common Stock are fully paid and nonassessable.
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Preferred Stock
Our Board of Directors is authorized, without further action by our stockholders, to issue shares of Preferred Stock from time to time in one or more series and, with respect to each series, to fix by resolution the designation and number of shares of the series and the voting powers, full or limited, or no voting powers, and such other powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, including dividend rights, conversion rights, redemption privileges and liquidation preferences, to the fullest extent permitted by the NRS. No shares of Preferred Stock are currently outstanding. The issuance of Preferred Stock could adversely affect the voting power, dividend rights and liquidation rights of holders of Common Stock, and could have the effect of delaying, deferring or preventing a change in control of the Company without further action by our stockholders.
Limitation of Liability
The liability of directors and officers of the Company shall be eliminated or limited to the fullest extent permitted by the NRS. If the NRS is amended to further eliminate or limit or authorize corporate action to further eliminate or limit the liability of directors or officers, the liability of directors and officers of the Company shall be eliminated or limited to the fullest extent permitted by the NRS, as so amended from time to time.
Special Stockholders Meetings
Subject to the rights of the holders of any series of Preferred Stock, and unless otherwise prescribed by law or the Articles, special meetings of stockholders may be called only by our Chief Executive Officer, the Chairman of the Board of Directors or our President, and must be called by the Chief Executive Officer or the Secretary upon the written request of a majority of the members of the Board of Directors (whether or not any vacancies then exist). Stockholders are not permitted to call a special meeting. Business transacted at a special meeting is limited to the purposes stated in the notice of the meeting and such additional matters as the chairman of the meeting rules to be relevant to those purposes. The Board of Directors designates the place of any meeting of stockholders and, absent a designation, the meeting will be held at our principal office. These provisions may have the effect of delaying, deferring or preventing stockholder action and a change in control of the Company.
Other Provisions of the Articles and Bylaws
Board of Directors. The Articles provide that the Board of Directors consists of not less than three and not more than nine directors, with the exact number fixed from time to time by resolution of the Board of Directors. Any vacancy or newly created directorship may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Directors may be removed by stockholders only at an annual meeting or a special meeting called for that purpose, and only by the affirmative vote of the holders of two-thirds of the voting power of all shares entitled to vote at the meeting.
Advance Notice; Action by Written Consent. The Bylaws establish advance notice procedures for stockholder nominations of directors and stockholder proposals, which generally require written notice to our Secretary not earlier than 120 days and not later than 90 days prior to the anniversary of the preceding annual meeting. Any action that may be taken at a meeting of stockholders may be taken without a meeting by written consent of the holders of at least a majority of the voting power, or such greater proportion as would be required for the action at a meeting.
Amendment of Bylaws. The Board of Directors may adopt, amend, alter or repeal the Bylaws without stockholder action. Stockholders may also adopt, amend, alter or repeal the Bylaws by the affirmative vote of the holders of at least a majority of the voting power of the then outstanding voting stock entitled to vote generally in the election of directors, voting together as a single class.
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Anti-Takeover Provisions of Nevada Law
Combinations with Interested Stockholders. NRS 78.411 to 78.444, inclusive, generally prohibit a Nevada corporation with 200 or more stockholders of record from engaging in specified business combinations with an “interested stockholder” (generally, a person that, together with its affiliates and associates, beneficially owns, or within the prior two years did own, 10% or more of the voting power of the corporation’s outstanding voting shares) for two years after the person first becomes an interested stockholder, unless the combination or the transaction by which the person became an interested stockholder is approved by the board of directors in advance, or the combination is approved by the board and by the affirmative vote of holders of at least 60% of the outstanding voting power not beneficially owned by the interested stockholder and its affiliates and associates. As permitted by NRS 78.434, the Articles provide that we have elected not to be governed by NRS 78.411 to 78.444, inclusive. Accordingly, these provisions do not apply to us.
Acquisition of Controlling Interest. NRS 78.378 to 78.3793, inclusive, apply to an “issuing corporation,” generally a Nevada corporation that has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada, and that does business in Nevada directly or through an affiliated corporation. If applicable, an acquiring person that acquires a “controlling interest” (one-fifth or more, one-third or more, or a majority of the voting power in the election of directors) may be denied voting rights with respect to the shares acquired unless those rights are approved by holders of a majority of the voting power of the corporation, excluding interested shares. We do not currently meet the definition of an issuing corporation and have not opted out of these provisions in the Articles or Bylaws; these provisions may apply to us in the future.
Exclusive Jurisdiction and Venue
Nevada Courts. The Articles provide that the Articles and the internal affairs of the Company shall be governed by and interpreted under the laws of the State of Nevada, excluding its conflict of laws principles. Unless the Company consents in writing to the selection of an alternative forum, the Courts located in Clark County, Nevada shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company (except to the extent that the Exchange Act provides otherwise), (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer (or affiliate of any of the foregoing) of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the NRS, the Articles or the Bylaws, or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine.
United States District Court. Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive jurisdiction for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933 (the “Securities Act”).
Venue. The Articles further provide that the United States District Court for the District of Nevada will be the exclusive venue for any cause of action arising under the Securities Act or the Exchange Act.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the foregoing forum provisions.
Transfer Agent and Registrar
Equity Stock Transfer is the transfer agent and registrar in respect of the Common Stock.
The foregoing description of our capital stock does not purport to be a complete legal description and is qualified in its entirety by reference to the Articles and the Bylaws, each of which has been filed with the Securities and Exchange Commission, and to the applicable provisions of the NRS.
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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of October 19, 2026 (the “Effective Date”), between Unusual Machines, Inc., a Nevada corporation (the “Company”), and Matthew Barnard (the “Executive”).
WHEREAS, the Company, its wholly-owned subsidiary, Upgrade Energy LLC, and the Executive are parties to a certain Agreement and Plan of Merger dated as of May 7, 2026 (the “Merger Agreement”), pursuant to which the Company will acquire 100% of the Executive’s rights, title and interest in and to DroneNX LLC d/b/a Upgrade Energy (“DroneNX”); and
WHEREAS, in addition to the terms defined in this Agreement, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Merger Agreement; and
WHEREAS, in its business, the Company has acquired and developed certain trade secrets, including, but not limited to, proprietary processes, sales methods and techniques, and other like confidential business and technical information, including but not limited to, technical information, design systems, pricing methods, pricing rates or discounts, processes, procedures, formulas, designs of computer software, or improvements, or any portion or phase thereof, whether patented, or not, or unpatentable, that is of any value whatsoever to the Company, as well as information relating to the Company’s Services (as defined below), information concerning proposed new Services, market feasibility studies, proposed or existing marketing techniques or plans (whether developed or produced by the Company or by any other person or entity for the Company), other Confidential Information (as defined below), and information about the Company’s executives, officers, and directors, which necessarily will be communicated to the Executive by reason of his employment by the Company; and
WHEREAS, the Company has strong and legitimate business interests in preserving and protecting its investment in the Executive, its trade secrets and Confidential Information, and its substantial, significant, or key, relationships with customers, vendors and suppliers, each, as defined below, whether actual or prospective; and
WHEREAS, the Company desires to preserve and protect its legitimate business interests further by restricting competitive activities of the Executive during the term of this Agreement and for a reasonable time following the termination of this Agreement; and
WHEREAS, the Company desires to continue to employ the Executive and to ensure the continued availability to the Company of the Executive’s services, and the Executive is willing to accept such employment and render such services, all upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:
1. Representations and Warranties. The Executive hereby represents and warrants to the Company that he (i) is not subject to any non-solicitation or non-competition agreement affecting his employment with the Company (other than pursuant to the Merger Agreement), (ii) is not subject to any confidentiality or nonuse/nondisclosure agreement affecting his employment with the Company (other than pursuant to the Merger Agreement), and (iii) except with respect to DroneNX, has brought to the Company no trade secrets, confidential business information, documents, or other personal property of a prior employer.
2. Term of Employment.
(a) Term. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company for a period of two years commencing as of the Effective Date (such period, as it may be extended or renewed, the “Term”), unless sooner terminated in accordance with the provisions of Section 6. The Term shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.
(b) Continuing Effect. Notwithstanding any termination of this Agreement, at the end of the Term or otherwise, the provisions of Sections 6(e), 7, 8, 9, 10, 12 15, 18, 19, and 22 shall remain in full force and effect and the provisions of Section 9 shall be binding upon the legal representatives, successors and assigns of the Executive.
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3. Duties.
(a) General Duties. The Executive shall serve as the Chief Executive Officer, of the Surviving Company, with duties and responsibilities that are customary for such an executive. The Executive shall report to Allan Evans, the Company’s Chief Executive Officer. The Executive shall also perform services for the Company and its other such subsidiaries as may be reasonably requested. The Executive shall use his best efforts to perform his duties and discharge his responsibilities pursuant to this Agreement competently, carefully and faithfully. In determining whether or not the Executive has used his best efforts hereunder, the Executive’s and the Company’s delegation of authority and all surrounding circumstances shall be taken into account and the best efforts of the Executive shall not be judged solely on the Company’s earnings or other results of the Executive’s performance, except as specifically provided to the contrary by this Agreement. The Executive shall, if requested, also serve as an officer or director of any affiliate of the Company for no additional compensation.
(b) Devotion of Time. Subject to the last sentence of this Section 3(b), the Executive shall devote such time, attention and energies to the affairs of the Company and its subsidiaries as are necessary to perform his duties and responsibilities pursuant to this Agreement. The Executive shall not enter the employ of or serve as a consultant to, or in any way perform any services with or without compensation to, any other persons, business, or organization, without the prior consent of the Company’s Chief Executive Officer or the Company’s President. Notwithstanding the above, the Executive shall be permitted to devote a limited amount of his time, to professional, charitable or similar organizations, including, but not limited to, serving as a non-executive director or committee member or as an advisor to a board of directors or committee of any company or organization provided that such activities do not interfere with the Executive’s performance of his duties and responsibilities as provided hereunder.
(c) Location of Office. The Executive’s principal business office shall be the Surviving Company’s office in the Los Angeles, California metropolitan area (the “Metro Area”), or such other location if it changes. The Executive may work remotely as long as it does not materially and adversely affect the performance of his duties. However, the Executive’s duties shall include all business travel necessary to the Company’s offices and facilities in the United States, including the Company’s offices and facilities located in Florida, and any other location in which the Company may establish an office or facility and such other places as may be required for the performance of his duties.
(d) Adherence to Inside Information Policies. The Executive acknowledges that the Company is publicly-held and, as a result, the Company has implemented inside information policies designed to preclude its executive officers and those of its subsidiaries from violating the federal securities laws by trading on material, non-public information or passing such information on to others in breach of any duty owed to the Company, or any third party. The Executive has reviewed and will abide by the Company’s inside information policies as are currently in effect and shall promote these policies internally and promptly execute any agreements generally distributed by the Company to its employees requiring such employees to abide by these policies.
4. Compensation and Expenses.
(a) Salary. For the services of the Executive to be rendered under this Agreement, the Company shall pay the Executive an annual salary of $300,000 (the “Base Salary”), less such deductions as shall be required to be withheld by applicable law and regulations payable in accordance with the Company’s customary payroll practices. The Executive’s Base Salary shall be reviewed at least annually by the Company’s Board and the Company’s Board may, but shall not be required to, increase the Base Salary during the Term. However, the Executive’s Base Salary may not be decreased during the Term.
(b) Expenses. In addition to any compensation received pursuant to this Section 4, the Company will reimburse or advance funds to the Executive for all reasonable documented travel (including travel expenses incurred by the Executive related to his travel to the Company’s other offices and facilities), entertainment and miscellaneous expenses incurred in connection with the performance of his duties under this Agreement, provided that the Executive properly provides a written accounting of such expenses to the Company in accordance with the Company’s practices. Such reimbursement or advances will be made in accordance with policies and procedures of the Company in effect from time to time relating to reimbursement of, or advances to, its executive officers. Notwithstanding the generality of the foregoing, any provision of the Employee Handbook on expenses shall be applicable and in the of a conflict with this Section 4(b) the Employee Handbook shall control.
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5. Benefits.
(a) Fringe Benefit and Perquisites. During the Term, the Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both to similarly situated executives of the Company).
(b) Employee Benefits. During the Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company, as in effect from time to time (collectively, “Employee Benefit Plans”), on a basis which is no less favorable than is provided to other similarly situated executives of the Company, to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law. Notwithstanding the foregoing, during the Term, the Company shall provide the Executive with health insurance covering the Executive and family dependents.
6. Termination.
(a) Death or Disability. Except as otherwise provided in this Agreement, this Agreement shall automatically terminate upon the death or disability of the Executive. For purposes of this Section 6(a), “disability” shall mean (i) the Executive is unable to engage in his customary duties by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) the Executive is determined to be totally disabled by the Social Security Administration. Any question as to the existence of a disability shall be determined by the written opinion of the Executive’s regularly attending physician (or his guardian) (or the Social Security Administration, where applicable). In the event that the Executive’s employment is terminated by reason of Executive’s death or disability, the Company shall pay the following to the Executive or his personal representative: (i) any accrued but unpaid Base Salary for services rendered to the date of termination, (ii) accrued but unpaid expenses required to be reimbursed under this Agreement, and (iii) any equity awards previously granted to the Executive under the plan shall thereupon become fully vested, and the Executive or his legally appointed guardian, as the case may be, shall have up to two years from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its term. The Executive (or his estate) shall receive the payments provided herein at such times as he would have received them if there was no death or disability. Additionally, if the Executive’s employment is terminated because of disability, any benefits (except perquisites) to which the Executive may be entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for one year, subject to the terms of any applicable plan or insurance contract and applicable law, provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 ½ month period” (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
(b) Termination by the Company for Cause or by the Executive Without Good Reason. The Company may terminate the Executive’s employment pursuant to the terms of this Agreement at any time for Cause (as defined below) by giving the Executive written notice of termination. Such termination shall become effective upon the giving of such notice. Upon any such termination for Cause, or in the event the Executive terminates his employment with the Company without Good Reason (as defined in Section 6(c)), then the Executive shall have no right to compensation, or reimbursement under Section 4, or to participate in any Executive benefit programs under Section 5, except as may otherwise be provided for by law, for any period subsequent to the effective date of termination. For the purposes of this Agreement, "Cause" means the Executive's (A) act or acts of willful misconduct injurious to the Company, monetarily or otherwise, (B) willful and continued failure to perform substantially his duties with the Company (other than any such failure resulting from incapacity due to a Disability) after a demand in writing for substantial performance is delivered by the Company’s Chief Executive Officer, which demand specifically identifies the manner in which the Chief Executive Officer believes that the Executive has not substantially performed his duties, (C) becoming subject to a “bad actor” disqualification under Rule 506(d) under the Securities Act of 1933, or (D) repeated and willful failure to follow the written directives of the Board of the Surviving Company in connection with his employment hereunder.
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The Executive's employment shall in no event be considered to have been terminated by the Company for Cause if such termination took place merely as the result of (i) bad judgment or negligence, (ii) any act or omission without intent of gaining therefrom directly or indirectly a profit to which the Executive was not legally entitled, (iii) any act or omission believed in good faith to have been in or not opposed to the interest of the Company or (iv) any act or omission in respect of which a determination is made that the Executive met the applicable standard of conduct prescribed for indemnification or reimbursement or payment of expenses under the Articles of Incorporation of the Company or the laws of the State of Nevada, in each case as in effect at the time of such act or omission; provided, however, this clause (iv) shall not be applicable to clause (C). The Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the Company’s Board that states that the Executive's conduct reflected any of the criteria set forth above in clauses (A), (B), (C) and/or (D) of this Section 6(b)and specifying the particulars thereof in detail.
(c) Termination by the Company Without Cause, Termination by Executive for Good Reason or Automatic Termination Upon a Change of Control or at the end of a Term after the Company provides notice of Non-Renewal.
(1) This Agreement may be terminated: (i) by the Executive for Good Reason (as defined below), (ii) by the Company without Cause, (iii) upon any Change of Control provided, that, within 12 months of the Change of Control (A) the Company terminates the Executive’s employment, fails to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, or changes his title as Chief Executive Officer of Upgrade Energy LLC, or (B) the Executive terminates his employment or (iv) at the end of a Term after the Company provides the Executive with notice of non-renewal.
(2) In the event this Agreement is terminated by the Executive for Good Reason or by the Company without Cause, the Executive shall be entitled to the following:
(A) any accrued but unpaid Base Salary for services rendered to the date of termination as required by applicable law;
(B) any accrued but unpaid expenses required to be reimbursed under this Agreement as required by applicable law;
(C) a severance payment (“Severance Amount”) equal to six months of the then Base Salary;
(D) the Executive or his legally appointed guardian, as the case may be, shall have up to one year from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its Term;
(E) any equity awards previously granted to the Executive shall thereupon vest on a pro rata basis based on the number of days elapsed; and
(F) any benefits (except perquisites) to which the Executive was entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for six months, subject to the terms of any applicable plan or insurance contract and applicable law provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 ½ month period” (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
(3) In the event of a Change of Control during the Term, the Executive, subject to the termination of employment or change in title as outlined in Section 6(c)(1), shall be entitled to receive each of the provisions of Section 6(c)(2)(A) – (F) above except that (i) the Severance Amount shall equal to six months of the then Base Salary; and (ii) the benefits under Section 6(c)(2)(F) shall continue for a six month period provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits under Section 6(c)(2)(F) are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 ½ month period” (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
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(4) In the event this Agreement is terminated at the end of a Term after the Company provides the Executive with notice of non-renewal and the Executive remains employed until the end of the Term, the Executive shall be entitled to the following:
(A) any accrued but unpaid Base Salary for services rendered to the date of termination as required by applicable law;
(B) any accrued but unpaid expenses required to be reimbursed under this Agreement as required by applicable law;
(C) any equity awards previously granted to the Executive under the Company’s Employee Benefit Plans or similar plan shall become fully vested;
(D) the Executive or his legally appointed guardian, as the case may be, shall have up to one years from the date of termination to exercise all such previously granted options, provided that in no event shall any option be exercisable beyond its Term; and
(E) any benefits (except perquisites) to which the Executive was entitled pursuant to Section 5(b) hereof shall continue to be paid or provided by the Company, as the case may be, for six months, subject to the terms of any applicable plan or insurance contract and applicable law provided that such benefits are exempt from Section 409A of the Code by reason of Treasury Regulation 1.409A-1(a)(5) or otherwise. In the event all or a portion of the benefits to which the Executive was entitled pursuant to Section 5(b) hereof are subject to 409A of the Code, the Executive shall not be entitled to the benefits that are subject to Section 409A of the Code subsequent to the “applicable 2 ½ month period” (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)).
Provided, however, that the Executive shall only be entitled to receive each of the provisions of this Section 6(c)(4)(A)-(E) if the Executive is willing and able (i) to execute a new agreement providing terms and conditions substantially similar to those in this Agreement and (ii) to continue providing such services, and therefore, the Company’s non-renewal of the Term will be considered an “involuntary separation from service” within the meaning of Treasury Regulation Section 1.409A-1(n).
(5) In the event of a termination for Good Reason, without Cause, or non-renewal by the Company, the payment of the Severance Amount, if applicable, shall be made at the same times as the Company pays compensation to its employees over the applicable monthly period and any other payments owed under Section 6(c) shall be promptly paid. Provided, however, that any balance of the Severance Amount remaining due on the “applicable 2 ½ month period” (as such term is defined under Treasury Regulation Section 1.409A-1(b)(4)(i)(A)) after the end of the tax year in which the Executive’s employment is terminated or the Term ends shall be paid on the last day of the applicable 2½ month period. If applicable, the payment of the Severance Amount and the acceleration of vesting shall be conditioned on the Executive signing an Agreement and General Release (substantially in the form which is attached as Exhibit A) which releases the Company or any of its affiliates (including its officers, directors and their affiliates) from any liability under this Agreement or related to the Executive’s employment with the Company provided that (x) the payment of the Severance Amount shall be made on the first regularly scheduled payroll date following the Executive’s execution and delivery of the Agreement and General Release, but in no event later than the 90th day following the Executive’s termination of employment; (y) such Agreement and General Release is executed by the Executive, submitted to the Company no later than the 90th day following the Executive’s termination of employment, it being understood that failure to execute and deliver the Agreement and General Release by such date shall result in forfeiture of all rights to the Severance Amount; and (z) in the event that the 90 day period described in clause (x) begins in one taxable year and ends in a second taxable year, then the payment of the Severance Amount shall be made in the second taxable year. Upon any Change of Control event, all payments owed under Section 6(c)(3) shall be paid immediately.
The term “Good Reason” shall mean: (i) a material diminution in the Executive’s authority, duties or responsibilities due to no fault of the Executive other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law; (ii) the Company requires the Executive to change his principal business office as defined in Section 3(c) to a location other than the Metro Area, (iii) a change in Executive’s overall compensation such that his overall compensation is diminished, or (iv) any other action or inaction that constitutes a material breach by the Company under this Agreement. Prior to the Executive terminating his employment with the Company for Good Reason, the Executive must provide written notice to the Company, within 30 days following the Executive’s initial awareness of the existence of such condition, that such Good Reason exists and setting forth in detail the grounds the Executive believes constitutes Good Reason. If the Company does not cure the condition(s) constituting Good Reason within 30 days following receipt of such notice, then the Executive’s employment shall be deemed terminated for Good Reason.
(d) Any termination made by the Company under this Agreement shall be approved by the Company’s Board.
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(e) Upon (1) voluntary or involuntary termination of the Executive’s employment or (2) the Company’s request at any time during the Executive's employment (provided it does not interfere with his ability to perform his duties and responsibilities hereunder), the Executive shall (i) provide or return to the Company any and all Company property, including keys, key cards, access cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, manuals, work product, thumb drives or other removable information storage devices, and hard drives, and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or work product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with his employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executive’s possession or control, including those stored on any non-Company devices, networks, storage locations and media in the Executive’s possession or control.
7. Indemnification. As provided in an Indemnification Agreement which the Company and the Executive have previously entered into, a copy of which is annexed as Exhibit B, the Company shall indemnify the Executive, to the maximum extent permitted by applicable law, against all costs, charges and expenses incurred or sustained by him in connection with any claim, action, suit or proceeding to which he may be made a party by reason of him being an officer, director or employee of the Company or of any subsidiary or affiliate of the Company. The Company shall provide, at its expense, directors and officers insurance for the Executive in amounts and for a term consistent with industry standards.
8. Non-Competition Agreement.
(a) Competition with the Company. Until termination of his employment and for a period of one year commencing on the date of termination, the Executive (individually or in association with, or as a shareholder, director, officer, consultant, employee, partner, joint venturer, manager, member, or otherwise, of or through any person, firm, corporation, partnership, limited liability company, association or other entity) shall not, directly or indirectly, act as an employee or officer (or comparable position) of, owning an interest in, or providing Services as defined in Section 9(a) for a direct competitor of the Company (any, a “Competitor”).
(b) Solicitation of Employees. During the period in which the provision of Section 8(a) shall be in effect, the Executive agrees that he shall not, directly or indirectly, request, recommend or advise any employee or of the Company (which includes all subsidiaries) to terminate his or her employment with the Company, for the purposes of providing services for a Competitor, or solicit for employment or recommend to any third party the solicitation for employment of any individual who was employed by the Company or any of its subsidiaries at any time during the one year period preceding the Executive’s termination of employment.
(c) Mutual Non-disparagement. Parties agree that, after the end of Executive’s employment, both will refrain from making (whether verbally, in writing, electronically, via social media, e-mail, text message otherwise), any unfavorable comments about the other, that would be likely to injure either Party’s reputation or business prospects; provided, however, that nothing herein shall preclude either Party from responding truthfully to a lawful subpoena or other compulsory legal process or from providing truthful information otherwise required by law.
(d) No Payment. The Executive acknowledges and agrees that no separate or additional payment will be required to be made to him in consideration of his undertakings in this Section 8, and confirms he has received adequate consideration for such undertakings.
(e) References. References to the Company in this Section 8 shall include the Company’s subsidiaries.
(f) For the avoidance of doubt, the provisions set forth in Sections 8(a) and 8(b) above are in addition to and not in lieu of the non-compete and non-solicitation provisions contained in the Merger Agreement.
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9. Non-Disclosure of Confidential Information.
(a) Confidential Information. For purposes of this Agreement, “Confidential Information” includes, but is not limited to, trade secrets, processes, policies, procedures, techniques, designs, drawings, know-how, show-how, technical information, specifications, computer software and source code, information and data relating to the development, research, testing, costs, marketing, and uses of the Services (as defined herein), the Company’s budgets and strategic plans, and the identity of customers, vendors, and suppliers, subjects and databases, data, and all technology relating to the Company’s businesses, systems, methods of operation, solicitation leads, marketing and advertising materials, methods and manuals and forms, all of which pertain to the activities or operations of the Company, the names, home addresses and all telephone numbers and e-mail addresses of the Company’s directors, employees, officers, executives, and former executives. Confidential Information also includes, without limitation, Confidential Information received from the Company’s subsidiaries and affiliates. For purposes of this Agreement, the following will not constitute Confidential Information (i) information which is or subsequently becomes generally available to the public through no act or fault of the Executive, (ii) information set forth in the written records of the Executive prior to disclosure to the Executive by or on behalf of the Company which information is given to the Company in writing as of or prior to the date of this Agreement, and (iii) information which is lawfully obtained by the Executive in writing from a third party (excluding any affiliates of the Executive) who lawfully acquired the confidential information and who did not acquire such confidential information or trade secret, directly or indirectly, from the Executive or the Company or its subsidiaries or affiliates and who has not breached any duty of confidentiality. As used herein, the term “Services” shall include all products and services manufactured, assembled, offered for sale or marketed by the Company during the Term. Services also includes any other products or services which the Company has taken concrete steps to offer for sale, but has not yet commenced selling or marketing, during or prior to the Term. Services also include any products or services disclosed in the Company’s filings with the NYSE American, any other applicable exchange or the SEC.
(b) Legitimate Business Interests. The Executive recognizes that the Company has legitimate business interests to protect and as a consequence, the Executive agrees to the restrictions contained in this Agreement because they further the Company’s legitimate business interests. These legitimate business interests include, but are not limited to (i) trade secrets; (ii) valuable confidential business, technical, and/or professional information that otherwise may not qualify as trade secrets, including, but not limited to, all Confidential Information; (iii) substantial, significant, or key relationships with specific prospective or existing customers, vendors or suppliers; (iv) goodwill associated with the Company’s business; and (v) specialized training relating to the Company’s technology, Services, methods, operations and procedures. Notwithstanding the foregoing, nothing in this Section 9(b) shall be construed to impose restrictions greater than those imposed by other provisions of this Agreement or the Merger Agreement.
(c) Confidentiality. During the Term of this Agreement and following termination of employment, for any reason, the Confidential Information shall be held by the Executive in the strictest confidence and shall not, without the prior express written consent of the Company, be disclosed to any person other than in connection with the Executive’s employment by the Company. The Executive further acknowledges that such Confidential Information as is acquired and used by the Company or its subsidiaries or affiliates is a special, valuable and unique asset. The Executive shall exercise all due and diligent precautions to protect the integrity of the Company’s Confidential Information and to keep it confidential whether it is in written form, on electronic media, oral, or otherwise. The Executive shall not copy any Confidential Information except to the extent necessary to his employment nor remove any Confidential Information or copies thereof from the Company’s premises except to the extent necessary to his employment. All records, files, materials and other Confidential Information obtained by the Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company. The Executive shall not, except in connection with and as required by his performance of his duties under this Agreement, for any reason use for his own benefit or the benefit of any person or entity other than the Company or disclose any such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the prior express written consent of an executive officer of the Company (excluding the Executive).
(d) References. References to the Company in this Section 9 shall include the Company’s subsidiaries and affiliates.
(e) Whistleblowing. Nothing contained in this Agreement shall be construed to prevent the Executive from reporting any act or failure to act to the SEC or other governmental body or prevent the Executive from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Securities Exchange Act of 1934 or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.
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(f) Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016 (“DTSA”). Notwithstanding any other provision of this Agreement:
(1) The Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that:
(A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or
(B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.
(2) If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the Company’s trade secrets to the Executive’s attorney and use the trade secret information in the court proceeding if the Executive:
(A) files any document containing trade secrets under seal; and
(B) does not disclose trade secrets, except pursuant to court order.
10. Equitable Relief; Exclusive Jurisdiction.
(a) The Company and the Executive recognize that the services to be rendered under this Agreement by the Executive are special, unique and of extraordinary character, and that in the event of the breach by the Executive of the terms and conditions of this Agreement or if the Executive, without the prior express consent of the Company’s Board, shall take any action in violation of Section 8 and/or Section 9, the Company shall be entitled to institute and prosecute proceedings in any court of competent jurisdiction referred to in Section 10(b) below, to enjoin the Executive from breaching the provisions of Section 8 and/or Section 9.
(b) Any action or proceeding arising from or under this Agreement must be commenced only in the appropriate state or federal court located in Orlando, Florida. The Executive and the Company irrevocably and unconditionally submit to the exclusive jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of such courts. The Executive and the Company irrevocably waive any objection that they now have or hereafter may have to the laying of venue of any suit, action or proceeding brought in any such court and further irrevocably waive any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Final judgment against the Executive or the Company in any such suit shall be conclusive and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and the amount of any liability of the Executive or the Company therein described, or by appropriate proceedings under any applicable treaty or otherwise.
11. Conflicts of Interest. While employed by the Company, the Executive shall not, unless approved by the Compensation Committee, directly or indirectly:
(a) participate as an individual in any way in the benefits of transactions with any of the Company’s customers, vendors or suppliers, including, without limitation, having a financial interest in the Company’s customers, vendors or suppliers, or making loans to, or receiving loans, from, the Company’s customers, vendors or suppliers;
(b) realize a personal gain or advantage from a transaction in which the Company has an interest or use information obtained in connection with the Executive’s employment with the Company for the Executive’s personal advantage or gain; or
(c) accept any offer to serve as an officer, director, partner, consultant, manager with, or to be employed in a professional, medical, technical, or managerial capacity by, a person or entity which does business with the Company.
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12. Inventions, Ideas, Processes, and Designs. Except as may be set forth in a separate written agreement between the Company (or a subsidiary of the Company) and the Executive all inventions, ideas, processes, programs, software, and designs (including all improvements) (i) conceived or made by the Executive during the course of his employment with the Company (whether or not actually conceived during regular business hours) and for a period of six months subsequent to the termination (whether by expiration of the Term or otherwise) of such employment with the Company, and (ii) related to the business of the Company, shall be disclosed in writing promptly to the Company and shall be the sole and exclusive property of the Company, and the Executive hereby assigns any such inventions to the Company. An invention, idea, process, program, software, or design (including an improvement) shall be deemed related to the business of the Company if (a) it was made with the Company’s funds, personnel, equipment, supplies, facilities, or Confidential Information, (b) results from work performed by the Executive for the Company, or (c) pertains to the current business or demonstrably anticipated research or development work of the Company. The Executive shall cooperate with the Company and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly assign all such inventions, ideas, processes, and designs to the Company. The decision to file for patent or copyright protection or to maintain such development as a trade secret, or otherwise, shall be in the sole discretion of the Company, and the Executive shall be bound by such decision. The Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive’s entire right, title and interest in and to all work product and intellectual property rights, 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 rights, title or interest in any work product or intellectual property rights so as to be less in any respect than the Company would have had in the absence of this Agreement. If applicable, the Executive shall provide as a schedule to this Agreement, a complete list of all inventions, ideas, processes, and designs, if any, patented or unpatented, copyrighted or otherwise, or non-copyrighted, including a brief description, which he made or conceived prior to his employment with the Company and which therefore are excluded from the scope of this Agreement. References to the Company in this Section 12 shall include the Company, its subsidiaries.
13. Indebtedness. If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Company may, if it so elects, and if permitted by applicable law, set off any sum due to the Company from the Executive and collect any remaining balance from the Executive unless the Executive has entered into a written agreement with the Company.
14. Assignability. The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company, provided that such successor or assign shall acquire all or substantially all of the securities or assets and business of the Company. The Executive’s obligations hereunder may not be assigned or alienated and any attempt to do so by the Executive will be void.
15. Severability.
(a) The Executive expressly agrees that the character, duration and geographical scope of the non-competition provisions set forth in this Agreement and the Merger Agreement are reasonable in light of the circumstances as they exist on the date hereof. Should a decision, however, be made at a later date by a court of competent jurisdiction that the character, duration or geographical scope of such provisions is unreasonable, then it is the intention and the agreement of the Executive and the Company that this Agreement shall be construed by the court in such a manner as to impose only those restrictions on the Executive’s conduct that are reasonable in the light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included herein because taken together they are more extensive than necessary to assure to the Company the intended benefits of this Agreement, it is expressly understood and agreed by the parties hereto that the provisions of this Agreement that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be invalid or unenforceable or is prohibited by the laws of the state or jurisdiction where it is to be performed, this Agreement shall be considered divisible as to such provision and such provision shall be inoperative in such state or jurisdiction and shall not be part of the consideration moving from either of the parties to the other. The remaining provisions of this Agreement shall be valid and binding and of like effect as though such provisions were not included.
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16. Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or next business day delivery to the addresses detailed below (or to such other address, as either of them, by notice to the other may designate from time to time), or by e-mail delivery (in which event a copy shall immediately be sent by FedEx or similar receipted delivery), as follows:
| To the Company: | ||
|
Allan Evans, Chief Executive Officer | ||
| 5728 Major Boulevard, Suite 250 | ||
| Orlando, Florida 32819 | ||
| Email: _____________________ | ||
| With a copy to: | Nason, Yeager, Gerson, Harris & Fumero, P.A. | |
| Attn: Michael D. Harris, Esq. | ||
| 3001 PGA Blvd., Suite 305 | ||
| Palm Beach Gardens, Florida 33410 | ||
| Email: mharris@nasonyeager.com | ||
| To the Executive: | Matthew Barnard | |
| 20900 Normandie Avenue, Unit D | ||
| Los Angeles, CA 90502 | ||
| Email: _______________________ | ||
| With a copy to: | K&L Gates LLP | |
| Attn: Clayton Parker, Esq. | ||
| Southeast Financial Center Suite 3900 | ||
| 200 South Biscayne Blvd. | ||
| Miami, Florida 33131 | ||
| _________________________ |
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
18. Attorneys’ Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).
19. Governing Law. This Agreement shall be governed or interpreted according to the internal laws of the State of Florida without regard to choice of law considerations and all claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort, or otherwise, shall also be governed by the laws of the State of Florida without regard to choice of law considerations.
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20. Entire Agreement. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.
21. Section and Paragraph Headings. The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
22. Section 409A Compliance.
(a) This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder. This Agreement shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement to the contrary, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service (including a voluntary separation from service for good reason that is considered an involuntary separation for purposes of the separation pay exception under Treasury Regulation 1.409A-1(n)(2)) or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.
(b) Notwithstanding any other provision of this Agreement, if at the time of the Executive's termination of employment, the Executive is a "specified employee", determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute "nonqualified deferred compensation" subject to Section 409A (e.g., payments and benefits that do not qualify as a short-term deferral or as a separation pay exception) that are provided to the Executive on account of the Executive’s separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of the Executive's termination date ("Specified Employee Payment Date"). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date without interest and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If the Executive dies during the six-month period, any delayed payments shall be paid to the Executive's estate in a lump sum upon the Executive's death.
(c) To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:
(1) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;
(2) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and
(3) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.
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(d) In the event the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code at the time of the Executive’s separation from service, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to Section 409A as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (i) six months and one day after the Executive’s separation from service, or (ii) the Executive’s death (the “Six Month Delay Rule”).
(1) For purposes of this subparagraph, amounts payable under the Agreement should not provide for a deferral of compensation subject to Section 409A to the extent provided in Treasury Regulation Section 1.409A-1(b)(4) (e.g., short-term deferrals), Treasury Regulation Section 1.409A-1(b)(9) (e.g., separation pay plans, including the exception under subparagraph (iii)), and other applicable provisions of the Treasury Regulations.
(2) To the extent that the Six Month Delay Rule applies to payments otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of the Six Month Delay Rule, and the balance of the installments shall be payable in accordance with their original schedule.
(3) To the extent that the Six Month Delay Rule applies to the provision of benefits (including, but not limited to, life insurance and medical insurance), such benefit coverage shall nonetheless be provided to the Executive during the first six months following his separation from service (the “Six Month Period”), provided that, during such Six-Month Period, the Executive pays to the Company, on a monthly basis in advance, an amount equal to the Monthly Cost (as defined below) of such benefit coverage. The Company shall reimburse the Executive for any such payments made by the Executive in a lump sum not later than 30 days following the sixth month anniversary of the Executive’s separation from service. For purposes of this subparagraph, “Monthly Cost” means the minimum dollar amount which, if paid by the Executive on a monthly basis in advance, results in the Executive not being required to recognize any federal income tax on receipt of the benefit coverage during the Six Month Period.
(e) The parties intend that this Agreement will be administered in accordance with Section 409A. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
(f) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A but do not satisfy an exemption from, or the conditions of, such Section.
[Signature Page To Follow]
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IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.
| Unusual Machines, Inc. | |
| By: /s/ Allan Evans | |
| Allan Evans | |
|
Chief Executive Officer |
| Executive: | |
| /s/ Matthew Barnard | |
| Matthew Barnard |
| 13 |
Exhibit A
General Release Agreement
[Attached]
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TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (the “Agreement”) is made and entered into as of ___________ ____, 20__ (the “Effective Date”), by and between Matthew Barnard (the “Employee”) and Unusual Machines Inc. (the “Employer”).
WHEREAS, the Employee is employed as the Chief Executive Officer of a subsidiary of the Company (the “Employer”);
WHEREAS, the Employee desires to resign as Chief Executive Officer of Upgrade Energy LLC. and as an employee in order to pursue other interests;
WHEREAS, the parties wish to resolve all outstanding claims and disputes between them in an amicable manner;
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth in this Agreement, the sufficiency of which the parties acknowledge, it is agreed as follows:
1. The Employee hereby resigns as the Chief Executive Officer of Upgrade Energy LLC and as an employee of the Employer, and the Employer accepts the Employee’s resignation, effective as of the Effective Date.
2. In consideration for the Employee’s acknowledgments, representations, warranties, covenants, releases and agreements set forth in this Agreement, the Employer agrees to pay the Employee [__] months of his base salary, which equates to $_______, in equal payments of $________ (the “Payments”). All Payments shall be made in accordance with the Employer’s customary twice-per-month payroll practices and shall be subject to withholding for all applicable federal, state, social security and other taxes. The Employee acknowledges that he would not otherwise be entitled to the Payments but for his promises in this Agreement.
3. As further consideration, the Employer also agrees to extend any current benefits that Employee previously elected to receive during his employment with Employer for a period of [___] months.
4. During the above [_____] month period in which the Payments are made to the Employee, the Employee agrees to be available to the Employer, its officers, directors, employees, attorneys, or agents, to assist with the transition of any projects of the Employer or to provide any information that the Employee may have knowledge regarding the Employer’s business. The Employee may provide this information by telephone and/or email communication.
5. Nothing in this Agreement shall be construed as an admission of liability or wrongdoing by the Employer, its past and present affiliates, officers, directors, owners, employees, attorneys, or agents, and the Employer specifically disclaims liability to or wrongful treatment of the Employee on the part of itself, its past and present affiliates, officers, directors, owners, employees, attorneys, and agents. Additionally, nothing in this Agreement shall be construed as an admission of liability or wrongdoing by the Employee and the Employee specifically disclaims liability to or wrongful acts directed at the Employer.
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6. The Employee covenants not to sue, and fully and forever releases and discharges the Employer, its past and present affiliates, directors, officers, owners, employees and agents, as well as its successors and assigns from any and all legally waivable claims, liabilities, damages, demands, and causes of action or liabilities of any nature or kind, whether now known or unknown, arising out of or in any way connected with the Employee’s employment with the Employer or the termination of that employment; provided, however, that nothing in this Agreement shall either waive any rights or claims of the Employee that arise after the Employee signs this Agreement or impair or preclude the Employee’s right to take action to enforce the terms of this Agreement or impair or preclude the Employee’s right to indemnification and defense against any third party claims arising out of Employee’s employment by the Employer. This release includes but is not limited to claims arising under federal, state or local laws prohibiting employment discrimination or relating to leave from employment, including but not limited to Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Equal Pay Act and the Americans with Disabilities Act, as amended, the Family and Medical Leave Act, as amended, claims for attorneys’ fees or costs, and any and all claims in contract, tort, or premised on any other legal theory. The Employee acknowledges that the Employee has been paid in full all compensation owed to the Employee by the Employer as a result of Employee’s employment, except for compensation (if any) due through the Effective Date which shall be paid in the next regular payroll of the Employer. The Employer and its directors, officers, and employees covenant not to sue, and fully and forever release and discharge the Employee, from any and all legally waivable claims from the beginning of time until the date of this Agreement, and from liabilities, damages, demands, and causes of action, attorney’s fees, costs or liabilities of any nature or kind, whether now known or unknown, arising out of or in any way connected with the Employee’s employment with the Employer.
7. The Employee represents that he has not filed any complaints or charges against the Employer with the Equal Employment Opportunity Commission, or with any other federal, state or local agency or court, and covenants that he will not seek to recover on any claim released in this Agreement.
8. The Employee agrees that he will not encourage or assist any of the Employer’s employees to litigate claims or file administrative charges against the Employer or its past and present affiliates, officers, directors, owners, employees and agents, unless required to provide testimony or documents pursuant to a lawful subpoena or other compulsory legal process.
9. The Employee acknowledges that he is subject to non-solicit, non-compete and confidentiality provisions under that certain Employment Agreement between the Employee and the Employer dated _______ ___, 2026, (the “Employment Agreement”) and the Merger Agreement as defined therein. The Employee further acknowledges that all confidential information regarding the Employer’s business compiled, created or obtained by, or furnished to, the Employee during the course of or in connection with his employment with the Employer including suppliers, other sources of supply and pricing, is the Employer’s exclusive property. Upon or before execution of this Agreement, the Employee will return to the Employer all originals and copies of any material containing confidential information and the Employee further agrees that he will not, directly or indirectly, use or disclose such information. The Employee will also return to the Employer upon execution of this Agreement any other items in his possession, custody or control that are the property of the Employer, including, but not limited to any laptop computer, iPad and smartphone, his files, credit cards, identification card, flash drives, passwords and office keys.
10. The Employee acknowledges that he has been given at least 21 days to consider this Agreement and that he has seven[1] days from the date he executes this Agreement in which to revoke it and that this Agreement will not be effective or enforceable until after the seven-day revocation period ends without revocation by the Employee. Revocation can be made by delivery of a written notice of revocation to the Company’s Chief Financial Officer at the offices of the Employer, by midnight on or before the seventh calendar day after the Employee signs the Agreement.
11. The Employee acknowledges that he has been advised to consult with an attorney of his choice with regard to this Agreement. The Employee hereby acknowledges that he understands the significance of this Agreement, and represents that the terms of this Agreement are fully understood and voluntarily accepted by him.
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12. The Employee and the Employer agree that neither he nor they, nor any of either’s agents or representatives will disclose, disseminate and/or publicize, or cause or permit to be disclosed, disseminated or publicized, the existence of this Agreement, any of the terms of this Agreement, or any claims or allegations which the Employee believes he or they could have made or asserted against one another, specifically or generally, to any person, corporation, association or governmental agency or other entity except: (i) to the extent necessary to obtain legal advice or to report income to appropriate taxing authorities; (ii) to the Employee’s immediate family so long as such person agrees to be bound by the confidential nature of this Agreement, (iii) in response to an order of a court of competent jurisdiction or subpoena issued under the authority thereof; or (iv) in response to any inquiry or subpoena issued by a state or federal governmental agency; provided, however, that notice of receipt of such order or subpoena shall be emailed to Unusual Machines, Inc. – attention Allan Evans, allan@unusualmachines.com, and in the case of the Employee to Matthew Barnard, matt@upgradeenergytech.com within 24 hours of the receipt of such order or subpoena, so that both the Employee and the Employer will have the opportunity to assert what rights they have to non-disclosure prior to any response to the order, inquiry or subpoena. Either party may give email notice of a different email address.
13. The Employee and the Employer agree to refrain from disparaging or making any unfavorable comments, in writing or orally, about either party, and in the case of the Employer, about its management, its operations, policies, or procedures and in the case of the Employee, to prospective employers, those making inquiry as to the reasons for his separation from the Company or to any person, company or other business entity.
14. In the event of any lawsuit against the Employer that relates to alleged acts or omissions by the Employee during his employment with the Employer, the Employee agrees to cooperate with the Employer by voluntarily providing truthful and full information as reasonably necessary for the Employer to defend against such lawsuit. Provided, however, the Employee shall be entitled to receive reimbursement for expenses, including lost wages, incurred in assisting the Employer regarding any lawsuit.
15. Nothing contained in this Agreement shall be construed to prevent the Employee from reporting any act or failure to act to the Securities and Exchange Commission or other governmental body or prevent the Employee from obtaining a fee as a “whistleblower” under Rule 21F-17(a) under the Securities and Exchange Act of 1934 or other rules or regulations implemented under the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.
16. This Agreement sets forth the entire agreement between the Employee and the Employer, and fully supersedes any and all prior agreements or understandings between them regarding its subject matter; provided, however, that nothing in this Agreement is intended to or shall be construed to modify, impair or terminate any obligation of the Employee or the Employer pursuant to provisions of (i) the Employment Agreement that by their terms continues after the Employee’s separation from the Employer’s employment[; or (ii) the Indemnification Agreement entered into between the Employer and Employee dated _______, 2026]. This Agreement may only be modified by written agreement signed by both parties.
17. The Employer and the Employee agree that in the event any provision of this Agreement is deemed to be invalid or unenforceable by any court or administrative agency of competent jurisdiction, or in the event that any provision cannot be modified so as to be valid and enforceable, then that provision shall be deemed severed from the Agreement and the remainder of the Agreement shall remain in full force and effect.
18. This Agreement shall be governed or interpreted according to the internal laws of the State of Florida without regard to choice of law considerations and all claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort, or otherwise, shall also be governed by the laws of the State of Florida without regard to choice of law considerations.
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19. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce or contest the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney’s fee, costs and expenses.
20. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, electronic or facsimile signature.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
| UNUSUAL MACHINES, INC. | |
| By: /s/ Allan Evans | |
| Allan Evans | |
|
Chief Executive Officer |
I have carefully read this Agreement and understand that it contains a release of known and unknown claims. I acknowledge and agree to all of the terms and conditions of this Agreement. I further acknowledge that I enter into this Agreement voluntarily with a full understanding of its terms.
| /s/ Matthew Barnard | |
| Matthew Barnard |
| 18 |
Exhibit 10.2
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is dated as of October 19, 2026 by and among Unusual Machines, Inc., a Nevada corporation (the “Parent”), and Matthew Barnard, the Member Representative (as defined in the Merger Agreement, as defined below).
WHEREAS, the Parent has agreed to provide certain registration rights to the Member Representative in order to induce the Member Representative to enter into that certain Agreement and Plan of Merger by and among the Parent, the UMAC Merger Sub, Upgrade, and the Member Representative] dated as of the date hereof (the “Merger Agreement”).
Now, therefore, in consideration of the mutual promises and the covenants as set forth herein, the parties hereto hereby agree as follows:
1. Definitions. Unless the context otherwise requires, capitalized words and terms used herein without definition and defined in the Merger Agreement are used herein as defined therein. Notwithstanding the foregoing, as used herein the capitalized words and terms defined in this Section 1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined:
“Agreement” means this Registration Rights Agreement, as the same may be amended, modified, or supplemented in accordance with the terms hereof.
“Board” means the Board of Directors of the Parent.
“Excluded Forms” means Registration Statements under the Securities Act on Forms S-4 and S-8 or any successors.
“Filing Date” has the meaning assigned to it in Section 3(a) of this Agreement.
“Member Representative” has the meaning assigned to it in the introductory paragraph of this Agreement.
“Merger Agreement” has the meaning assigned to it in the Recitals of this Agreement.
“Parent” has the meaning assigned to it in the introductory paragraph of this Agreement.
“Proposed Registration” means any proposed Registration Statement to be filed pursuant to this Agreement.
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The terms “register” “registered” and “registration” refer to a registration effected by preparing and filing a Registration Statement on a form other than any of the Excluded Forms in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such Registration Statement.
“Registration Statement” means any registration statement filed by the Parent on behalf of the Member Representative that covers the resale of Registrable Securities under the provisions of this Agreement.
“Registrable Securities” means as of any date of determination, (a) the Shares to be acquired by the Member Representative pursuant to the Merger Agreement as Merger Consideration, and (b) any securities of the Parent issued with respect to such Shares by way of any stock dividend or stock split or in connection with any merger, combination, recapitalization, share exchange, consolidation, reorganization, or other similar transaction.
“Representatives” means all shareholders, officers, directors, members, managers, partners, employees and agents of a party to the Merger Agreement.
“Rule 144” has the meaning assigned to it in Section 7 of this Agreement.
“SEC” means the U.S. Securities and Exchange Commission or any other governmental body at the time administering the Securities Act.
“SEC Guidance” means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff regarding the applicability of Rule 415 and (ii) the Securities Act.
“Securities Act” means the Securities Act of 1933 (or successor statute).
“Selling Expenses” means all selling commissions, underwriting discounts fees and, other fees paid by the Member Representative to a broker-dealer, finder’s fees, and stock transfer taxes applicable to the Registrable Securities contained in a Registration Statement for the benefit of the Member Representative.
“Trading Days” means a day on which the principal Trading Market is open for Trading for at least four and one-half hours.
2. Required Registration. Within 30 days after Closing, the Parent shall file with the SEC a Registration Statement on Form S-3 or, if the Parent is not then eligible to use Form S-3, on Form S-1, or any successor form covering the sale of all of the Registrable Securities.
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3. Obligations of the Parent. If and whenever the Parent is required by the provisions hereof to effect or cause the registration of any Registrable Securities under the Securities Act as provided herein, the Parent shall:
(a) prepare and file with the SEC within the timeframe specified in Section 2 (the “Filing Date”), a Registration Statement with respect to such Registrable Securities, and use commercially reasonable efforts to cause such Registration Statement to become effective within 60 days after the Filing Date if such Registration Statement is reviewed by the Staff of the SEC or as soon as reasonably practicable if it is not (the “Effectiveness Period”), provided that before filing a Registration Statement or any amendment or supplement thereto, the Parent will at least two Trading Days prior to making any such filing furnish to the Member Representative a copy of the Registration Statement, as amended if applicable and any response letter or other correspondence to the Staff of the SEC proposed to be filed or submitted, and provide the Member Representative with a reasonable opportunity to review and provide comments or input on such Registration Statement and response letter or other correspondence, and address such comments or input so received from the Member Representative in good faith, prior to filing or submitting such documents. Notwithstanding anything to the contrary set forth herein, the Member Representative shall have the ability to approve, prior to filing or submission of any of the foregoing materials, any disclosure or communication with the SEC which directly relates to the Member Representative and the sale of Registrable Securities, provided that such approval should not be unreasonably withheld or delayed.
(b) subject to complying with Section 3(a), prepare and file with the SEC such amendments to any such Registration Statement (including post-effective amendments) and supplements to the prospectus included therein as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act during the Effectiveness Period;
(c) furnish to the Member Representative such number of copies of such Registration Statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such Registration Statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents, as the Member Representative may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities owned by the Member Representative;
(d) make such filings under the securities or blue sky laws of such states as the Member Representative may reasonably request to enable the Member Representative to consummate the sale;
(e) promptly notify the Member Representative at any time when a prospectus relating to their Registrable Securities is required to be delivered under the Securities Act, of the Parent’s becoming aware that the prospectus included in the related Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to the Member Representative a reasonable number of copies of a prospectus supplement or amendment so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus, as supplemented or amended, shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. In such event, the Parent shall use its reasonable best effort to file a Form 8-K or amended prospectus or prospectus supplement in order to permit the Member Representative to be able to sell the Registrable Securities, which shall prior to filing first be provided to the Member Representative with a reasonable opportunity to review and provide comments and input;
(f) otherwise comply with all applicable rules and regulations of the SEC and to perform its obligations hereunder;
(g) cause the Registrable Securities to continue to be listed on the Principal Market;
(h) provide a transfer agent for all Registrable Securities and promptly pay all fees and costs of the transfer agent;
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(i) provide a CUSIP number for all Registrable Securities, in each case not later than the effective date of the applicable Registration Statement;
(j) notify the Member Representative of any stop order threatened or issued by the SEC and take all actions reasonably necessary to prevent the entry of such stop order or to remove it if entered;
(k) promptly email the Member Representative copies of all comment letters, response letters and other communications from and with the Staff of the SEC, use its reasonable best efforts to file an amendment to a Registration Statement, after receipt of a comment letter or oral comments, subject in each case to the Member Representative’s right to receive, review and provide comments and input on such documents or communications prior to their respective filing or submission, as applicable and request acceleration of the effectiveness of the Registration Statement within four Trading Days after the Parent or its counsel has been advised that the Staff of the SEC will not review or has no further comments thereon; and
(l) request acceleration of the effectiveness of the Registration Statement within four Trading Days after the Parent or its counsel has been advised that the Staff of the SEC will not review such Registration Statement or has no further comments thereon.
For purposes of this Agreement, any requirement on the part of the Parent to provide, furnish copies of, notify and give an opportunity to provide comments or input regarding the Registration Statement, amendments, supplements, correspondence or other documents and communications to or with the SEC relating to the Registration Statement or otherwise contemplated by this Agreement to a the Member Representative shall be deemed to include the Member Representative’s legal counsel, in addition to the Member Representative.
4. Other Procedures.
(a) until the earlier of (i) the sale or other disposition of all Registrable Securities, or (ii) two years following the effectiveness of the Registration Statement. In consideration of the Parent’s obligations under this Agreement, the Member Representative agrees that, upon receipt of any notice from the Parent of the happening of any event of the kind described in Section 3(e) herein, the Parent Representative shall forthwith discontinue its sale of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Member Representative’s receipt of the copies of the supplemented or amended prospectus contemplated by said Section 3(e).
(b) The Parent’s obligation to file any Registration Statement or amendment including a post-effective amendment, shall be subject to the Member Representative, as applicable, furnishing to the Parent in writing such information and documents regarding the Member Representative and the distribution of the Member Representative’s Registrable Securities as may reasonably be required to be disclosed in the Registration Statement in question by the rules and regulations under the Securities Act or under any other applicable securities or blue sky laws of the jurisdiction referred to in Section 3(d) herein. The Parent’s obligations are also subject to the Member Representative promptly executing any representation letter concerning compliance with Regulation M under the Exchange Act (or any successor rule or regulation). If the Member Representative fails to provide all of the information required by this Section 4(b), the Parent shall have no obligation to include its Registrable Securities in a Registration Statement or it may withdraw the Member Representative’s Registrable Securities from the Registration Statement without incurring any penalty or otherwise incurring liability to the Member Representative.
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(c) If as result of an SEC Staff policy, rule, or regulation or for any other reason, the Parent is unable to register all Registrable Securities in one Registration Statement, then upon the earlier of 30 days (or such earlier time as is permitted by the Staff of the SEC or any rule of the SEC) after any Registration Statement filed pursuant to this Agreement is declared effective by the SEC, the Parent shall file another Registration Statement including all of the remaining Registrable Securities of the Member Representative, in which event the conditions of this Agreement shall apply; provided, however, in no event shall the Parent delay the effective date of any Registration Statement for more than four Trading Days after receipt of notice from the SEC Staff that it will either not review a Registration Statement or it has no further comments with respect to a Registration Statement.
(d) The Parent shall not include any securities for any other shareholder in any registration statement other than Registrable Securities for the Member Representative in any Registration Statement.
5. Registration Expenses. In connection with any registration of Registrable Securities pursuant to Section 2, the Parent shall, whether or not any such registration shall become effective, from time to time, pay all expenses (other than Selling Expenses and the legal fees and expenses of the Member Representative) incident to its performance of or compliance, including, without limitation, all registration, and filing fees, fees and expenses of compliance with securities or blue sky laws, word processing, printing and copying expenses, messenger and delivery expenses, fees and disbursements of counsel for the Parent and all independent public accountants and other Persons retained by the Parent.
6. Indemnification.
(a) In the event of any registration of any Shares of common stock under the Securities Act pursuant to this Agreement, the Parent shall indemnify, defend and hold harmless the Member Representative and his successors and assigns, from and against any losses, claims, damages or liabilities, joint or several, to which the Member Representative and his successors and assigns may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or any violation by the Parent of the Securities Act, the Exchange Act, or state securities or blue sky laws or relating to action or inaction required of the Parent in connection with such registration or qualification under the Securities Act or such state securities or blue sky laws. If the Parent fails to defend the Member Representative and his successors and assigns, as applicable, as required by Section 6(c) herein, it shall reimburse (after receipt of appropriate documentation) the Member Representative and his successors and assigns for any legal fees (limited to one law firm) or any other reasonable and documented out-of-pocket expenses incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Parent shall not be liable to the Member Representative or his successors or assigns in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement, a preliminary prospectus, a prospectus, or amendment or supplement or any document incident to registration or qualification of any Registrable Securities pursuant to this Agreement in reliance upon and in conformity with written information furnished to the Parent by the Member Representative or his successors or assigns specifically for use in the preparation thereof.
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(b) In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Member Representative shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6(a)) the Parent, each director of the Parent, each officer of the Parent who signs such Registration Statement, the Parent’s attorneys and auditors and any Person who controls the Parent within the meaning of the Securities Act, from and against any loss, claim, damage or liability that arises out of or is based upon any untrue statement or omission from such Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, if and to the extent that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Parent by the Member Representative specifically for use in the preparation of such Registration Statement, preliminary prospectus, final prospectus or amendment or supplement.
(c) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section 6(a) or (b), such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to such indemnifying party of the commencement of such action. The indemnifying party shall be relieved of its obligations under this Section 6(c) if and to the extent that the indemnified party delays in giving notice and the indemnifying party is damaged or prejudiced by the delay. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so as to assume the defense thereof, the indemnifying party shall be responsible for any legal or other expenses subsequently incurred by the indemnifying party in connection with the defense thereof, provided, however, that, if counsel for an indemnified party shall have reasonably concluded that there is an actual or potential conflict of interest between the indemnified party and the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, and such indemnifying party shall reimburse such indemnified party for the reasonable and documented fees and expenses of one law firm retained by the indemnified party which are reasonably related to the matters covered by the indemnity agreement provided in this Section 6. Provided, further, that in no event shall any indemnification by the Member Representative under this Section 6 exceed the net proceeds from the sale of Registrable Securities received by the Member Representative. No indemnified party shall make any settlement of any claims indemnified against hereunder without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. In the event that any indemnifying party enters into any settlement without the written consent of the indemnified party, the indemnifying party shall not consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff of a release of such indemnified party from all liability in respect to such claim or litigation.
(d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which (i) any indemnified party makes a claim for indemnification pursuant to this Section 6, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required in circumstances for which indemnification is provided under this Section 6; then, in each such case, the Parent and the Member Representative shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject as is appropriate to reflect the relative fault of the Parent and the Member Representative in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, it being understood that the parties acknowledge that the overriding equitable consideration to be given effect in connection with this provision is the ability of one party or the other to correct the statement or omission (or avoid the conduct or take an act) which resulted in such losses, claims, damages or liabilities, and that it would not be just and equitable if contribution pursuant hereto were to be determined by pro-rata allocation or by any other method of allocation which does not take into consideration the foregoing equitable considerations. Notwithstanding the foregoing, (i) the Member Representative shall not be required to contribute any amount in excess of the net proceeds to him of all Registrable Securities sold by him pursuant to such Registration Statement, and (ii) no Person who is guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
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7. Rule 144. As long as the Member Representative holds restricted securities (as that term is used in Rule 144), the Parent covenants that it will (i) make and keep public information available, as those terms are understood and defined in Rule 144, at all times, (ii) file in a timely manner the reports and other documents required to be filed under the Securities Act or the Exchange Act and the rules and regulations adopted by the SEC thereunder, (iii) furnish to the Member Representative promptly upon request (x) a written statement by the Parent as to its compliance with the reporting requirements of Rule 144 and the Exchange Act, (y) a copy of the most recent annual or quarterly report of the Parent, and (z) such other information as the Member Representative may reasonably request, and (iv) cooperate with the Member Representative and respond as promptly as possible to any requests from the Member Representative in connection with Rule 144 transfers of restricted securities, in each case to enable the Member Representative to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemption provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC (collectively, “Rule 144”); provided, however, nothing contained in this Section 7 or elsewhere in this Agreement shall prevent the Parent from consummating a transaction in which another entity acquires it through a merger or similar transaction.
8. Severability. In the event any parts of this Agreement are found to be illegal, unenforceable or void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the illegal, unenforceable or void parts were deleted.
9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile or “.pdf” signature.
10. Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.
11. Notices and Addresses. All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth in, and shall be effective in accordance with the terms of, the Merger Agreement.
12. Attorneys’ Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding relating to this Agreement is filed, the prevailing party shall be entitled to an award by the court of reasonable attorneys’ fees, costs and expenses.
13. Entire Agreement; Oral Evidence. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement of the change, waiver discharge or termination is sought.
14. Additional Documents. The parties hereto shall execute such additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.
15. Governing Law. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed in accordance with the Merger Agreement.
16. Amendments and Waivers. Any amendments to or waivers with respect to this Agreement shall be made in accordance with Section [10.09] of the Merger Agreement.
17. Section or Paragraph Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.
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[Signature Page Follows]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed personally or by a duly authorized representative thereof as of the day and year first above written.
Parent:
Unusual Machines, Inc.:
By: /s/ Allan Evans
Name: Allan Evans
Title: Chief Executive Officer
Member Representative:
By: /s/ Matthew Barnard
Name: Matthew Barnard
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Exhibit 99.1
October 19, 2026
Unusual Machines Completes Acquisition of Upgrade Energy, Expanding U.S. Drone Battery Manufacturing
Adds high-performance battery and power systems to Unusual Machines’ portfolio of critical drone components
ORLANDO, FL / ACCESS Newswire / October 19, 2026 / Unusual Machines, Inc. (NYSE American:UMAC), a leading manufacturer of NDAA-compliant drone components, today announced the completion of its acquisition of DroneNX LLC, operating as Upgrade Energy, a U.S. manufacturer of high-performance drone batteries and power systems.
Originally announced on May 11, 2026, the acquisition expands Unusual Machines’ portfolio to include batteries, complementing its existing motors, headsets, and other drone components.
“The U.S. is investing heavily in domestic drone production, but the industrial base is only as strong as the supply chain supporting it,” said Allan Evans, CEO of Unusual Machines. “Batteries are an essential part of that equation. Matt and his team have built a strong business with deep expertise in battery technology and manufacturing. This adds a critical piece of the drone powertrain to our business and strengthens our ability to support the industry’s next phase of growth.”
“Together with Unusual Machines, we’re building on Upgrade Energy’s battery expertise to expand U.S. production and serve more customers,” said Matthew Barnard, CEO of Upgrade Energy. “Combining our capabilities will allow us to play a larger role in the drone supply chain and deliver the performance, availability, and reliability operators depend on.”
Ahead of closing, Unusual Machines began scaling battery production and hiring additional personnel at Upgrade Energy’s 18,500-square-foot facility in Torrance, California, with plans to establish battery pack operations in Orlando, Florida.
About Unusual Machines, Inc.
Unusual Machines is a leading provider of NDAA-compliant drone components, focused on building a domestic supply chain for the growing U.S. drone industry. The Company manufactures a broad portfolio of critical components, including flight controllers, electronic speed controllers, video systems, motors, FPV headsets, cameras and, following its acquisition of Upgrade Energy, batteries and power systems. Unusual Machines is expanding U.S. manufacturing to meet increasing demand from defense, enterprise, and commercial customers, while serving the consumer FPV market through its Fat Shark and Rotor Riot brands. According to Fact.MR, the U.S. drone components market represents a $3 billion to $5 billion opportunity. For more information, visit unusualmachines.com.
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Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, which are intended to be covered by the safe harbor provisions for forward-looking statements contained therein. All statements other than statements of historical fact are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “is likely,” “may,” “plan,” “potential,” “should,” “target,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements in this press release include, without limitation, statements regarding the anticipated benefits of the acquisition of Upgrade Energy; the integration of Upgrade Energy’s business, personnel and operations; our plans to scale battery production, hire additional personnel and establish battery pack operations in Orlando, Florida; the expansion of our product offering and our ability to serve a larger market; anticipated demand from defense, enterprise, commercial and consumer customers; U.S. government investment in domestic drone production; and the size of, and trends in, the U.S. drone components market. These statements are neither historical facts nor assurances of future performance and are based on our current beliefs, expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, many of which are outside of our control. Actual results and outcomes may differ materially from those expressed or implied in any forward-looking statement. Important factors that could cause such differences include, among others: our ability to successfully integrate Upgrade Energy and realize the anticipated benefits of the acquisition within the expected time frame or at all; unanticipated costs, liabilities or delays associated with the acquisition or integration; our ability to retain key Upgrade Energy personnel, customers and suppliers; our ability to scale manufacturing capacity, establish new facilities and achieve expected production volumes, quality and margins; the availability and cost of raw materials, battery cells and other components, including the effects of tariffs, trade restrictions and supply chain disruptions; risks associated with lithium battery manufacturing, including product safety, recalls, warranty claims and environmental, health and safety compliance; changes in U.S. government defense and procurement priorities, budgets and funding, and the timing of government spending; laws and regulations affecting drones and drone components, and our ability to maintain compliance with them; competition, including from larger or better-capitalized competitors; demand for our products and our ability to develop and commercialize new products; our ability to protect our intellectual property; general economic, market, industry and geopolitical conditions; and the other risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which is available at www.sec.gov. New factors emerge from time to time, and it is not possible for us to predict all of them or to assess their potential impact. Accordingly, you should not place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by applicable law, we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contacts:
Unusual Machines, Inc.
Investor: investors@unusualmachines.com
Media: media@unusualmachines.com
SOURCE: Unusual Machines, Inc.
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