UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 20, 2026
ALT5 SIGMA CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada | 000-19621 | 41-1454591 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
8548 Rozita Lee Avenue, Suite 305 Las Vegas, Nevada |
89113 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (702) 997-5968
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | 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:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common stock (par value $0.001 per share) | ALTS | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Block Street Corp.
On April 20, 2026, ALT5 Sigma Corporation (the “Company”, “we”, “our”, or “us”) entered into a Stock Exchange Agreement (the “SEA”) with the four owners of Block Street Corp., a Nevada corporation (“Block Street”). In connection with the SEA, we granted the four owners certain warrants for the purchase of shares of our common stock and Block Street entered into employment agreements with two of the four individuals.
We issued an aggregate of 12,670,257 shares (the “Issued Stock”) of our common stock (our “Common Stock”) to the four individuals, valued at $12 million at Nasdaq minimum price and granted two sets of five-year, pre-funded warrants to the four individuals, the first set of which (the “Set One Warrants”) is exercisable for an aggregate of up to 15,837,821 shares (the “Set One Warrant Stock”) of Common Stock with an initial aggregate exercise price of $15 million at Nasdaq minimum price and a remaining exercise price of $.001 per share and the second set of which (the “Set Two Warrants”) is exercisable for an aggregate of up to 16,893,675 shares (the “Set Two Warrant Stock”) of Common Stock with an initial aggregate exercise price of $16 million at Nasdaq minimum price and a remaining exercise price of $.001 per share. The Set One Warrants vest in full at any time on or after the date on which Block Street (following the closing of the transactions contemplated by the SEA) has generated US GAAP-compliant net revenues, applied consistently with the Company’s historical accounting policies, on a trailing four consecutive Company-quarterly reporting basis, of not less than $20,000,000, as certified by the principal financial officer of the Company. The Set Two Warrants vest in full at any time on or after the date on which Block Street (following the closing of the transactions contemplated by the SEA) has generated US GAAP-compliant annual “Modified Operating Income,” applied consistently with the Company’s historical accounting policies, on a trailing four consecutive Company-quarterly reporting basis, of not less than $8,000,000, as certified by the principal financial officer of the Company. “Modified Operating Income” means “Net Operating Income” plus realized gains and minus realized losses from the sale of tokens generated by the initial coin offerings operations of Block Street. “Net Operating Income” means, using the following categories as defined in SEC Regulation S-X Section 210.5-03: net sales and gross revenues, less (i) costs and expenses applicable to sales and revenues, and (ii) other operating costs and expenses, and (iii) selling, general and administrative expenses, and (iv) provision for doubtful accounts and notes, and (v) other general expenses.
Both the Set One Warrants and the Set Two Warrants provide for the cashless exercise thereof.
The shares of Issued Stock and the shares of Set One Warrant Stock and Set Two Warrant Stock, from and after the respective issuances thereof, are subject to contractual lock-up and leak-out provisions. The lock-up period for all of such shares of stock is 24 months, subject to releases of 25% thereof every six months commencing April 20, 2026 for the shares of Issued Stock and commencing on the dates on which the shares of Set One Warrant Stock and Set Two Warrant Stock are issued.
Each holder of shares “leak-out” stock has the right, but not the obligation, to sell those shares of stock into the public markets on each trading day that quantum of such shares in an amount that does not exceed 10% of the average number of shares of our Common Stock sold in the public markets during each of the twenty (20) trading days preceding the date on which the holder sells any of such shares of stock, the daily trading volume as reflected on nasdaq.com (the “Daily Leak-out Volume”). The Daily Leak-out Volume is not cumulative; it is a trading day “use it or lose it” right. Further, the gross price of each such share of stock sold by the holder shall be at not less than the “best bid” at the time that the relevant holder places a sell order with his broker, no matter how such sell order is placed. If a holder, in a transaction not involving the public markets, shall sell or otherwise give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such shares of stock, then (A) as a condition precedent to the closing of such a transaction, such third party shall execute an agreement in favor of us that contains leak-out provisions substantially similar to the leak-out provisions set forth in this section and (B) any sales into the public markets by such third party shall be aggregated on a daily basis with any sales into the public markets by the legacy holder. The Daily Leak-out Volume shall be adjusted for forward stock splits, reverse stock splits (consolidations), and recapitalizations of shares of our Common Stock and similar transactions affecting all holders of our Common Stock equally.
We do not have any obligation to register any of the shares of the Issued Stock, the Set One Warrant Stock, or the Set Two Warrant Stock.
The issuance of the Issued Stock, the grant of the Set One Warrants and the Set Two Warrants, and the potential issuances of the shares of Set One Warrant Stock and Set Two Warrant Stock were all effectuated as a private offering under Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”).
The foregoing descriptions of the SEA, Employment Agreements, Set One Warrant, and Set Two Warrant do not purport to be complete and are qualified in its entirety by reference to the full text of each such agreement, a copy of each of which is attached as exhibits 10.138, 10.139, 10.140, 4.11, and 4.12 to this Current Report on Form 8-K and are incorporated by reference herein.
Dectec
On April 20, 2026, we also entered into binding letter of intent with the Decentralized Technologies Inc. (“Dectec”), pursuant to which we will acquire all of the issued and outstanding shares of capital stock of Dectec and will issue four million shares of our Common Stock (the “Initial Issuance”) to the equity holders of Dectec. In addition to the Initial Issuance, we shall issue up to four million shares of our Common Stock during the following 36-month period from closing at a ratio of one million shares for every five million dollars of “Gross Profit” generated by Dectec’s solutions. “Gross Profit” is defined as Gross Sales generated directly from Dectec’s solutions, less (i) cost of goods sold (which include, but are not limited to, commissions, software licenses, data acquisition costs, AI compute costs, and other direct delivery costs associated with Dectec’s operations) and (ii) (A) costs and expenses applicable to sales and revenues and (B) other operating costs and expenses and (C) selling, general and administrative expenses and (D) provision for doubtful accounts and notes and (E) other general expenses.
The issuance of the Initial Issuance of Stock was effectuated as a private offering under Section 4(a)(2) of the 1933 Act.
Section 3 – Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
The information disclosed in Item 1.01 of this Current Report on Form 8-K in respect of issuance of shares of our common stock is incorporated herein by reference.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit Number |
Description | |
| 4.11 | Form of $20,000,000 pre-funded warrant from Block Street transaction, granted April 20, 2026. | |
| 4.12 | Form of $16,000,000 pre-funded warrant from Block Street transaction, granted April 20, 2026. | |
| 10.138 | Form of Stock Exchange Agreement for the Block Street transaction, dated April 20, 2026. | |
| 10.139 | Form of Employment Agreement between Block Street Corp. and Derek Peterson, dated April 20, 2026. | |
| 10.140 | Form of Employment Agreement between Block Street Corp. and Matthew Morgan, dated April 20, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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.
| ALT5 SIGMA CORPORATION | ||
| Date: April 24, 2026 | By: | /s/ Tony Isaac |
| Tony Isaac | ||
Chief Executive Officer and President |
||
Exhibit 4.11
EXHIBIT
[to Stock Exchange Agreement]
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS PRE-FUNDED WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(A) OF THIS PRE-FUNDED WARRANT.
ALT5 SIGMA CORPORATION
Pre-funded Warrant to Purchase Common Stock
Pre-funded Warrant No.: [__]
Date of Grant: April [__], 2026 (the “Grant Date”)
ALT5 Sigma Corporation, a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [____________], the registered holder hereof or his permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Pre-funded Warrant (including any pre-funded Warrants granted in exchange, transfer, or replacement hereof, this “Pre-funded Warrant”), at any time or times on or after the date on which the Company has generated US GAAP-compliant net revenues, applied consistently with the Company’s historical accounting policies, on a trailing four consecutive Company-quarterly reporting basis of not less than $20,000,000, as certified by the principal financial officer of the Company (the “Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), that number (subject to adjustment as provided herein) of fully paid and non-assessable shares of Common Stock (as defined below) (the “Pre-funded Warrant Stock”), equal to that amount obtained by dividing (i) [__________] [Note: should be an aggregate of 15,000,000 for all 4 Block Street stockholders], by (ii) the Exercise Price. Except as otherwise defined herein, capitalized terms in this Pre-funded Warrant shall have the meanings set forth in Section 17. This Pre-funded Warrant is one of the Pre-funded Warrants (the “SEA Pre-funded Warrants”) granted pursuant to that certain Stock Exchange Agreement (the “Stock Exchange Agreement”), dated April [___], 2026 (the “Exchange Date”), by and among the Company, Block Street Corp., a Nevada corporation (“Block Street”), and the four stockholders of Block Street.
1. EXERCISE OF PRE-FUNDED WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(g)), this Pre-funded Warrant may be exercised by the Holder on any day on or after the Initial Exercisability Date (each, an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”) of the Holder’s election to exercise this Pre-funded Warrant. Within one (1) Trading Day following an exercise of this Pre-funded Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of shares of Pre-funded Warrant Stock as to which this Pre-funded Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(c)). The Holder shall not be required to deliver the original of this Pre-funded Warrant in order to effect an exercise hereunder unless no shares of Pre-funded Warrant Stock are issuable thereafter. Execution and delivery of an Exercise Notice with respect to less than all of the shares of Pre-funded Warrant Stock shall have the same effect as cancellation of the original of this Pre-funded Warrant and grant of a new Pre-funded Warrant, evidencing the right to purchase the remaining number of shares of Pre-funded Warrant Stock. Execution and delivery of an Exercise Notice for all of the then-remaining shares of Pre-funded Warrant Stock shall have the same effect as cancellation of the original of this Pre-funded Warrant after delivery of the shares of Pre-funded Warrant Stock in accordance with the terms hereof. On or before the second (2nd) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by e-mail or other electronic means an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Exercise Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule, or regulation for the settlement of a trade of such shares of Pre-funded Warrant Stock initiated on the applicable Exercise Date), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”), upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or his designee’s balance account with DTC through its Deposit and Withdrawal at Custodian service or (Y) if the Transfer Agent is not participating in the DTC FAST Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or his designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the shares of Pre-funded Warrant Stock with respect to which this Pre-funded Warrant has been exercised, irrespective of the date such shares of Pre-funded Warrant Stock are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such shares of Pre-funded Warrant Stock (as the case may be). If this Pre-funded Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of shares of Pre-funded Warrant Stock represented by this Pre-funded Warrant submitted for exercise is greater than the number of shares of Pre-funded Warrant Stock being acquired upon an exercise and upon surrender of this Pre-funded Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, generate and deliver to the Holder (or his designee) a new Pre-funded Warrant (in accordance with Section 7(d)) representing the right to purchase the number of shares of Pre-funded Warrant Stock purchasable immediately prior to such exercise under this Pre-funded Warrant, less the number of shares of Pre-funded Warrant Stock with respect to which this Pre-funded Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Pre-funded Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance, and similar taxes, costs, and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of shares of Pre-funded Warrant Stock upon exercise of this Pre-funded Warrant. The Company’s failure to deliver shares of Pre-funded Warrant Stock to the Holder on or prior to the later of (i) three (3) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule, or regulation for the settlement of a trade of such shares of Pre-funded Warrant Stock initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price or valid notice of a Cashless Exercise (such later date, the “Stock Delivery Date”) shall be deemed to be a breach of this Pre-funded Warrant. Notwithstanding anything to the contrary contained in this Pre-funded Warrant, after the effective date of a registration statement registering for resale any shares of Pre-funded Warrant Stock issuable hereunder and prior to the Holder’s receipt of notice that such registration statement is no longer available, the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or his designee) in connection with any sale of shares of Pre-funded Warrat Stock with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular registration statement to the extent applicable, and for which the Holder has not yet settled. From and after the Grant Date through and including the Expiration Date, the Company shall maintain a transfer agent that participates in the DTC FAST Program.
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(b) Exercise Price. The aggregate exercise price of this Pre-funded Warrant ($0.9471 per share of Pre-funded Warrant Stock), except for a nominal exercise price of $0.001 per share of Pre-funded Warrant Stock, was pre-funded to the Company on the Grant Date in connection with the transactions contemplated by the Stock Exchange Agreement and, consequently, no additional consideration (other than the nominal exercise price of $0.001 per share of Pre-funded Warrant Stock) shall be required to be paid by the Holder to the Company to effect an exercise of this Pre-funded Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever. The remaining unpaid exercise price per share of Pre-funded Warrant Stock under this Pre-funded Warrant shall be $0.001, subject to adjustment hereunder (the “Exercise Price”).
(c) Company’s Failure to Deliver Securities Timely. If the Company shall fail, for any reason or for no reason, on or prior to the Stock Delivery Date, to issue and deliver to the Holder (or his designee) a certificate for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled and register such shares of Pre-funded Warrant Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC FAST Program, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise of this Pre-funded Warrant (as the case may be) (a “Delivery Failure”), then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Stock Delivery Date and during such Delivery Failure an amount equal to 1% of the product of (A) the number of shares of Common Stock not issued to the Holder on or prior to the Stock Delivery Date and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Exercise Date and ending on the applicable Stock Delivery Date, and (Y) the Holder, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Pre-funded Warrant that has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing, if, on or prior to the Stock Delivery Date the Transfer Agent is not participating in the DTC FAST Program, the Company shall fail to issue and deliver to the Holder (or his designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC FAST Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below, and if, on or after such Stock Delivery Date, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation so to issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares of Pre-funded Warrant Stock) shall terminate, or (ii) promptly honor its obligation so to issue and deliver to the Holder a certificate or certificates representing such shares of Pre-funded Warrant Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Pre-funded Warrant Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”). Nothing shall limit the Holder’s right to pursue any other remedies available to him hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Pre-funded Warrant as required pursuant to the terms hereof.
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(d) Cashless Exercise. If at any time following the 6-month anniversary of the Initial Exercisability Date, there is no effective Registration Statement covering the resale of the shares of Pre-funded Warrant Stock by the Holder, then this Pre-funded Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of shares of Pre-funded Warrant Stock equal to the quotient obtained by dividing [(A x B) – (A x C)] by (D), where:
| (A) = | the number of shares of Pre-funded Warrant Stock that would be issuable upon exercise of this Pre-funded Warrant in accordance with the terms of this Pre-funded Warrant if such exercise were by means of a cash exercise rather than a cashless exercise; |
| (B) = | the greater of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Pre-funded Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Notice or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election; |
| (C) = | the Exercise Price of this Pre-funded Warrant, as adjusted hereunder, at the time of such exercise; and |
| (D) = | the lesser of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Pre-funded Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Notice or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election. |
If shares of Pre-funded Warrant Stock are issued in such a cashless exercise, the parties acknowledge and agree that, in accordance with Section 3(a)(9) of the Securities Act, the shares of Pre-funded Warrant Stock shall take on the characteristics of the Pre-funded Warrants being exercised, and the holding period of the Pre-funded Warrants being exercised may be tacked on to the holding period of the shares of Pre-funded Warrant Stock. The Company agrees not to take any position contrary to this Section 1(d).
(e) For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the Exchange Date, it is intended that the shares of Pre-funded Warrant Stock issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the shares of Pre-funded Warrant Stock shall be deemed to have commenced, on the date this Pre-funded Warrant was originally issued pursuant to the Stock Exchange Agreement.
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(f) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of shares of Pre-funded Warrant Stock to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of shares of Pre-funded Warrant Stock that are not disputed and resolve such dispute in accordance with Section 13.
(g) Limitations on Exercises. The Company shall not effect the exercise of any portion of this Pre-funded Warrant, and the Holder shall not have the right to exercise any portion of this Pre-funded Warrant, pursuant to the terms and conditions of this Pre-funded Warrant and any such exercise shall be null and void and treated as if never made, to the extent that, after giving effect to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Pre-funded Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Pre-funded Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants, including other SEA Pre-funded Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(g). For purposes of this Section 1(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Pre-funded Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then-outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(g), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Pre-funded Warrant Stock to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by e-mail or other electronic means to the Holder the number of shares of Common Stock then-outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Pre-funded Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Pre-funded Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of SEA Pre-funded Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Pre-funded Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Pre-funded Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(g) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(g) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Pre-funded Warrant.
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(h) Reservation of Shares.
(i) Required Reserve Amount. So long as this Pre-funded Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this Pre-funded Warrant a number of shares of Common Stock at least equal to three (3) times the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the SEA Pre-funded Warrants then-outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(h)(i) be reduced other than proportionally in connection with (i) any exercise or redemption of SEA Pre-funded Warrants or such other event covered by Section 2(a) below, or (ii) upon an exercise of a Pre-funded Warrant, the shares reserved shall be reduced by the same number of shares of Pre-funded Warrant Stock issued. The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the SEA Pre-funded Warrants based on number of shares of Common Stock issuable upon exercise of SEA Pre-funded Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a Holder shall sell or otherwise transfer any of such holder’s SEA Pre-funded Warrants, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any SEA Pre-funded Warrants shall be allocated to the remaining holders of SEA Pre-funded Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the SEA Pre-funded Warrants then held by such holders (without regard to any limitations on exercise).
(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(h)(i) above, and not in limitation thereof, at any time while any of the SEA Pre-funded Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all actions necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SEA Pre-funded Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of this Pre-funded Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Pre-funded Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(h); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this Section 1(h) shall limit any obligations of the Company under any provision of the Stock Exchange Agreement.
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2. ADJUSTMENT OF NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK. The number of shares of Pre-funded Warrant Stock issuable upon exercise of this Pre-funded Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on or after the Exchange Date, (i) subdivides (by any stock split, stock dividend, recapitalization, or otherwise) its then-outstanding shares of Common Stock into a larger number of shares or (ii) combines (by combination, reverse stock split, or otherwise) its then-outstanding shares of Common Stock into a smaller number of shares, then, in each such case, the number of shares of Pre-funded Warrant Stock shall be proportionately adjusted, but the Exercise Price shall remain unchanged. Any adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such subdivision or combination.
(b) Potential Decrease in Number of Shares of Pre-funded Warrant Stock. If, as of any Exercise Date, the Nasdaq Minimum Price exceeds Acquisition Stock Issuance Price (as that term is defined in the Stock Exchange Agreement), then the number of shares of Pre-funded Warrant Stock that may be purchased upon exercise of this Pre-funded Warrant shall be decreased proportionately, so that, after such adjustment, the aggregate number of shares of Pre-funded Warrant Stock shall be reduced in accordance with the following formula:
STEP 1: DIVIDE ACQUISITION STOCK ISSUANCE PRICE BY NASDAQ MINIMUM PRICE
STEP 2: MULTIPLY STEP 1 RESULT BY ORIGINAL NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK
STEP 3 STEP 2 RESULT IS THE ADJUSTED NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK
ANY SUCH ADJUSTMENT SHALL BE ON A PER-EXERCISE DATE BASIS.
(c) Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock.
(d) Voluntary Adjustment By Company. The Company may at any time during the term of this Pre-funded Warrant, with the prior written consent of the Required Holders (as defined in the Stock Exchange Agreement), reduce the then-current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(e) Lock-up of Shares of Pre-funded Warrant Stock. Except as set forth below, from and after the exercise of this Pre-funded Warrant, through and including the twenty-four-month anniversary thereof, each initial exercising party of this Pre-funded Warrant shall not, directly or indirectly, sell, give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such exercising party’s shares of Pre-funded Warrant Stock, independently of whether such prohibited transaction would or could, directly or indirectly, provide any economic value to such exercising party (any such enumerated transaction or any transaction analogous thereto, a “Pre-funded Warrant Stock Lock-up”). Notwithstanding the above, twenty-five percent (25%) of the shares of Pre-funded Warrant Stock that are the subject of this Pre-funded Warrant Stock Lock-up shall each be released therefrom in six-month increments, commencing on the six-month anniversary of the relevant exercise of this Pre-funded Warrant; provided, however, that, from and after the six-month anniversary of the relevant exercise of this Pre-funded Warrant, the Company, in its sole and absolute discretion, may, at any time thereafter or from time to time thereafter, release the shares of Pre-funded Warrant Stock, in whole or in part, from the provisions of this Pre-funded Warrant Stock Lock-up for any reason or for no reason.
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(f) Leak-out of Shares of Pre-funded Warrant Stock. From and after the expiration of the relevant Pre-funded Warrant Stock Lock-up period, each initial exercising party of this Pre-funded Warrant has the right, but not the obligation, to sell into the public markets on each trading day that quantum of shares of Pre-funded Warrant Stock that are no longer subject to the Pre-funded Warrant Stock Lock-up in an amount that does not exceed 10% of the average number of shares of Company Common Stock sold in the public markets during each of the twenty (20) trading days preceding the date on which the initial exercising party of this Pre-funded Warrant sells any of such shares of Pre-funded Warrant Stock, the daily trading volume as reflected on nasdaq.com (the “Pre-funded Warrant Stock Daily Leak-out Volume”). The Pre-funded Warrant Stock Daily Leak-out Volume is not cumulative; that is to say, that it is a trading day “use it or lose it” right. Further, the gross price of each such share sold by the initial exercising party of this Pre-funded Warrant shall be at not less than the “best bid” at the time that the relevant initial exercising party of this Pre-funded Warrant places a sell order with his broker, no matter how such sell order is placed. If the initial exercising party of this Pre-funded Warrant, in a transaction not involving the public markets, shall sell or otherwise give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such grantee’s shares of Pre-funded Warrant Stock, then (A) as a condition precedent to the closing of such a transaction, such third party shall execute an agreement in favor of the Company that contains leak-out provisions substantially similar to the leak-out provisions set forth in this section and (B) any sales into the public markets by such third party shall be aggregated on a daily basis with any sales into the public markets by the initial exercising party of this Pre-funded Warrant. Notwithstanding anything to the contrary that may be provided in this section, the Pre-funded Warrant Stock Daily Leak-out Volume shall be adjusted for forward stock splits, reverse stock splits (consolidations), and recapitalizations of shares of Company Common Stock and similar transactions affecting all holders of Company Common Stock equally.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness, or any other assets by way of a dividend, spin-off, reclassification, corporate rearrangement, scheme of arrangement, or other similar transaction) (a “Distribution”) at any time after the Initial Exercisability Date of this Pre-funded Warrant, then, in each such case, the Company shall set aside a sufficient portion of such Distribution such that upon any subsequent exercise of this Pre-funded Warrant by the Holder the Holder shall be entitled to receive such Distribution for each share of Pre-funded Warrant Stock acquired upon such exercise (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution upon any exercise of this Pre-funded Warrant would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
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4. FUNDAMENTAL TRANSACTIONS.
(a) Fundamental Transactions. If, at any time while this Pre-funded Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any Fundamental Transaction (as defined below), then, upon any subsequent exercise of this Pre-funded Warrant, the Holder shall have the right to receive, for each share of Pre-funded Warrant Stock that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 1(g) on the exercise of this Pre-funded Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Pre-funded Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Pre-funded Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Pre-funded Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction contemplated by clause (f) of the definition thereof in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Pre-funded Warrant and the other Transaction Documents in accordance with the provisions of this Section 4(a) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Pre-funded Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Pre-funded Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Pre-funded Warrant (without regard to any limitations on the exercise of this Pre-funded Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Pre-funded Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Pre-funded Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Pre-funded Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. For purposes hereof, “Fundamental Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d 5(b)(1) promulgated under the Exchange Act), other than a legal entity majority owned by, or a group wholly consisting of, officers and directors of the Company and their Affiliates, of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of any class of its Preferred Stock and the securities issued together with any such class of Preferred Stock), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (d) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, or (e) to the extent not covered by clauses (a) – (d) above, the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property. Notwithstanding the foregoing or anything contained herein to the contrary, in the event of a Fundamental Transaction in which the Company’s stockholders receive consideration consisting primarily of cash and/or marketable securities and in which the Corporation ceases to be listed or quoted on a Trading Market, the Holder shall only have the right to receive the Alternate Consideration upon any exercise of this Pre-funded Warrant.
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5. NON-CIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Pre-funded Warrant, and will at all times in good faith carry out all the provisions of this Pre-funded Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Pre-funded Warrant above the Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Pre-funded Warrant.
6. PRE-FUNDED WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Pre-funded Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Pre-funded Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Pre-funded Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the shares of Pre-funded Warrant Stock which it is then entitled to receive upon the due exercise of this Pre-funded Warrant. In addition, nothing contained in this Pre-funded Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Pre-funded Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
7. RE-GRANT OF PRE-FUNDED WARRANTS.
(a) Transfer of Pre-funded Warrant. If this Pre-funded Warrant is to be transferred, the Holder shall surrender this Pre-funded Warrant to the Company, whereupon the Company will forthwith generate and deliver upon the order of the Holder a new Pre-funded Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of shares of Pre-funded Warrant Stock being transferred by the Holder and, if less than the total number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant is being transferred, a new Pre-funded Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of shares of Pre-funded Warrant Stock not being transferred.
(b) Lost, Stolen, or Mutilated Pre-funded Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Pre-funded Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft, or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Pre-funded Warrant, the Company shall execute and deliver to the Holder a new Pre-funded Warrant (in accordance with Section 7(d)) representing the right to purchase the shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant.
(c) Exchangeable for Multiple Pre-funded Warrants. This Pre-funded Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Pre-funded Warrant or Pre-funded Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant, and each such new Pre-funded Warrant will represent the right to purchase such portion of such shares of Pre-funded Warrant Stock as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.
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(d) Grant of New Pre-funded Warrants. Whenever the Company is required to generate a new Pre-funded Warrant pursuant to the terms of this Pre-funded Warrant, such new Pre-funded Warrant (i) shall be of like tenor with this Pre-funded Warrant, (ii) shall represent, as indicated on the face of such new Pre-funded Warrant, the right to purchase the shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant (or in the case of a new Pre-funded Warrant being generated pursuant to Section 7(a) or Section 7(c)), the shares of Pre-funded Warrant Stock designated by the Holder, which, when added to the number of shares of Common Stock underlying the other new Pre-funded Warrants granted in connection with such grant, does not exceed the number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant), (iii) shall have a grant date, as indicated on the face of such new Pre-funded Warrant, which is the same as the Grant Date, and (iv) shall have the same rights and conditions as this Pre-funded Warrant.
8. NOTICES. Whenever notice is required to be given under this Pre-funded Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 10.6 of the Stock Exchange Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Pre-funded Warrant (other than the issuance of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of shares of Pre-funded Warrant Stock, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder, (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction and (iv) within one (1) Business Day of the occurrence of any breach of terms of any Transaction Document, setting forth in reasonable detail any material events with respect to such breach and any efforts by the Company to cure such breach. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Stock Exchange Agreement) pursuant to a Current Report on Form 8-K. If the Company or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Pre-funded Warrant (other than Section 1(g)) may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders (as defined in the Stock Exchange Agreement). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
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10. SEVERABILITY. If any provision of this Pre-funded Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Pre-funded Warrant so long as this Pre-funded Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11. GOVERNING LAW. This Pre-funded Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Pre-funded Warrant shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 10.6 of the Stock Exchange Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The State of Nevada, Clark County, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS PRE-FUNDED WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION; HEADINGS. This Pre-funded Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Pre-funded Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Pre-funded Warrant. Terms used in this Pre-funded Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Stock Exchange Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
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13. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, or fair market value or the arithmetic calculation of the number of shares of Pre-funded Warrant Stock (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, or such fair market value or such arithmetic calculation of the number of shares of Pre-funded Warrant Stock (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at his sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 13 and (B) written documentation supporting his or its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives his or its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
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(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute relating to the Exercise Price includes, without limitation, disputes as to the proper application of the adjustment provisions set forth in Secion 2, (iii) the terms of this Pre-funded Warrant and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute (including, without limitation, determining the proper application of the adjustment provisions set forth in Section 2 and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Pre-funded Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in his sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v) nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 13).
14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Pre-funded Warrant shall be cumulative and in addition to all other remedies available under this Pre-funded Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Pre-funded Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Pre-funded Warrant shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Pre-funded Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares of Common Stock and certificates therefor, contemplated hereby upon the exercise of this Pre-funded Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or his agent on his behalf.
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15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. IF (A) THIS PRE-FUNDED WARRANT IS PLACED IN THE HANDS OF AN ATTORNEY FOR COLLECTION OR ENFORCEMENT OR IS COLLECTED OR ENFORCED THROUGH ANY LEGAL PROCEEDING OR THE HOLDER OTHERWISE TAKES ACTION TO COLLECT AMOUNTS DUE UNDER THIS PRE-FUNDED WARRANT OR TO ENFORCE THE PROVISIONS OF THIS PRE-FUNDED WARRANT OR (B) THERE OCCURS ANY BANKRUPTCY, REORGANIZATION, RECEIVERSHIP OF THE COMPANY OR OTHER PROCEEDINGS AFFECTING COMPANY CREDITORS’ RIGHTS AND INVOLVING A CLAIM UNDER THIS PRE-FUNDED WARRANT, THEN THE COMPANY SHALL PAY THE COSTS INCURRED BY THE HOLDER FOR SUCH COLLECTION, ENFORCEMENT OR ACTION OR IN CONNECTION WITH SUCH BANKRUPTCY, REORGANIZATION, RECEIVERSHIP OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND DISBURSEMENTS.
16. TRANSFER. This Pre-funded Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required by the Stock Exchange Agreement.
17. CERTAIN DEFINITIONS. For purposes of this Pre-funded Warrant, the following terms shall have the following meanings:
(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) “Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Grant Date, directly or indirectly managed or advised by the Holder’s investment manager or any of his Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing, and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(e) “Bid Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in any tier of the OTC Markets Group, Inc. as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
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(f) “Bloomberg” means Bloomberg, L.P.
(g) “Business Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(h) “Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported by in any tier of the OTC Markets Group Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(i) “Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(j) “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTC Link or any over-the-counter quotation tier of the OTC Markets Group Inc.
(k) “Expiration Date” means the date that is the five (5)-year anniversary of the Initial Exercisability Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.
(l) “Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(m) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(n) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity, or a government or any department or agency thereof.
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(o) “Principal Market” means The Nasdaq Capital Market.
(p) “SEC” means the United States Securities and Exchange Commission or the successor thereto.
(q) “Subsidiary” means, with respect to a specified Person, any corporation, or other entity, of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body and shall include any corporate, partnership, joint venture, or other entity over which it exercises direction or control or which is in a like relation to a subsidiary.
(r) “Subject Entity” means any Person, Persons, or Group or any Affiliate or associate of any such Person, Persons, or Group.
(s) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(t) “Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price or trading volume determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(u) “Transaction Documents” means this Pre-funded Warrant, the Stock Exchange Agreement, and any agreement or document to be executed pursuant to this Pre-funded Warrant or the Stock Exchange Agreement.
(v) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by in any tier of the OTC Markets Group Inc. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization, or other similar transaction during such period.
** signature page follows **
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IN WITNESS WHEREOF, the Company has caused this Pre-funded Warrant to Purchase Common Stock to be duly executed as of the Grant Date set out above.
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Acting Chief Executive Officer | |
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
ALT5 SIGMA CORPORATION
The undersigned holder hereby elects to exercise the Pre-funded Warrant to Purchase Common Stock No. _______ (the “Pre-funded Warrant”) of ALT5 Sigma Corporation, a Nevada corporation (the “Company”) as specified below. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Pre-funded Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
| ☐ | a “Cash Exercise” with respect to _________________ shares of Pre-funded Warrant Stock; and/or |
| ☐ | a “Cashless Exercise” with respect to _______________ shares of Pre-funded Warrant Stock. |
In the event that the Holder has elected a Cashless Exercise with respect to some or all of the shares of Pre-funded Warrant Stock to be issued pursuant hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the shares of Pre-funded Warrant Stock to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Pre-funded Warrant.
3. Delivery of shares of Pre-funded Warrant Stock. The Company shall deliver to Holder, or his designee or agent as specified below, __________ shares of Common Stock in accordance with the terms of the Pre-funded Warrant. Delivery shall be made to Holder, or for his benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | |
| ☐ | Check here if requesting delivery by Deposit and Withdrawal at Custodian service, as follows: |
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: |
| Date: _____________ __, | ||
| Name of Registered Holder | ||
| By: | ||
| Name: | ||
| Title: | ||
| Tax ID:__________________________________________ | |
| E-mail Address:___________________________________ |
EXHIBIT B
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above-indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 202_, from the Company and acknowledged and agreed to by _______________.
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 4.12
EXHIBIT B-2
[to Stock Exchange Agreement]
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS PRE-FUNDED WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(A) OF THIS PRE-FUNDED WARRANT.
ALT5 SIGMA CORPORATION
Pre-funded Warrant to Purchase Common Stock
Pre-funded Warrant No.: [__]
Date of Grant: April [__], 2026 (the “Grant Date”)
ALT5 Sigma Corporation, a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [____________], the registered holder hereof or his permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Pre-funded Warrant (including any pre-funded Warrants granted in exchange, transfer, or replacement hereof, this “Pre-funded Warrant”), at any time or times on or after the date on which the Company has generated US GAAP-compliant annual Modified Operating Income, applied consistently with the Company’s historical accounting policies, on a trailing four consecutive Company-quarterly reporting basis of not less than $8,000,000, as certified by the principal financial officer of the Company (the “Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), that number (subject to adjustment as provided herein) of fully paid and non-assessable shares of Common Stock (as defined below) (the “Pre-funded Warrant Stock”), equal to that amount obtained by dividing (i) [__________] [Note: should be an aggregate of 16,000,000 for all 4 Block Street stockholders], by (ii) the Exercise Price. Except as otherwise defined herein, capitalized terms in this Pre-funded Warrant shall have the meanings set forth in Section 17. This Pre-funded Warrant is one of the Pre-funded Warrants (the “SEA Pre-funded Warrants”) granted pursuant to that certain Stock Exchange Agreement (the “Stock Exchange Agreement”), dated April [___], 2026 (the “Exchange Date”), by and among the Company, Block Street Corp., a Nevada corporation (“Block Street”), and the four stockholders of Block Street.
1. EXERCISE OF PRE-FUNDED WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(g)), this Pre-funded Warrant may be exercised by the Holder on any day on or after the Initial Exercisability Date (each, an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”) of the Holder’s election to exercise this Pre-funded Warrant. Within one (1) Trading Day following an exercise of this Pre-funded Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of shares of Pre-funded Warrant Stock as to which this Pre-funded Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(c)). The Holder shall not be required to deliver the original of this Pre-funded Warrant in order to effect an exercise hereunder unless no shares of Pre-funded Warrant Stock are issuable thereafter. Execution and delivery of an Exercise Notice with respect to less than all of the shares of Pre-funded Warrant Stock shall have the same effect as cancellation of the original of this Pre-funded Warrant and grant of a new Pre-funded Warrant, evidencing the right to purchase the remaining number of shares of Pre-funded Warrant Stock. Execution and delivery of an Exercise Notice for all of the then-remaining shares of Pre-funded Warrant Stock shall have the same effect as cancellation of the original of this Pre-funded Warrant after delivery of the shares of Pre-funded Warrant Stock in accordance with the terms hereof. On or before the second (2nd) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by e-mail or other electronic means an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Exercise Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule, or regulation for the settlement of a trade of such shares of Pre-funded Warrant Stock initiated on the applicable Exercise Date), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”), upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or his designee’s balance account with DTC through its Deposit and Withdrawal at Custodian service or (Y) if the Transfer Agent is not participating in the DTC FAST Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or his designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the shares of Pre-funded Warrant Stock with respect to which this Pre-funded Warrant has been exercised, irrespective of the date such shares of Pre-funded Warrant Stock are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such shares of Pre-funded Warrant Stock (as the case may be). If this Pre-funded Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of shares of Pre-funded Warrant Stock represented by this Pre-funded Warrant submitted for exercise is greater than the number of shares of Pre-funded Warrant Stock being acquired upon an exercise and upon surrender of this Pre-funded Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, generate and deliver to the Holder (or his designee) a new Pre-funded Warrant (in accordance with Section 7(d)) representing the right to purchase the number of shares of Pre-funded Warrant Stock purchasable immediately prior to such exercise under this Pre-funded Warrant, less the number of shares of Pre-funded Warrant Stock with respect to which this Pre-funded Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Pre-funded Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance, and similar taxes, costs, and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of shares of Pre-funded Warrant Stock upon exercise of this Pre-funded Warrant. The Company’s failure to deliver shares of Pre-funded Warrant Stock to the Holder on or prior to the later of (i) three (3) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule, or regulation for the settlement of a trade of such shares of Pre-funded Warrant Stock initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price or valid notice of a Cashless Exercise (such later date, the “Stock Delivery Date”) shall be deemed to be a breach of this Pre-funded Warrant. Notwithstanding anything to the contrary contained in this Pre-funded Warrant, after the effective date of a registration statement registering for resale any shares of Pre-funded Warrant Stock issuable hereunder and prior to the Holder’s receipt of notice that such registration statement is no longer available, the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or his designee) in connection with any sale of shares of Pre-funded Warrat Stock with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular registration statement to the extent applicable, and for which the Holder has not yet settled. From and after the Grant Date through and including the Expiration Date, the Company shall maintain a transfer agent that participates in the DTC FAST Program.
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(b) Exercise Price. The aggregate exercise price of this Pre-funded Warrant ($0.9471 per share of Pre-funded Warrant Stock), except for a nominal exercise price of $0.001 per share of Pre-funded Warrant Stock, was pre-funded to the Company on the Grant Date in connection with the transactions contemplated by the Stock Exchange Agreement and, consequently, no additional consideration (other than the nominal exercise price of $0.001 per share of Pre-funded Warrant Stock) shall be required to be paid by the Holder to the Company to effect an exercise of this Pre-funded Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever. The remaining unpaid exercise price per share of Pre-funded Warrant Stock under this Pre-funded Warrant shall be $0.001, subject to adjustment hereunder (the “Exercise Price”).
(c) Company’s Failure to Deliver Securities Timely. If the Company shall fail, for any reason or for no reason, on or prior to the Stock Delivery Date, to issue and deliver to the Holder (or his designee) a certificate for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled and register such shares of Pre-funded Warrant Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC FAST Program, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise of this Pre-funded Warrant (as the case may be) (a “Delivery Failure”), then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Stock Delivery Date and during such Delivery Failure an amount equal to 1% of the product of (A) the number of shares of Common Stock not issued to the Holder on or prior to the Stock Delivery Date and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Exercise Date and ending on the applicable Stock Delivery Date, and (Y) the Holder, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Pre-funded Warrant that has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing, if, on or prior to the Stock Delivery Date the Transfer Agent is not participating in the DTC FAST Program, the Company shall fail to issue and deliver to the Holder (or his designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC FAST Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below, and if, on or after such Stock Delivery Date, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation so to issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares of Pre-funded Warrant Stock) shall terminate, or (ii) promptly honor its obligation so to issue and deliver to the Holder a certificate or certificates representing such shares of Pre-funded Warrant Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Pre-funded Warrant Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Pre-funded Warrant Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”). Nothing shall limit the Holder’s right to pursue any other remedies available to him hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Pre-funded Warrant as required pursuant to the terms hereof.
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(d) Cashless Exercise. If at any time following the 6-month anniversary of the Initial Exercisability Date, there is no effective Registration Statement covering the resale of the shares of Pre-funded Warrant Stock by the Holder, then this Pre-funded Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of shares of Pre-funded Warrant Stock equal to the quotient obtained by dividing [(A x B) – (A x C)] by (D), where:
| (A) = | the number of shares of Pre-funded Warrant Stock that would be issuable upon exercise of this Pre-funded Warrant in accordance with the terms of this Pre-funded Warrant if such exercise were by means of a cash exercise rather than a cashless exercise; |
| (B) = | the greater of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Pre-funded Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Notice or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election; |
| (C) = | the Exercise Price of this Pre-funded Warrant, as adjusted hereunder, at the time of such exercise; and |
| (D) = | the lesser of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Pre-funded Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Notice or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election. |
If shares of Pre-funded Warrant Stock are issued in such a cashless exercise, the parties acknowledge and agree that, in accordance with Section 3(a)(9) of the Securities Act, the shares of Pre-funded Warrant Stock shall take on the characteristics of the Pre-funded Warrants being exercised, and the holding period of the Pre-funded Warrants being exercised may be tacked on to the holding period of the shares of Pre-funded Warrant Stock. The Company agrees not to take any position contrary to this Section 1(d).
(e) For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the Exchange Date, it is intended that the shares of Pre-funded Warrant Stock issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the shares of Pre-funded Warrant Stock shall be deemed to have commenced, on the date this Pre-funded Warrant was originally issued pursuant to the Stock Exchange Agreement.
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(f) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of shares of Pre-funded Warrant Stock to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of shares of Pre-funded Warrant Stock that are not disputed and resolve such dispute in accordance with Section 13.
(g) Limitations on Exercises. The Company shall not effect the exercise of any portion of this Pre-funded Warrant, and the Holder shall not have the right to exercise any portion of this Pre-funded Warrant, pursuant to the terms and conditions of this Pre-funded Warrant and any such exercise shall be null and void and treated as if never made, to the extent that, after giving effect to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Pre-funded Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Pre-funded Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants, including other SEA Pre-funded Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(g). For purposes of this Section 1(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Pre-funded Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then-outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(g), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Pre-funded Warrant Stock to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by e-mail or other electronic means to the Holder the number of shares of Common Stock then-outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Pre-funded Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Pre-funded Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of SEA Pre-funded Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Pre-funded Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Pre-funded Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(g) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(g) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Pre-funded Warrant.
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(h) Reservation of Shares.
(i) Required Reserve Amount. So long as this Pre-funded Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this Pre-funded Warrant a number of shares of Common Stock at least equal to three (3) times the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the SEA Pre-funded Warrants then-outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(h)(i) be reduced other than proportionally in connection with (i) any exercise or redemption of SEA Pre-funded Warrants or such other event covered by Section 2(a) below, or (ii) upon an exercise of a Pre-funded Warrant, the shares reserved shall be reduced by the same number of shares of Pre-funded Warrant Stock issued. The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the SEA Pre-funded Warrants based on number of shares of Common Stock issuable upon exercise of SEA Pre-funded Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a Holder shall sell or otherwise transfer any of such holder’s SEA Pre-funded Warrants, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any SEA Pre-funded Warrants shall be allocated to the remaining holders of SEA Pre-funded Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the SEA Pre-funded Warrants then held by such holders (without regard to any limitations on exercise).
(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(h)(i) above, and not in limitation thereof, at any time while any of the SEA Pre-funded Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all actions necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SEA Pre-funded Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of this Pre-funded Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Pre-funded Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(h); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this Section 1(h) shall limit any obligations of the Company under any provision of the Stock Exchange Agreement.
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2. ADJUSTMENT OF NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK. The number of shares of Pre-funded Warrant Stock issuable upon exercise of this Pre-funded Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on or after the Exchange Date, (i) subdivides (by any stock split, stock dividend, recapitalization, or otherwise) its then-outstanding shares of Common Stock into a larger number of shares or (ii) combines (by combination, reverse stock split, or otherwise) its then-outstanding shares of Common Stock into a smaller number of shares, then, in each such case, the number of shares of Pre-funded Warrant Stock shall be proportionately adjusted, but the Exercise Price shall remain unchanged. Any adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such subdivision or combination.
(b) Potential Decrease in Number of Shares of Pre-funded Warrant Stock. If, as of any Exercise Date, the Nasdaq Minimum Price exceeds Acquisition Stock Issuance Price (as that term is defined in the Stock Exchange Agreement), then the number of shares of Pre-funded Warrant Stock that may be purchased upon exercise of this Pre-funded Warrant shall be decreased proportionately, so that, after such adjustment, the aggregate number of shares of Pre-funded Warrant Stock shall be reduced in accordance with the following formula:
STEP 1: DIVIDE ACQUISITION STOCK ISSUANCE PRICE BY NASDAQ MINIMUM PRICE
STEP 2: MULTIPLY STEP 1 RESULT BY ORIGINAL NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK
STEP 3 STEP 2 RESULT IS THE ADJUSTED NUMBER OF SHARES OF PRE-FUNDED WARRANT STOCK
ANY SUCH ADJUSTMENT SHALL BE ON A PER-EXERCISE DATE BASIS.
(c) Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock.
(d) Voluntary Adjustment By Company. The Company may at any time during the term of this Pre-funded Warrant, with the prior written consent of the Required Holders (as defined in the Stock Exchange Agreement), reduce the then-current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(e) Lock-up of Shares of Pre-funded Warrant Stock. Except as set forth below, from and after the exercise of this Pre-funded Warrant, through and including the twenty-four-month anniversary thereof, each initial exercising party of this Pre-funded Warrant shall not, directly or indirectly, sell, give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such exercising party’s shares of Pre-funded Warrant Stock, independently of whether such prohibited transaction would or could, directly or indirectly, provide any economic value to such exercising party (any such enumerated transaction or any transaction analogous thereto, a “Pre-funded Warrant Stock Lock-up”). Notwithstanding the above, twenty-five percent (25%) of the shares of Pre-funded Warrant Stock that are the subject of this Pre-funded Warrant Stock Lock-up shall each be released therefrom in six-month increments, commencing on the six-month anniversary of the relevant exercise of this Pre-funded Warrant; provided, however, that, from and after the six-month anniversary of the relevant exercise of this Pre-funded Warrant, the Company, in its sole and absolute discretion, may, at any time thereafter or from time to time thereafter, release the shares of Pre-funded Warrant Stock, in whole or in part, from the provisions of this Pre-funded Warrant Stock Lock-up for any reason or for no reason.
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(f) Leak-out of Shares of Pre-funded Warrant Stock. From and after the expiration of the relevant Pre-funded Warrant Stock Lock-up period, each initial exercising party of this Pre-funded Warrant has the right, but not the obligation, to sell into the public markets on each trading day that quantum of shares of Pre-funded Warrant Stock that are no longer subject to the Pre-funded Warrant Stock Lock-up in an amount that does not exceed 10% of the average number of shares of Company Common Stock sold in the public markets during each of the twenty (20) trading days preceding the date on which the initial exercising party of this Pre-funded Warrant sells any of such shares of Pre-funded Warrant Stock, the daily trading volume as reflected on nasdaq.com (the “Pre-funded Warrant Stock Daily Leak-out Volume”). The Pre-funded Warrant Stock Daily Leak-out Volume is not cumulative; that is to say, that it is a trading day “use it or lose it” right. Further, the gross price of each such share sold by the initial exercising party of this Pre-funded Warrant shall be at not less than the “best bid” at the time that the relevant initial exercising party of this Pre-funded Warrant places a sell order with his broker, no matter how such sell order is placed. If the initial exercising party of this Pre-funded Warrant, in a transaction not involving the public markets, shall sell or otherwise give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such grantee’s shares of Pre-funded Warrant Stock, then (A) as a condition precedent to the closing of such a transaction, such third party shall execute an agreement in favor of the Company that contains leak-out provisions substantially similar to the leak-out provisions set forth in this section and (B) any sales into the public markets by such third party shall be aggregated on a daily basis with any sales into the public markets by the initial exercising party of this Pre-funded Warrant. Notwithstanding anything to the contrary that may be provided in this section, the Pre-funded Warrant Stock Daily Leak-out Volume shall be adjusted for forward stock splits, reverse stock splits (consolidations), and recapitalizations of shares of Company Common Stock and similar transactions affecting all holders of Company Common Stock equally.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness, or any other assets by way of a dividend, spin-off, reclassification, corporate rearrangement, scheme of arrangement, or other similar transaction) (a “Distribution”) at any time after the Initial Exercisability Date of this Pre-funded Warrant, then, in each such case, the Company shall set aside a sufficient portion of such Distribution such that upon any subsequent exercise of this Pre-funded Warrant by the Holder the Holder shall be entitled to receive such Distribution for each share of Pre-funded Warrant Stock acquired upon such exercise (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution upon any exercise of this Pre-funded Warrant would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
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4. FUNDAMENTAL TRANSACTIONS.
(a) Fundamental Transactions. If, at any time while this Pre-funded Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any Fundamental Transaction (as defined below), then, upon any subsequent exercise of this Pre-funded Warrant, the Holder shall have the right to receive, for each share of Pre-funded Warrant Stock that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 1(g) on the exercise of this Pre-funded Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Pre-funded Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Pre-funded Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Pre-funded Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction contemplated by clause (f) of the definition thereof in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Pre-funded Warrant and the other Transaction Documents in accordance with the provisions of this Section 4(a) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Pre-funded Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Pre-funded Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Pre-funded Warrant (without regard to any limitations on the exercise of this Pre-funded Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Pre-funded Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Pre-funded Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Pre-funded Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. For purposes hereof, “Fundamental Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d 5(b)(1) promulgated under the Exchange Act), other than a legal entity majority owned by, or a group wholly consisting of, officers and directors of the Company and their Affiliates, of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of any class of its Preferred Stock and the securities issued together with any such class of Preferred Stock), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (d) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, or (e) to the extent not covered by clauses (a) – (d) above, the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property. Notwithstanding the foregoing or anything contained herein to the contrary, in the event of a Fundamental Transaction in which the Company’s stockholders receive consideration consisting primarily of cash and/or marketable securities and in which the Corporation ceases to be listed or quoted on a Trading Market, the Holder shall only have the right to receive the Alternate Consideration upon any exercise of this Pre-funded Warrant.
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5. NON-CIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Pre-funded Warrant, and will at all times in good faith carry out all the provisions of this Pre-funded Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Pre-funded Warrant above the Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Pre-funded Warrant.
6. PRE-FUNDED WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Pre-funded Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Pre-funded Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Pre-funded Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the shares of Pre-funded Warrant Stock which it is then entitled to receive upon the due exercise of this Pre-funded Warrant. In addition, nothing contained in this Pre-funded Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Pre-funded Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
7. RE-GRANT OF PRE-FUNDED WARRANTS.
(a) Transfer of Pre-funded Warrant. If this Pre-funded Warrant is to be transferred, the Holder shall surrender this Pre-funded Warrant to the Company, whereupon the Company will forthwith generate and deliver upon the order of the Holder a new Pre-funded Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of shares of Pre-funded Warrant Stock being transferred by the Holder and, if less than the total number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant is being transferred, a new Pre-funded Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of shares of Pre-funded Warrant Stock not being transferred.
(b) Lost, Stolen, or Mutilated Pre-funded Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Pre-funded Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft, or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Pre-funded Warrant, the Company shall execute and deliver to the Holder a new Pre-funded Warrant (in accordance with Section 7(d)) representing the right to purchase the shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant.
(c) Exchangeable for Multiple Pre-funded Warrants. This Pre-funded Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Pre-funded Warrant or Pre-funded Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant, and each such new Pre-funded Warrant will represent the right to purchase such portion of such shares of Pre-funded Warrant Stock as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.
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(d) Grant of New Pre-funded Warrants. Whenever the Company is required to generate a new Pre-funded Warrant pursuant to the terms of this Pre-funded Warrant, such new Pre-funded Warrant (i) shall be of like tenor with this Pre-funded Warrant, (ii) shall represent, as indicated on the face of such new Pre-funded Warrant, the right to purchase the shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant (or in the case of a new Pre-funded Warrant being generated pursuant to Section 7(a) or Section 7(c)), the shares of Pre-funded Warrant Stock designated by the Holder, which, when added to the number of shares of Common Stock underlying the other new Pre-funded Warrants granted in connection with such grant, does not exceed the number of shares of Pre-funded Warrant Stock then underlying this Pre-funded Warrant), (iii) shall have a grant date, as indicated on the face of such new Pre-funded Warrant, which is the same as the Grant Date, and (iv) shall have the same rights and conditions as this Pre-funded Warrant.
8. NOTICES. Whenever notice is required to be given under this Pre-funded Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 10.6 of the Stock Exchange Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Pre-funded Warrant (other than the issuance of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of shares of Pre-funded Warrant Stock, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder, (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction and (iv) within one (1) Business Day of the occurrence of any breach of terms of any Transaction Document, setting forth in reasonable detail any material events with respect to such breach and any efforts by the Company to cure such breach. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Stock Exchange Agreement) pursuant to a Current Report on Form 8-K. If the Company or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Pre-funded Warrant (other than Section 1(g)) may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders (as defined in the Stock Exchange Agreement). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
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10. SEVERABILITY. If any provision of this Pre-funded Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Pre-funded Warrant so long as this Pre-funded Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11. GOVERNING LAW. This Pre-funded Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Pre-funded Warrant shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 10.6 of the Stock Exchange Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The State of Nevada, Clark County, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS PRE-FUNDED WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION; HEADINGS. This Pre-funded Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Pre-funded Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Pre-funded Warrant. Terms used in this Pre-funded Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Stock Exchange Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
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13. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, or fair market value or the arithmetic calculation of the number of shares of Pre-funded Warrant Stock (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, or such fair market value or such arithmetic calculation of the number of shares of Pre-funded Warrant Stock (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at his sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 13 and (B) written documentation supporting his or its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives his or its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
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(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute relating to the Exercise Price includes, without limitation, disputes as to the proper application of the adjustment provisions set forth in Secion 2, (iii) the terms of this Pre-funded Warrant and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute (including, without limitation, determining the proper application of the adjustment provisions set forth in Section 2 and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Pre-funded Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in his sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v) nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 13).
14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Pre-funded Warrant shall be cumulative and in addition to all other remedies available under this Pre-funded Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Pre-funded Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Pre-funded Warrant shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Pre-funded Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares of Common Stock and certificates therefor, contemplated hereby upon the exercise of this Pre-funded Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or his agent on his behalf.
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15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. IF (A) THIS PRE-FUNDED WARRANT IS PLACED IN THE HANDS OF AN ATTORNEY FOR COLLECTION OR ENFORCEMENT OR IS COLLECTED OR ENFORCED THROUGH ANY LEGAL PROCEEDING OR THE HOLDER OTHERWISE TAKES ACTION TO COLLECT AMOUNTS DUE UNDER THIS PRE-FUNDED WARRANT OR TO ENFORCE THE PROVISIONS OF THIS PRE-FUNDED WARRANT OR (B) THERE OCCURS ANY BANKRUPTCY, REORGANIZATION, RECEIVERSHIP OF THE COMPANY OR OTHER PROCEEDINGS AFFECTING COMPANY CREDITORS’ RIGHTS AND INVOLVING A CLAIM UNDER THIS PRE-FUNDED WARRANT, THEN THE COMPANY SHALL PAY THE COSTS INCURRED BY THE HOLDER FOR SUCH COLLECTION, ENFORCEMENT OR ACTION OR IN CONNECTION WITH SUCH BANKRUPTCY, REORGANIZATION, RECEIVERSHIP OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND DISBURSEMENTS.
16. TRANSFER. This Pre-funded Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required by the Stock Exchange Agreement.
17. CERTAIN DEFINITIONS. For purposes of this Pre-funded Warrant, the following terms shall have the following meanings:
(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) “Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Grant Date, directly or indirectly managed or advised by the Holder’s investment manager or any of his Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing, and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
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(e) “Bid Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in any tier of the OTC Markets Group, Inc. as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(f) “Bloomberg” means Bloomberg, L.P.
(g) “Business Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(h) “Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported by in any tier of the OTC Markets Group Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(i) “Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(j) “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTC Link or any over-the-counter quotation tier of the OTC Markets Group Inc.
(k) “Expiration Date” means the date that is the five (5)-year anniversary of the Initial Exercisability Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.
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(l) “Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(m) “Modified Operating Income” means Net Operating Income plus realized gains and minus realized losses from the sale of tokens generated by the initial coin offerings operations of Block Street Corp., a Nevada corporation, the Company’s wholly-owned subsidiary.
(n) “Net Operating Income” means as follows, using the following categories as defined in SEC Regulation S-X Section 210.5-03:
Net sales and gross revenues, less
| i. | Costs and expenses applicable to sales and revenues, and |
| ii. | Other operating costs and expenses, and |
| iii. | Selling, general and administrative expenses, and |
| iv. | Provision for doubtful accounts and notes, and |
| v. | Other general expenses. |
(o) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(p) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity, or a government or any department or agency thereof.
(q) “Principal Market” means The Nasdaq Capital Market.
(r) “SEC” means the United States Securities and Exchange Commission or the successor thereto.
(s) “Subsidiary” means, with respect to a specified Person, any corporation, or other entity, of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body and shall include any corporate, partnership, joint venture, or other entity over which it exercises direction or control or which is in a like relation to a subsidiary.
(t) “Subject Entity” means any Person, Persons, or Group or any Affiliate or associate of any such Person, Persons, or Group.
(u) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
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(v) “Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price or trading volume determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(w) “Transaction Documents” means this Pre-funded Warrant, the Stock Exchange Agreement, and any agreement or document to be executed pursuant to this Pre-funded Warrant or the Stock Exchange Agreement.
(x) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by in any tier of the OTC Markets Group Inc. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization, or other similar transaction during such period.
** signature page follows **
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IN WITNESS WHEREOF, the Company has caused this Pre-funded Warrant to Purchase Common Stock to be duly executed as of the Grant Date set out above.
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Acting Chief Executive Officer | |
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
ALT5 SIGMA CORPORATION
The undersigned holder hereby elects to exercise the Pre-funded Warrant to Purchase Common Stock No. _______ (the “Pre-funded Warrant”) of ALT5 Sigma Corporation, a Nevada corporation (the “Company”) as specified below. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Pre-funded Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
| ☐ | a “Cash Exercise” with respect to _________________ shares of Pre-funded Warrant Stock; and/or |
| ☐ | a “Cashless Exercise” with respect to _______________ shares of Pre-funded Warrant Stock. |
In the event that the Holder has elected a Cashless Exercise with respect to some or all of the shares of Pre-funded Warrant Stock to be issued pursuant hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the shares of Pre-funded Warrant Stock to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Pre-funded Warrant.
3. Delivery of shares of Pre-funded Warrant Stock. The Company shall deliver to Holder, or his designee or agent as specified below, __________ shares of Common Stock in accordance with the terms of the Pre-funded Warrant. Delivery shall be made to Holder, or for his benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | |
| ☐ | Check here if requesting delivery by Deposit and Withdrawal at Custodian service, as follows: |
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: |
| Date: _____________ __, | ||
| Name of Registered Holder | ||
| By: | ||
| Name: | ||
| Title: | ||
| Tax ID:__________________________________________ | |
| E-mail Address:___________________________________ |
EXHIBIT B
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above-indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 202_, from the Company and acknowledged and agreed to by _______________.
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.138
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the “Agreement”) dated as of April 20, 2026, is entered into by and among ALT5 Sigma Corporation, a Nevada corporation (the “Purchaser”), Block Street Corp., a Nevada corporation (the “Company”), and the stockholders of the Company listed on Schedule 1 to this Agreement (each, a “Stockholder” and, collectively, the “Stockholders”).
RECITALS
A. The Stockholders are the record and beneficial owners of the number of shares of capital stock of the Company (the “Company Common Stock”) respectively set forth opposite each Stockholder’s name on Schedule 1, which shares of Company Common Stock collectively constitute all of the issued and outstanding shares of capital stock in the Company.
B. Purchaser desires to purchase from the Stockholders, and the Stockholders desire to sell to Purchaser, all, and not less than all, of their shares of Company Common Stock in exchange for the issuance of shares of Acquisition Common Stock and grant of Acquisition Warrant, all on the terms and subject to the conditions set forth in this Agreement (the “Exchange”).
C. As a result of the Exchange, Purchaser will become the sole stockholder of the Company, and the Company will become a wholly-owned subsidiary of Purchaser.
D. Certain capitalized terms used in this Agreement are defined on Exhibit A hereto.
AGREEMENT
In consideration of the agreements, provisions and covenants set forth below, Purchaser, the Company, and each of the Stockholders, hereby agree as follows:
ARTICLE I.
EXCHANGE OF SHARES
1.1 Agreement to Sell.
Upon the terms and subject to all of the conditions contained herein, each of the Stockholders hereby agrees to sell, assign, transfer, and deliver to Purchaser, and Purchaser hereby agrees to purchase and accept from each of the Stockholders, on the Closing Date, all, and not less than all, of the shares of Company Common Stock.
1.2 Exchange Securities.
(a) Acquisition Stock to be Delivered at the Closing. In connection with the sale, assignment, transfer, and delivery of the Company Common Stock by all of the Stockholders to the Purchaser, and upon the terms and subject to all of the conditions contained herein, at the Closing, Purchaser shall issue and distribute an aggregate of that number of shares of Purchaser (collectively, the “Acquisition Stock”) equal to $12,000,000 divided by the Nasdaq Minimum Price, which is $0.9471, which represents the average NOCP of the five trading days preceding the date of this Agreement (the “Acquisition Stock Issuance Price”) to all of the Stockholders on a pro-rata basis based upon their respective record and beneficial ownership interest in the Company, in accordance with Schedule I and as certified by the President of the Company, at the Closing.
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(b) Acquisition Warrants to be Delivered at the Closing. Also in connection with the sale, assignment, transfer and delivery of the Company Common Stock by all of the Stockholders to the Purchaser, and upon the terms and subject to all of the conditions contained herein, at the Closing, the Purchaser shall grant and distribute pre-funded warrants to all of the Stockholders, or their assigns, on a pro-rata basis based upon their respective record and beneficial ownership interest in the Company, such pre-funded warrants exercisable for the purchase of shares of Purchaser Common Stock upon the terms and conditions set forth therein (the “Acquisition Warrants”; the shares of Purchaser Common Stock, underlying the Acquisition Warrants, the shares of “Acquisition Warrant Stock”), in accordance with Schedule I, as follows:
(i) The Stockholders shall be granted Acquisition Warrants representing that number of shares of Purchaser Common Stock valued at $15,000,000, based on the pricing modality set forth in Section (iii), below, that, upon the Company having generated US GAAP-compliant net revenues, applied consistently with ALT5’s historical accounting policies, on a trailing four consecutive Purchaser-quarterly reporting basis of not less than $20,000,000 (the “First Milestone”), as certified by the principal financial officer of Purchaser. The Acquisition Warrants shall be exercisable during the five-year term thereof from and after the last day of such trailing fourth Purchaser quarter.
(ii) The Stockholders shall be granted Acquisition Warrants representing that number of shares of Purchaser Common Stock valued at $16,000,000, based on the pricing modality set forth in Section (iii), below, that, upon the Company having generated US GAAP-compliant annual “Modified Operating Income,”1 applied consistently with ALT5’s historical accounting policies, on a trailing four consecutive Purchaser-quarterly reporting basis of not less than $8,000,000 (the “Second Milestone”), as certified by the principal financial officer of Purchaser. The Acquisition Warrants shall be exercisable during the five-year term thereof from and after the last day of such trailing fourth Purchaser quarter.
(iii) All Acquisition Warrants issued pursuant to this Section 1.2(b) shall (i) have an exercise price which shall be the greater of (A) the Acquisition Stock Issuance Price and (B) the Nasdaq Minimum Price on the dates that the First Milestone and the Second Milestone, respectively, occur, (ii) have a term of five years, and (iii) otherwise be substantially in the form of the Acquisition Warrants attached hereto as Exhibit B-1 and Exhibit B-2. Accordingly, in the event that the Acquisition Warrant exercise price is greater than the Acquisition Stock Issuance Price, the number of shares of Purchaser Common Stock underlying each of the Acquisition Warrants shall be proportionately reduced to maintain such $15,000,000 or $16,000,000 aggregate value.
1 Modified Operating Income is Net Operating Income plus realized gains and minus realized losses from the sale of tokens generated by the initial coin offerings operations of the Purchaser.
Net Operating Income is defined as follows, using the following categories as defined in SEC Regulation S-X Section 210.5-03:
Net sales and gross revenues, less
| a. | Costs and expenses applicable to sales and revenues, and | |
| b. | Other operating costs and expenses, and | |
| c. | Selling, general and administrative expenses, and | |
| d. | Provision for doubtful accounts and notes, and | |
| e. | Other general expenses. |
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(c) Lock-up and Leak-out Provisions. The shares of Acquisition Stock and the shares of Acquisition Warrant Stock, if, when, and as issued, are subject to equivalent lock-ups and leak-outs in accordance with the following provisions:
(i) Lock-up of Acquisition Stock. Except as set forth below, from and after the Closing Date, through and including the twenty-four (24)-month anniversary thereof, each initial issuee of shares of Acquisition Stock shall not, directly or indirectly, sell, give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such issuee’s shares, independently of whether such prohibited transaction would or could, directly or indirectly, provide any economic value to such issuee (any such enumerated transaction or any transaction analogous thereto, an “Acquisition Stock Lock-up”). Notwithstanding the above, twenty-five percent (25%) of the shares of Acquisition Stock that are the subject of this Lock-up shall each be released therefrom in six-month increments, commencing on the six-month anniversary of the Closing Date; provided, however, that, from and after the six-month anniversary of the Closing Date, the Company, in its sole and absolute discretion, may, at any time thereafter or from time to time thereafter, release the shares of Acquisition Stock, in whole or in part, from the provisions of this Acquisition Stock Lock-up for any reason or for no reason.
(ii) Lock-up of Acquisition Warrant Stock. Except as set forth below, from and after the exercise of any Acquisition Warrant, through and including the twenty-four-month anniversary thereof, each initial exercising party of an Acquisition Warrant shall not, directly or indirectly, sell, give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such exercising party’s shares of Acquisition Warrant Stock, independently of whether such prohibited transaction would or could, directly or indirectly, provide any economic value to such exercising party (any such enumerated transaction or any transaction analogous thereto, an “Acquisition Warrant Stock Lock-up”). Notwithstanding the above, twenty-five (25%) percent of the shares of Acquisition Warrant Stock that are the subject of this Acquisition Warrant Stock Lock-up shall each be released therefrom in six-month increments, commencing on the six-month anniversary of the relevant exercise of an Acquisition Warrant; provided, however, that, from and after the six-month anniversary of the relevant exercise of an Acquisition Warrant, the Company, in its sole and absolute discretion, may, at any time thereafter or from time to time thereafter, release the shares of Acquisition Warrant Stock, in whole or in part, from the provisions of this Acquisition Warrant Stock Lock-up for any reason or for no reason.
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(iii) Leak-out of Acquisition Stock. From and after the expiration of the relevant Acquisition Stock Lock-up period, the relevant issuee has the right, but not the obligation, to sell into the public markets on each trading day that the quantum of shares of Acquisition Stock that are no longer subject to the Acquisition Stock Lock-up in an amount that does not exceed 10% of the average number of shares of Purchaser Common Stock sold in the public markets during each of the twenty (20) trading days preceding the date on which the relevant issuee sells any of such shares of Acquisition Stock, the daily trading volume as reflected on nasdaq.com (the “Acquired Stock Daily Leak-out Volume”). The Acquired Stock Daily Leak-out Volume is not cumulative; that is to say, that it is a trading day “use it or lose it” right. Further, the gross price of each such share sold by the relevant issuee shall be at not less than the “best bid” at the time that the relevant issuee places a sell order with his or its broker, no matter how such sell order is placed. If the relevant issuee, in a transaction not involving the public markets, shall sell or otherwise give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such issuee’s shares of Acquisition Stock, then (A) as a condition precedent to the closing of such a transaction, such third party shall execute an agreement in favor of the Purchaser that contains leak-out provisions substantially similar to the leak-out provisions set forth in this section and (B) any sales into the public markets by such third party shall be aggregated on a daily basis with any sales into the public markets by the relevant issuee. Notwithstanding anything to the contrary that may be provided in this section, the Acquired Stock Daily Leak-out Volume shall be adjusted for forward stock splits, reverse stock splits (consolidations), and recapitalizations of shares of Purchaser Common Stock and similar transactions affecting all holders of Purchaser Common Stock equally.
(iv) Leak-out of Acquisition Warrant Stock. From and after the expiration of the relevant Acquisition Warrant Stock Lock-up period, each initial exercising party of an Acquisition Warrant has the right, but not the obligation, to sell into the public markets on each trading day that the quantum of shares of Acquisition Warrant Stock that are no longer subject to the Acquisition Warrant Stock Lock-up in an amount that does not exceed 10% of the average number of shares of Purchaser Common Stock sold in the public markets during each of the twenty (20) trading days preceding the date on which the initial exercising party of an Acquisition Warrant sells any of such shares of Acquisition Warrant Stock, the daily trading volume as reflected on nasdaq.com (the “Acquired Warrant Stock Daily Leak-out Volume”). The Acquired Warrant Stock Daily Leak-out Volume is not cumulative; that is to say, that it is a trading day “use it or lose it” right. Further, the gross price of each such share sold by the initial exercising party of an Acquisition Warrant shall be at not less than the “best bid” at the time that the relevant initial exercising party of an Acquisition Warrant places a sell order with his or its broker, no matter how such sell order is placed. If the initial exercising party of an Acquisition Warrant, in a transaction not involving the public markets, shall sell or otherwise give, swap, transfer, or hypothecate, or grant any option for the sale, gift, swap, transfer, or hypothecation, to any third party in respect of any of such issuee’s shares of Acquisition Warrant Stock, then (A) as a condition precedent to the closing of such a transaction, such third party shall execute an agreement in favor of the Purchaser that contains leak-out provisions substantially similar to the leak-out provisions set forth in this section and (B) any sales into the public markets by such third party shall be aggregated on a daily basis with any sales into the public markets by the initial exercising party of an Acquisition Warrant. Notwithstanding anything to the contrary that may be provided in this section, the Acquired Warrant Stock Daily Leak-out Volume shall be adjusted for forward stock splits, reverse stock splits (consolidations), and recapitalizations of shares of Purchaser Common Stock and similar transactions affecting all holders of Purchaser Common Stock equally.
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1.3 Mechanics of Exchange.
(a) At the Closing, each Stockholder shall surrender the certificate or certificates that, immediately prior to the Closing, represented the shares of Company Common Stock (the “Certificates”) to the exchange agent designated by Purchaser in exchange for the shares of Acquisition Stock and the grant of the Acquisition Warrants.
(b) Promptly after the Closing, Purchaser or its designated exchange agent shall make available to each Stockholder a letter of transmittal and instructions for use in effecting the surrender of Certificates in exchange for the Acquisition Stock and the Acquisition Warrants. Upon surrender of his or its respective Certificate(s) to such exchange agent together with the letter of transmittal, duly executed, the Stockholder shall be entitled to in exchange therefor (i) be issued such number of shares of Acquisition Stock and (ii) to be granted Acquisition Warrants as such Stockholder has the right to receive in respect of the Certificate(s) so surrendered pursuant to the provisions of this Article I.
1.4 No Fractional Shares of Acquisition Stock.
No fraction of a share of Purchaser Common Stock shall be issued in the Exchange. In lieu of fractional shares, the Stockholders, upon surrender of their respective Certificates as set forth in Section 1.3, shall be issued that number of shares of Purchaser Common Stock resulting by rounding up to the nearest whole number of shares of Acquisition Stock that each such Stockholder shall receive as a result of the Exchange.
1.5 Closing.
The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at 9:00 a.m., Pacific Daylight Time, at the principal administrative offices of Purchaser, or at a location mutually agreed upon by Purchaser and the Company, on or before April 20, 2026 (the “Closing Date”); provided, however, that, if all of the other conditions set forth in Articles VI and VII hereof are not satisfied or waived, unless this Agreement has been terminated under Article IX hereof, or at such date, the Closing Date shall be the business day following the day on which all such conditions have been satisfied or waived, or at such other date, time and place as Purchaser, the Company and the Stockholders shall agree.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Except as set forth in the Disclosure Schedule, consisting of information about the Company provided by the Company and the Stockholders to Purchaser in connection with this Agreement (the “Company Disclosure Schedule”), each of the Company and each of the Stockholders represents and warrants jointly and severally to Purchaser as follows:
2.1 Organization; Good Standing; and Qualification.
The Company is duly incorporated, validly existing and in good standing under the laws of the State of Nevada, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where the failure to be in good standing or to have such governmental licenses, authorizations, consents and approvals will not, in the aggregate, either (i) have a Material Adverse Effect on the business, assets or financial condition of the Company or (ii) impair the ability of the Company to perform its obligations under this Agreement. The Company is duly qualified, licensed, or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased requires such qualification, licensing, or domestication, except where the failure to be so qualified, licensed, or domesticated will not have a Material Adverse Effect. Set forth as part of the Company Disclosure Schedule is a list of those jurisdictions in which the Company presently conducts its business and owns, holds, and operates its properties and assets.
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2.2 Subsidiaries.
The Company does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise. The Company does not have any direct or indirect interests of stock ownership or otherwise in any corporation, partnership, joint venture, firm, association, or business enterprise, and is not party to any agreement to acquire such an interest.
2.3 Articles of Incorporation and Bylaws.
The Articles of Incorporation, Bylaws, and other Organizational Documents, each as amended to the date of this Agreement (the “Company’s Charter Documents”) and all other corporate governance documents of the Company (collectively, with the Company’s Charter Documents, the “Company’s Organizational Documents”), a true and complete copy of each of which was delivered to Purchaser prior to the execution of this Agreement, constitute all of the Organizational Documents of the Company and will not have been amended or repealed between the date of this Agreement and the Closing Date. The Company is not in violation or breach of any of the provisions of the Company’s Organizational Documents, except for such violations or breaches, which, in the aggregate, will not have a Material Adverse Effect on the Company.
2.4 Authorization; Binding Nature of Agreements.
(a) This Agreement and each of the Transaction Agreements constitute the legal, valid, and binding obligation of each person or entity who is a party thereto (other than Purchaser), enforceable against each such person or entity in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether such enforceability is considered in a proceeding in law or equity. Each Stockholder has all requisite legal capacity to execute and deliver this Agreement and the Transaction Agreements to which he or it is a party, and to perform his or its obligations hereunder and thereunder. The execution and delivery by each of the Company and each of the Stockholders of this Agreement and the Transaction Agreements (to the extent either is a party thereto), and the consummation of the transactions contemplated herein and therein (the “Transactions”) have been authorized by all necessary corporate or other action on the part of the Company and each of the Stockholders. This Agreement and the Transaction Agreements have been duly executed and delivered by the parties thereto (other than Purchaser).
(b) There is no pending Proceeding, and, to the Company’s and each of the Stockholders’ knowledge, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Exchange or the Company’s and the Stockholders’ ability to comply with or perform any of their respective obligations and covenants under the Transactional Agreements, and, to the knowledge of the Company and each of the Stockholders, no event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding.
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2.5 No Violation.
Neither the execution nor delivery of this Agreement or the Transaction Agreements, nor the consummation or performance of any of the Transactions by the Company or the Stockholders will directly or indirectly:
(a) (i) violate or conflict with any provision of the Company’s Organizational Documents of the Company; (ii) result in (with or without notice or lapse of time) a violation or breach of, or conflict with or constitute a default or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or require notice under, any agreement, promissory note, lease, instrument or arrangement to which the Company or any of its assets are bound or result in the creation of any Liens upon the Company or any of its assets; (iii) violate any order, writ, judgment, injunction, ruling, award or decree of any Governmental Body; (“Governmental Body”); (iv) violate any statute, law or regulation of any jurisdiction as such statute, law or regulation that relates to the Stockholders or the Company or any of the assets of the Company; or (v) result in cancellation, modification, revocation or suspension of any permits, licenses, registrations, consents, approvals, authorizations or certificates issued or granted by any Governmental Body which are held by or granted to the Stockholders or the Company or which are necessary for the conduct of the Company’s business; or
(b) to the knowledge of the Company or each of the Stockholders, cause the Company to become subject to, or to become liable for the payment of, any Tax (as hereinafter defined) or cause any of the assets owned by the Company to be reassessed or revalued by any taxing authority or other Governmental Body.
None of the Company or the Stockholders is or will be required to give any notice to or obtain any approval, consent, ratification, waiver or other authorization (a “Consent”) from any person or entity (including, without limitation, any Governmental Body) in connection with (i) the execution and delivery of this Agreement or any of the Transaction Agreements or (ii) the consummation or performance of any of the Transactions.
2.6 Capitalization and Related Matters.
(a) Capitalization. The Company has issued and outstanding one hundred thousand (100,000) shares of Company Common Stock. Except as set forth in the preceding sentence, no other class or series of capital stock or other security of the Company is authorized, issued, reserved for issuance, or outstanding. The Stockholders, as of the Closing Date, are the lawful, record and beneficial owners of the number of shares of Company Common Stock set forth opposite each Stockholder’s name on Schedule 1 attached hereto. The Stockholders have, as of the date hereof and as of the Closing Date, valid and marketable title to their respective Stock, free and clear of all Liens (including, without limitation, any claims of spouses under applicable community property laws) and are the lawful, record and beneficial owners of all of the Company Common Stock. Except as is issued to and held by the Stockholders or the Company, no other class of capital stock or other security of the Company, as applicable, is authorized, issued, reserved for issuance or outstanding. At the Closing, Purchaser will be vested with good and marketable title to the Company Common Stock, free and clear of all Liens (including, without limitation, any claims of spouses under applicable community property laws). No legend or other reference to any purported Lien appears upon any certificate representing the Company Common Stock. Each of the shares of Company Common Stock owned of record and beneficially by the Stockholders has been duly authorized and validly issued and is fully paid and nonassessable. None of the outstanding capital or other securities of the Company was issued, redeemed, or repurchased in violation of the Securities Act or any other securities or “blue sky” laws.
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(b) No Redemption Requirements. There are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments, or agreements of any character by which the Company or any of the Stockholders is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other securities of the Company. There are no outstanding contractual obligations (contingent or otherwise) of the Company to retire, repurchase, redeem, or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, the Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.
2.7 Compliance with Laws and Other Instruments.
Except as would not have a Material Adverse Effect, the business and operations of the Company have been and are being conducted in accordance with all applicable foreign, federal, provincial, and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all courts and governmental agencies and instrumentalities. There are no permits, bonuses, registrations, consents, approvals, authorizations, certificates, or any waiver of the foregoing, which are required to be issued or granted by a Governmental Body for the conduct of the Business as presently conducted or the ownership of the assets of the Company. Except as would not have a Material Adverse Effect, the Company is not, and has not received notice alleging that it is, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of the Company’s Organizational Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which the Company is a party or by which any of the Company’s properties, assets or rights are bound or affected. To the knowledge of the Company, no other party to any material contract, agreement, lease, license, commitment, instrument, or other obligation to which the Company is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof. The Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Company, any event or circumstance relating to the Company that materially and adversely affects in any way its business, properties, assets or prospects or that prohibits the Company from entering into this Agreement and the Transaction Agreements or would prevent or make burdensome its performance of or compliance with all or any part of this Agreement, the Transaction Agreements or the consummation of the Transactions contemplated hereby or thereby.
2.8 Certain Proceedings.
There are no outstanding or pending proceedings that has been commenced against or involving the Company or any of its assets and, to the knowledge of the Company and the Stockholders, no matters of the foregoing nature are contemplated or threatened. None of the Company or the Stockholders has been charged with, and is not threatened with, or under any investigation with respect to, any allegation concerning any violation of any provision of any federal, provincial, local, or foreign law, regulation, ordinance, order, or administrative ruling, and is not in default with respect to any order, writ, injunction, or decree of any Governmental Body.
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2.9 No Brokers or Finders.
None of the Company, the Stockholders, or any officer, director, independent contractor, consultant, agent, or employee of the Company has agreed to pay, or has taken any action that will result in any person or entity becoming obligated to pay or entitled to receive, any investment banking, brokerage, finder’s or similar fee or commission in connection with this Agreement or the Transactions. The Company and the Stockholders shall jointly and severally indemnify and hold Purchaser harmless against any liability or expense arising out of, or in connection with, any such claim.
2.10 Title to and Condition of Properties.
The Company has good, valid, and marketable title to all of its properties and assets (whether real, personal, or mixed, and whether tangible or intangible) reflected as owned in its books and records, free and clear of all Liens. The Company owns or holds under valid leases or other rights to use all real property, plants, machinery, equipment, and all assets necessary for the conduct of its business as presently conducted, except where the failure to own or hold such property, plants, machinery, equipment, and assets would not have a Material Adverse Effect on the Company. No Person other than the Company owns or has any right to the use or possession of the assets used in the Company’s business. The material buildings, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put or would be put in the Ordinary Course of Business, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.
2.11 Absence of Undisclosed Liabilities.
The Company has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether asserted or unasserted, whether due or to become due, whether or not known to the Company) arising out of any transaction entered into prior to the Closing Date or any act or omission prior to the Closing Date which individually or taken together would constitute a Material Adverse Effect on the Company and have no debt, obligation or liability to each other or any of the Stockholders or their affiliates, except to the extent specifically set forth on or reserved against on the Balance Sheet of the Company.
The financial statements of the Company, as delivered to the Purchaser, are consistent with the books and records of the Company and fairly present in all material respects the financial condition, assets, and liabilities of the Company, as applicable, taken as a whole, as of the dates and periods indicated, and were prepared in accordance with GAAP (except as otherwise indicated therein or in the notes thereto).
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2.12 Changes.
The Company has not, since its formation:
(a) Ordinary Course of Business. Conducted its business or entered into any transaction other than in the Ordinary Course of Business, except for this Agreement.
(b) Adverse Changes. Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects which would have a Material Adverse Effect;
(c) Loans. Made any loans or advances to any Person other than travel advances and reimbursement of expenses made to employees, officers, and directors in the Ordinary Course of Business;
(d) Compensation and Bonuses. Made any payments of any bonuses or compensation other than regular salary payments, or increase in the salaries, or payment on any of its debts in the Ordinary Course of Business, to any of its stockholders, directors, officers, employees, independent contractors, or consultants or entry into by it of any employment, severance, or similar contract with any director, officer, or employee, independent contractor or consultant; Adopted, or increased in the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement, or other employee benefit plan for or with any of its employees;
(e) Liens. Created or permitted to exist any Lien on any of its properties or assets other than Permitted Liens;
(f) Capital Stock. Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise; changed its authorized or issued capital stock; granted any stock option or right to purchase shares of its capital stock; issued any security convertible into any of its capital stock; granted any registration rights with respect to shares of its capital stock; purchased, redeemed, retired, or otherwise acquired any shares of its capital stock; declared or paid any dividend or other distribution or payment in respect of shares of capital stock of any other entity;
(g) Dividends. Declared, set aside, made or paid any dividend or other distribution to any of its stockholders;
(h) Material Contracts. Terminated or modified any of its Material Contract except for termination upon expiration in accordance with the terms of such agreements, a description of which is included in the Company’s Disclosure Schedule;
(i) Claims. Released, waived, or cancelled any claims or rights relating to or affecting the Company in excess of $1,000 in the aggregate or instituted or settled any Proceeding involving in excess of $10,000 in the aggregate;
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(j) Discharged Liabilities. Paid, discharged, cancelled, waived, or satisfied any claim, obligation, or liability in excess of $1,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the Ordinary Course of Business;
(k) Indebtedness. Created, incurred, assumed, or otherwise become liable for any Indebtedness or commit to any endeavor involving a commitment in excess of $1,000 in the aggregate, other than contractual obligations incurred in the Ordinary Course of Business;
(l) Guarantees. Guaranteed or endorsed in a material amount any obligation or net worth of any Person;
(m) Acquisitions. Acquired the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person;
(n) Accounting. Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP;
(o) Agreements. Entered into any agreement, or otherwise obligated itself, to do any of the foregoing.
2.13 Material Contracts.
The Company has delivered to Purchaser, prior to the date of this Agreement, true, correct, and complete copies of each of its Material Contracts.
(a) No Defaults. The Material Contracts of the Company are valid and binding agreements of the Company, as applicable, and are in full force and effect and are enforceable in accordance with their terms. Except as would not have a Material Adverse Effect, the Company is not in breach or default of any of its Material Contracts to which it is a party and, to the knowledge of the Company, no other party to any of its Material Contracts is in breach or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance has existed that (with or without notice or lapse of time) would (i) contravene, conflict with or result in a violation or breach of, or become a default or event of default under, any provision of any of its Material Contracts or (ii) permit the Company or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any of its Material Contracts. The Company has not received any notice and has no knowledge of any pending or threatened cancellation, revocation, or termination of any of its Material Contracts to which it is a party, and there are no renegotiations of, or attempts to renegotiate.
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2.14 Tax Returns and Audits.
(a) Tax Returns. (i) All material Tax Returns required to be filed by or on behalf of the Company have been timely filed and all such Tax Returns were (at the time they were filed) and are true, correct, and complete in all material respects; (ii) all Taxes of the Company required to have been paid (whether or not reflected on any Tax Return) have been fully and timely paid, except those Taxes which are presently being contested in good faith or for which an adequate reserve for the payment of such Taxes has been established on the Company’s balance sheet; (iii) no waivers of statutes of limitation have been given or requested with respect to the Company in connection with any Tax Returns covering the Company or with respect to any Taxes payable by it; (iv) no Governmental Body in a jurisdiction where the Company does not file Tax Returns has made a claim, assertion or threat to the Company that the Company is or may be subject to taxation by such jurisdiction; (v) the Company has duly and timely collected or withheld, paid over and reported to the appropriate Governmental Body all amounts required to be so collected or withheld for all periods under all applicable laws; (vi) there are no Liens with respect to Taxes on the property or assets of the Company other than Permitted Liens; (vii) there are no Tax rulings, requests for rulings, or closing agreements relating to the Company for any period (or portion of a period) that would affect any period after the date hereof; and (viii) any adjustment of Taxes of the Company made by a Governmental Body in any examination that the Company is required to report to the appropriate provincial, local or foreign taxing authorities has been reported, and any additional Taxes due with respect thereto have been paid. No state of fact exists or has existed which would constitute ground for the assessment of any tax liability by any Governmental Body. All Tax Returns filed by the Company are true, correct, and complete.
(b) No Adjustments, Changes. Neither the Company nor any other Person on behalf of the Company (a) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of provincial, local, or foreign law or (b) has agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of provincial, local, or foreign law.
(c) No Disputes. There is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of or Tax Return filed or required to be filed by the Company, nor is any such claim or dispute pending or contemplated. The Company has made available to Purchaser true, correct, and complete copies of all Tax Returns, examination reports and statements of deficiencies assessed or asserted against or agreed to by the Company since its formation and any and all correspondence with respect to the foregoing. The Company does not have any outstanding closing agreement, ruling request, request for consent to change a method of accounting, subpoena, or request for information to or from a Governmental Body in connection with any Tax matter.
(d) No Tax Allocation, Sharing. The Company is not a party to any Tax allocation or sharing agreement. The Company (a) has not been a member of a Tax Group filing a consolidated income Tax Return under Section 1501 of the Code (or any similar provision of provincial, local, or foreign law), and (b) does not have any liability for Taxes for any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of provincial, local, or foreign law) as a transferee or successor, by contract or otherwise.
2.15 Material Assets.
The financial statements of the Company reflect the material properties and assets (real and personal) owned or leased by them.
2.16 Insurance Coverage.
The Company has no insurance or general liability policies maintained by the Company on its properties and assets.
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2.17 Litigation; Orders.
There is no Proceeding (whether federal, provincial, local, or foreign) pending or, to the knowledge of the Company, threatened or appealable against or affecting the Company or any of its properties, assets, business, or employees. To the knowledge of the Company, there is no fact that might result in or form the basis for any such Proceeding. The Company is not subject to any Orders and has not received any written opinion or memorandum or legal advice from their legal counsel to the effect that the Company is exposed, from a legal standpoint, to any liability which would be material to its business. The Company is not engaged in any legal action to recover monies due it or for damages sustained by any of them.
2.18 Licenses.
Except as would not have a Material Adverse Effect, the Company possesses from the appropriate Governmental Body all licenses, permits, authorizations, approvals, franchises, and rights that are necessary for it to engage in its business as currently conducted and to permit it to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets (collectively, “Permits”). Except as would not have a Material Adverse Effect, the Company has not received any written notice from any Governmental Body or other Person that there is lacking any license, permit, authorization, approval, franchise or right necessary for the Company to engage in its business as currently conducted and to permit the Company to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets. Except as would not have a Material Adverse Effect, the Permits are valid and in full force and effect. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a violation of or a failure to comply with any Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit. The Company has not received any written notice from any Governmental Body or any other Person regarding: (a) any actual, alleged, possible, or potential contravention of any Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any Permit. All applications required to have been filed for the renewal of such Permits have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such Permits have been duly made on a timely basis with the appropriate Persons. All Permits are renewable by their terms or in the Ordinary Course of Business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of which have, to the extent due, been duly paid.
2.19 Interested party Transactions.
No officer or director of the Company or Stockholder or any Affiliate, Related Person, or “associate” (as such term is defined in Rule 405 of the Commission under the Securities Act) of any such Person, either directly or indirectly, (a) has an interest in any Person which (i) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Company or (ii) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish the Company any goods or services; (b) has a beneficial interest in any contract or agreement to which the Company is a party or by which it may be bound or affected; or (c) is a party to any material agreements, contracts or commitments in effect as of the date hereof with the Company. “Related Person” means: (i) with respect to a particular individual, the individual’s immediate family which shall include the individual’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and brothers and sisters-in-law and (ii) with respect to a specified individual or entity, any entity or individual that, directly or indirectly, controls, is controlled by, or is under common control with such specified entity or individual.
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2.20 Governmental Inquiries.
The Company has made available to Purchaser a copy of each material written inspection report, questionnaire, inquiry, demand, or request for information received by the Company from (and the response of the Company thereto), and each material written statement, report or other document filed by the Company with, any Governmental Body since its formation.
2.21 Bank Accounts and Safe Deposit Boxes.
The Company Disclosure Schedule discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by the Company, the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account or otherwise have access to the account or box, as the case may be.
2.22 Intellectual Property.
Any Intellectual Property the Company uses in its business as presently conducted is owned by the Company or properly licensed, and no Person has asserted any claim challenging the Company’s ownership or rights therein.
2.23 Stock Option Plans; Employee Benefits.
(a) The Company does not have any employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided to the Company. The Company has no commitment, whether formal or informal and whether legally binding or not, to create any additional plan, arrangement, or practice similar to the Approved Plans.
2.24 Employee Matters.
(a) No former or current employee of the Company is a party to, or is otherwise bound by, any agreement or arrangement (including, without limitation, any confidentiality, non-competition, or proprietary rights agreement) that in any way adversely affected, affects, or will affect (i) the performance of his, her or its duties to the Company, or (ii) the ability of the Company to conduct its business.
(b) The Company has no employees, directors, officers, consultants, independent contractors, representatives, or agents whose contract of employment or engagement cannot be terminated by three months’ notice.
(c) The Company is not required or obligated to pay, and since its formation, have not paid any moneys to or for the benefit of, any director, officer, employee, consultant, independent contractor, representative or agent of the Company.
(d) The Company is in compliance with all applicable laws respecting employment and employment practices, terms and conditions or employment and wages and hours, and is not engaged in any unfair labor practice. There is no labor strike, dispute, shutdown, or stoppage actually pending or, to the knowledge of the Company or any of the Stockholders, threatened against or affecting the Company.
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2.25 Environmental and Safety Matters.
Except as would not have a Material Adverse Effect:
(a) the Company has at all times been and is in compliance with all Environmental Laws and Orders applicable to the Company, as applicable.
(b) There are no Proceedings pending or, to the knowledge of the Company, threatened against the Company alleging the violation of any Environmental Law or Environmental Permit applicable to the Company or alleging that the Company is a potentially responsible party for any environmental site contamination. None of the Company or any of the Stockholders is aware of, or has ever received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, suit, proceeding, hearing or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, or hazardous or toxic material or waste.
(c) Neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Body or third Persons under any Environmental Laws applicable to the Company.
2.26 Material Customers.
Since its formation, none of the Material Customers (as hereinafter defined) of the Company has notified the Company or any of the Stockholders of their intent to terminate their business with the Company business because of any dissatisfaction on the part of any such person or entity. The Transactions have not caused any of the Material Customers of the Company to terminate or provide notice of their intent or threaten to terminate their business with the Company or to notify the Company or any of the Stockholders of their intent not to continue to do such business with the Company after the Closing. As used herein, “Material Customers” means those customers from whom the Company derives annual revenues in excess of US $5,000.
2.27 Inventories.
All inventories of the Company are of good, usable, and merchantable quality in all material respects, and, except as set forth in the Company Disclosure Schedule, do not include a material amount of obsolete or discontinued items. Except as set forth in the Company Disclosure Schedule, (a) all such inventories are of such quality as to meet in all material respects the quality control standards of the Company, (b) all such inventories are recorded on the books at the lower of cost or market value determined in accordance with GAAP, and (c) no write-down in inventory has been made or should have been made pursuant to GAAP during the past two years.
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2.28 Money Laundering Laws.
The operations of the Company are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Body (collectively, the “Money Laundering Laws”) and no Proceeding involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
2.29 Disclosure.
(a) Any information set forth in this Agreement, the Company Disclosure Schedule, or the Transaction Agreements shall be true, correct, and complete in all material respects.
(b) No statement, representation, or warranty of the Company or any of the Stockholders in this Agreement (taken with the Schedules) or the Transaction Agreements or any exhibits or schedules thereto contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein, taken as a whole, in light of the circumstances in which they were made, not misleading.
(c) Except as set forth in the Company Disclosure Schedule, none of the Company nor any of the Stockholders has any knowledge of any fact that has specific application to the Company (other than general economic or industry conditions) and that adversely affects the assets or the business, prospects, financial condition, or results of operations of the Company.
(d) In the event of any inconsistency between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in the Schedules with respect to a specifically identified representation or warranty), the statements in the Schedules shall control.
(e) The books of account, minute books, and stock record books of the Company, all of which have been made available to Purchaser, are complete and accurate and have been maintained in accordance with sound business practices. Without limiting the generality of the foregoing, the minute books of the Company contain complete and accurate records of all meetings held, and corporate action taken, by the stockholders, the board of directors, and committees of the board of directors of the Company, as applicable, and no meeting of any such stockholders, board of directors, or committees has been held for which minutes have not been prepared and are not contained in such minute books.
2.30 Finders and Brokers.
(a) None of the Company or any of the Stockholders or any Person acting on behalf of the Company or any of the Stockholders has engaged any finder, broker, intermediary or any similar Person in connection with the Exchange.
(b) None of the Company or any of the Stockholders nor any Person acting on behalf of the Company or any of the Stockholders has entered into a contract or other agreement that provides that a fee shall be paid to any Person or Entity if the Exchange is consummated.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Stockholders as of the date hereof:
3.1 Organization; Good Standing.
Purchaser is duly incorporated, validly and in good standing existing under the laws of the State of Nevada, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where the failure to be in good standing or to have such governmental licenses, authorizations, consents and approvals will not, in the aggregate, either (i) have a Material Adverse Effect on the business, assets or financial condition of Purchaser, or (ii) impair the ability of Purchaser to perform its obligations under this Agreement. Purchaser is duly qualified, licensed, or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased requires such qualification, licensing, or domestication, except where the failure to be so qualified, licensed, or domesticated will not have a Material Adverse Effect.
3.2 Purchaser Common Stock; Purchaser Derivative Securities.
(a) As of December 27, 2025, Purchaser has: (a) authorized capital stock which consists of 2,000,000,000 shares of Purchaser Common Stock, par value $0.001 per share, and 20,000,000 shares of preferred stock, par value $0.001 per share, of which 127,166,254 shares of Purchaser Common Stock and 770,291 shares of preferred stock are issued and outstanding. 34,250 shares of Preferred Stock have been designated as Series B Preferred Stock, of which 34,207 shares are issued and outstanding. 2,000,000 shares of preferred stock have been designated as Series I Convertible Preferred Stock, of which no shares are issued and outstanding. 2,000,000 shares of preferred stock have been designated as Series Q Convertible Preferred Stock, of which 636,084 shares are issued and outstanding. 200,000 shares of preferred stock have been designated as Series S Convertible Preferred Stock, of which 100,000 shares are issued and outstanding. All of such outstanding shares of capital stock have been validly issued and are fully paid and nonassessable. No shares of Purchaser Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by Purchaser.
(b) Schedule 3.2(b) hereto lists, as of the date hereof, (i) each holder of issued and outstanding warrants, options, debentures, or convertible or exchangeable security of the Purchaser, (ii) the number and type of shares subject to each such security, (iii) the exercise price or exchange terms of each such security, and (iv) the termination date of each such security.
(c) The shares of Acquisition Stock and the shares of Purchaser Common Stock underlying the Acquisition Warrants, if and when issued in connection with this Agreement and the other Transactional Agreements, will be duly authorized, validly issued, fully paid, and nonassessable.
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3.3 Authority; Binding Nature of Agreements.
(a) The execution, delivery and performance of this Agreement, the Transactional Agreements, and all other agreements and instruments contemplated to be executed and delivered by Purchaser in connection herewith have been duly authorized by all necessary corporate action on the part of Purchaser and its board of directors.
(b) This Agreement, the Transactional Agreements, and all other agreements and instruments contemplated to be executed and delivered by Purchaser constitute the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with their terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether such enforceability is considered in a proceeding in law or equity.
(c) There is no pending Proceeding, and, to Purchaser’s knowledge, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Exchange or Purchaser’s ability to comply with or perform its obligations and covenants under the Transactional Agreements, and, to the knowledge of Purchaser, no event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding.
3.4 Non-contravention; Consents.
The execution and delivery of this Agreement and the other Transactional Agreements, and the consummation of the Exchange, by Purchaser will not, directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a material violation of (i) Purchaser’s Articles of Incorporation or Bylaws or (ii) any resolution adopted by Purchaser’s Board of Directors or any committee thereof or the stockholders of Purchaser;
(b) to the knowledge of Purchaser, contravene, conflict with or result in a material violation of, or give any Governmental Body the right to challenge the Exchange or to exercise any remedy or obtain any relief under, any legal requirement or any Order to which Purchaser or any material assets owned or used by it are subject;
(c) to the knowledge of Purchaser, cause any material assets owned or used by Purchaser to be reassessed or revalued by any taxing authority or other Governmental Body;
(d) to the knowledge of Purchaser, contravene, conflict with or result in a material violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by Purchaser or that otherwise relates to Purchaser’s business or to any of the material assets owned or used by Purchaser, where such contraventions, conflict, violation, revocation, withdrawal, suspension, cancellation, termination or modification would have a Material Adverse Effect on Purchaser;
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(e) contravene, conflict with or result in a material violation or material breach of, or material default under, any material Contract to which Purchaser is a party;
(f) give any Person the right to any payment by Purchaser or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments, or other contingent obligations of any nature whatsoever of Purchaser in favor of any Person, in any such case as a result of the Exchange; or
(g) result in the imposition or creation of any material Lien upon or with respect to any material asset owned or used by Purchaser.
Except for Consents, filings or notices required under the state and federal securities laws or any other laws or regulations or as otherwise contemplated in this Agreement and the other Transactional Agreements, Purchaser will not be required to make any filing with or give any notice to, or obtain any Consent from, any Person in connection with the execution and delivery of this Agreement and the other Transactional Agreements or the consummation or performance of the Exchange.
3.5 Finders and Brokers.
(a) Neither Purchaser nor any Person acting on behalf of Purchaser has engaged any finder, broker, intermediary or any similar Person in connection with the Exchange.
(b) Purchaser has not entered into a contract or other agreement that provides that a fee shall be paid to any Person or Entity if the Exchange is consummated.
3.6 Reports and Financial Statements; Absence of Certain Changes.
(a) Purchaser has filed all reports required to be filed with the SEC pursuant to the Exchange Act since April 17, 2023 (all such reports, including those to be filed prior to the Closing Date and all registration statements and prospectuses filed by Purchaser with the SEC, are collectively referred to as the “Purchaser SEC Reports”). All of the Purchaser SEC Reports, as of their respective dates of filing (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) complied in all material respects as to form with the applicable requirements of the Securities Act or Exchange Act and the rules and regulations thereunder, as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements of Purchaser included in the Purchaser SEC Reports comply in all material respects with the published rules and regulations of the SEC with respect thereto, and such audited financial statements (i) were prepared from the books and records of Purchaser, (ii) were prepared in accordance with GAAP applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto), and (iii) present fairly the financial position of Purchaser as of the dates thereof and the results of operations and cash flows for the periods then ended. The unaudited financial statements included in the Purchaser SEC Reports comply in all material respects with the published rules and regulations of the SEC with respect thereto; and such unaudited financial statements (i) were prepared from the books and records of Purchaser, (ii) were prepared in accordance with GAAP, except as otherwise permitted under the Exchange Act and the rules and regulations thereunder, on a consistent basis (except as may be indicated therein or in the notes or schedules thereto), and (iii) present fairly the financial position of Purchaser as of the dates thereof and the results of operations and cash flows (or changes in financial condition) for the periods then ended, subject to normal year-end adjustments and any other adjustments described therein or in the notes or schedules thereto.
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(b) Except as specifically contemplated by this Agreement or reflected in the Purchaser SEC Reports, since April 17, 2023, there has not been (i) any material adverse change in Purchaser’s business, assets, liabilities, operations, and, to the knowledge of Purchaser, no event has occurred that is likely to have a material adverse effect on Purchaser’s business, assets, liabilities or operations, (ii) any declarations setting aside or payment of any dividend or distribution with respect to the Purchaser Common Stock other than consistent with past practices, (iii) any material change in Purchaser’s accounting principles, procedures or methods, (iv) cancellation in writing of any material customer contract, or (v) the loss of any customer relationship which would have a material adverse effect on Purchaser’s business, assets, liabilities or operations.
3.7 Compliance with Applicable Law.
Except as disclosed in the Purchaser SEC Reports filed prior to the date of this Agreement and except to the extent that the failure or violation would not in the aggregate have a Material Adverse Effect on the business, results of operations or financial condition of Purchaser, to Purchaser’s knowledge, Purchaser holds all Governmental Authorizations necessary for the lawful conduct of its business under and pursuant to, and the business of Purchaser is not being conducted in violation of, any Governmental Authorization applicable to Purchaser.
3.8 Complete Copies of Requested Reports.
Purchaser has delivered or made available true and complete copies of each document that has been reasonably requested by the Company or any of the Stockholders.
3.9 Full Disclosure.
(a) Neither this Agreement (including all Schedules and exhibits hereto) nor any of the Transactional Agreements contemplated to be executed and delivered by Purchaser in connection with this Agreement contains any untrue statement of material fact; and none of such documents omits to state any material fact necessary to make any of the representations, warranties or other statements or information contained therein not misleading.
(b) All of the information regarding Purchaser and its business, condition, assets, liabilities, operations, financial performance, net income and prospects that has been furnished to the Company or any of the Stockholders by or on behalf of Purchaser or any of the Purchaser’s Representatives, is accurate and complete in all material respects.
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ARTICLE IV.
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
4.1 Access and Investigation.
The Company and each of the Stockholders shall ensure that, at all times during the Pre-Closing Period:
(a) The Company and each of the Stockholders and their Representatives provide Purchaser and its Representatives access, at reasonable times and with twenty-four (24) hours’ notice from Purchaser to the Company, to all of the premises and assets of the Company, to all existing books, records, Tax Returns, work papers and other documents and information relating to the Company, and to responsible officers and employees of the Company, and the Company and its Representatives provide Purchaser and its Representatives with copies of such existing books, records, Tax Returns, work papers and other documents and information relating to the Company as Purchaser may request in good faith;
(b) The Company and each of the Stockholders and their Representatives confer regularly with Purchaser upon its request concerning operational matters and otherwise report regularly (not less than semi-monthly and as Purchaser may otherwise request) to Purchaser and discuss with Purchaser and its Representatives concerning the status of the business, condition, assets, liabilities, operations, and financial performance of the Company, and promptly notify Purchaser of any material change in the business, condition, assets, liabilities, operations, and financial performance of the Company, or any event reasonably likely to lead to any such change.
4.2 Operation of the Business.
The Company and each of the Stockholders shall ensure that, during the Pre-Closing Period:
(a) The Company conducts its operations in the Ordinary Course of Business and in the same manner as such operations have been conducted prior to the date of this Agreement;
(b) The Company uses its commercially reasonable efforts to preserve intact its current business organization, keep available and not terminate the services of its current officers and employees and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees, and other Persons having business relationships with the Company;
(c) The Company does not declare, accrue, set aside, or pay any dividend or make any other distribution in respect of any shares of its capital stock, and does not repurchase, redeem, or otherwise reacquire any shares of its capital stock or other securities, except with respect to the repurchase of shares of the Company Common Stock upon termination of employees at the original purchase price pursuant to agreements existing at the date hereof;
(d) The Company does not sell or otherwise issue (or grant any warrants, options, or other rights to purchase) any shares of capital stock or any other securities, except the issuance of the Company Common Stock pursuant to option grants to employees made under the Option Plan in the Ordinary Course of Business;
(e) The Company does not amend any of the Company’s Organizational Documents, and does not affect or become a party to any recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(f) The Company does not form any subsidiary or acquire any equity interest or other interest in any other Entity;
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(g) The Company does not establish or adopt any Employee Benefit Plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers, or employees;
(h) The Company does not change any of its methods of accounting or accounting practices in any respect;
(i) The Company does not make any Tax election;
(j) The Company does not commence or take any action or fail to take any action which would result in the commencement of any Proceeding;
(k) The Company does not (i) acquire, dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or other assets, other than in the Ordinary Course of Business; (ii) incur, assume or prepay any indebtedness or obligation or any other liabilities or issue any debt securities, other than in the Ordinary Course of Business; (iii) assume, guarantee, endorse for the obligations of any other person, other than in the Ordinary Course of Business; (iv) make any loans, advances or capital contributions to, or investments in, any other Person, other than in the Ordinary Course of Business; or (v) fail to maintain insurance consistent with past practices for its business and property;
(l) The Company pays all debts and Taxes, files all of its Tax Returns (as provided herein) and pays or performs all other obligations, when due;
(m) The Company does not enter into or amend any agreements pursuant to which any other Person is granted distribution, marketing or other rights of any type or scope with respect to any of its services, products, or technology;
(n) The Company does not hire any new officer-level employee;
(o) The Company does not revalue any of its assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable, except as required under GAAP and in the Ordinary Course of Business;
(p) Except as otherwise contemplated hereunder, the Company does not enter into any transaction or take any other action outside the Ordinary Course of Business; and
(q) The Company does not enter into any transaction or take any other action that likely would cause or constitute a Breach of any representation or warranty made by it in this Agreement.
4.3 Filings and Consents; Cooperation.
The Company and each of the Stockholders shall ensure that:
(a) Each filing or notice required to be made or given (pursuant to any applicable Law, Order, or contract, or otherwise) by the Company or any of the Stockholders in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is made or given as soon as possible after the date of this Agreement;
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(b) Each Consent required to be obtained (pursuant to any applicable Law, Order, or contract, or otherwise) by the Company or any of the Stockholders in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date;
(c) The Company promptly delivers to Purchaser a copy of each filing made, each notice given, and each Consent obtained by the Company during the Pre-Closing Period; and
(d) During the Pre-Closing Period, the Company and its Representatives cooperate with Purchaser and Purchaser’s Representatives, and prepare and make available such documents and take such other actions as Purchaser may request in good faith, in connection with any filing, notice or Consent that Purchaser is required or elects to make, give or obtain.
4.4 Notification; Updates to Disclosure Schedules.
(a) During the Pre-Closing Period, the Company shall promptly notify Purchaser in writing of:
(i) the discovery by it of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to any representation or warranty made by it in this Agreement or in any of the other Transactional Agreements, or that would upon the giving of notice or lapse of time, result in any of its representations and warranties set forth in this Agreement to become untrue or otherwise cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied; and
(ii) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement (except as a result of actions taken pursuant to the express written consent of Purchaser) and that is contrary to any representation or warranty made by it in this Agreement, or that would upon the giving of notice or lapse of time, result in any of its representations and warranties set forth in this agreement to become untrue or otherwise cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied.
(b) If any event, condition, fact or circumstances that is required to be disclosed pursuant to Section 4.4(a) requires any material change in the Company Disclosure Schedule, or if any such event, condition, fact or circumstance would require such a change assuming the Company Disclosure Schedule were dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstances, then the Company, as applicable, shall promptly deliver to Purchaser an update to the Company Disclosure Schedule specifying such change.
(c) It will promptly update any relevant and material information provided to Purchaser after the date hereof pursuant to the terms of this Agreement.
4.5 Commercially Reasonable Efforts.
During the Pre-Closing Period, the Company shall use its commercially reasonable efforts to cause the conditions set forth in Article VI and Article VII to be satisfied on a timely basis and so that the Closing can take place on or before April 20, 2026, in accordance with Section 1.5, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties of the Company set forth in this Agreement becoming untrue, or in any of the conditions of Closing set forth in Article VI or Article VII not being satisfied.
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4.6 Confidentiality; Publicity.
The Company and each of the Stockholders shall ensure that:
(a) The Company and each of the Stockholders and their Representatives keep strictly confidential the existence and terms of this Agreement prior to the issuance or dissemination of any mutually agreed upon press release or other disclosure hereof or under the Exchange Act; and
(b) Neither the Company, any of the Stockholders, nor any of their Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any of its suppliers, customers, landlords, creditors or employees or to any other Person) regarding this Agreement and the Exchange; except in each case to the extent that it is required by law to make any such disclosure regarding such transactions or as separately agreed by the parties; provided, however, that, if it is required by law to make any such disclosure, the Company advises Purchaser, at least five business days before making such disclosure, of the nature and content of the intended disclosure.
ARTICLE V.
COVENANTS OF PURCHASER
5.1 Notification.
During the Pre-Closing Period, Purchaser shall promptly notify the Company in writing of:
(a) The discovery by Purchaser of any event, condition, fact, or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to any representation or warranty made by Purchaser in this Agreement; and
(b) Any event, condition, fact, or circumstance that occurs, arises, or exists after the date of this Agreement (except as a result of actions taken pursuant to the written consent of the Company) and that is contrary to any representation or warranty made by Purchaser in this Agreement;
5.2 Filings and Consents; Cooperation.
Purchaser shall ensure that:
(a) Each filing or notice required to be made or given (pursuant to any applicable Law, Order, or contract, or otherwise) by Purchaser in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is made or given as soon as possible after the date of this Agreement;
(b) Each Consent required to be obtained (pursuant to any applicable Law, Order, or contract, or otherwise) by Purchaser in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date;
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(c) Purchaser promptly delivers to the Company and each Stockholder a copy of each filing made, each notice given and each Consent obtained by Purchaser during the Pre-Closing Period; and
(d) During the Pre-Closing Period, Purchaser and its Representatives cooperate with the Company and their Representatives, and prepare and make available such documents and take such other actions as the Company may request in good faith, in connection with any filing, notice or Consent that the Company is required or elects to make, give or obtain.
5.3 Commercially Reasonable Efforts.
During the Pre-Closing Period, Purchaser shall use its commercially reasonable efforts to cause the conditions set forth in Article VI and Article VII to be satisfied on a timely basis and so that the Closing can take place on or before April 20, 2026, or as soon thereafter as is reasonably practical, in accordance with Section 1.5, and shall not take any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations and warranties of Purchaser set forth in this Agreement becoming untrue or in any of the conditions of closing set forth in Article VI or Article VII not being satisfied.
5.4 Disclosure of Confidential Information.
(a) Each of Purchaser and each of the Stockholders acknowledges and agrees that it or he or it, respectively, may receive Confidential Information in connection with this Transaction, including, without limitation, the Company Disclosure Schedule and any information disclosed during the due diligence process, the public disclosure of which will harm the disclosing party’s business. The Receiving Party may use Confidential Information only in connection with the Transaction. The results of the due diligence review may not be used for any other purpose other than in connection with the Transaction. Except as expressly provided in this Agreement, the Receiving Party shall not disclose Confidential Information to anyone without the Disclosing Party’s prior written consent. The Receiving Party shall take all reasonable measures to avoid disclosure, dissemination, or unauthorized use of Confidential Information, including, at a minimum, those measures it takes to protect its own confidential information of a similar nature. The Receiving Party shall not export any Confidential Information in any manner contrary to the export regulations of the governmental jurisdiction to which it is subject.
(b) The Receiving Party may disclose Confidential Information as required to comply with binding orders of governmental entities that have jurisdiction over it, provided that the Receiving Party (i) gives the Disclosing Party reasonable notice (to the extent permitted by law) to allow the Disclosing Party to seek a protective order or other appropriate remedy, (ii) discloses only such information as is required by the governmental entity, and (iii) uses commercially reasonable efforts to obtain confidential treatment for any Confidential Information so disclosed.
(c) All Confidential Information shall remain the exclusive property of the Disclosing Party. The Disclosing Party’s disclosure of Confidential Information shall not constitute an express or implied grant to the Receiving Party of any rights to or under the Disclosing Party’s patents, copyrights, trade secrets, trademarks, or other intellectual property rights.
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(d) The Receiving Party shall notify the Disclosing Party immediately upon discovery of any unauthorized use or disclosure of Confidential Information or any other breach of this Agreement by the Receiving Party. The Receiving Party shall cooperate with the Disclosing Party in every reasonable way to help the Disclosing Party regain possession of such Confidential Information and prevent its further unauthorized use.
(e) The Receiving Party shall return or destroy all tangible materials embodying Confidential Information (in any form and including, without limitation, all summaries, copies and excerpts of Confidential Information) promptly following the Disclosing Party’s written request; provided, however, that, subject to the provisions of this Agreement, the Receiving Party may retain one copy of such materials in the confidential, restricted access files of its legal department for use only in the event a dispute arises between the parties related to the Transaction and only in connection with that dispute. At the Disclosing Party’s option, the Receiving Party shall provide written certification of its compliance with this Section.
5.5 Indemnification.
(a) The Company and each of the Stockholders, jointly and severally, shall defend, indemnify, and hold harmless Purchaser, and its respective employees, officers, directors, stockholders, controlling persons, affiliates, agents, successors and assigns (collectively, the “Purchaser Indemnified Persons”), and shall reimburse the Purchaser Indemnified Person, for, from and against any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim (collectively, “Damages”), arising out of or resulting from:
(i) any untrue representations, misrepresentations, or breaches of warranties by or of the Company or any of the Stockholders contained in or pursuant to this Agreement and/or the Company Disclosure Schedule;
(ii) any breach or nonfulfillment of any covenant, agreement or other obligation by or of the Company or any of the Stockholders (only to the extent made or occurring prior to or at the Closing) contained in or pursuant to this Agreement, the Transaction Agreements executed by the Company or any of the Stockholders in their capacity solely as a Stockholder, the Company Disclosure Schedule, or any of the other agreements, documents, schedules or exhibits to be entered into by the Company or any of the Stockholders in their individual capacity pursuant to or in connection with this Agreement;
(iii) all Pre-Closing liabilities of the Company or each of the Stockholders; and
(iv) any liability, claim, action or proceeding of any kind whatsoever, whether instituted or commenced prior to or after the Closing Date, which directly or indirectly relates to, arises or results from, or occurs in connection with facts or circumstances relating to the conduct of business of the Company or the assets of the Company, or events or circumstances existing on or prior to the Closing Date.
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(b) Purchaser shall defend, indemnify, and hold harmless the Company and its respective affiliates, agents, successors, and assigns (collectively, the “Company Indemnified Persons”), and shall reimburse the Company Indemnified Persons, for, from and against any Damages, directly or indirectly, relating to, resulting from, or arising out of:
(i) any untrue representation, misrepresentation, or breach of warranty by or of Purchaser contained in or pursuant to this Agreement;
(ii) any breach or nonfulfillment of any covenant, agreement, or other obligations by or of Purchaser contained in or pursuant to this Agreement, the Transaction Agreements or any other agreements, documents, schedules, or exhibits to be entered into or delivered to pursuant to or in connection with this Agreement.
(c) Promptly after receipt by an indemnified Party under this Section 5.5 of this Agreement of notice of a claim against it (“Claim”), such indemnified Party shall, if a claim is to be made against an indemnifying Party under such Section, give notice to the indemnifying Party of such Claim, but the failure to so notify the indemnifying Party will not relieve the indemnifying Party of any liability that it may have to any indemnified Party, except to the extent that the indemnifying Party demonstrates that the defense of such action is prejudiced by the indemnified Party’s failure to give such notice.
(d) A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the Party from whom indemnification is sought.
ARTICLE VI.
CLOSING CONDITIONS OF PURCHASER
Purchaser’s obligations to affect the Closing and consummate the Exchange are subject to the satisfaction of each of the following conditions:
6.1 Accuracy of Representations and Warranties.
The representations and warranties of the Company and each of the Stockholders in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on and as of the Closing. The Company and each of the Stockholders shall have performed all obligations in this Agreement required to be performed or observed by them on or prior to the Closing.
6.2 Additional Conditions to Closing.
(a) All necessary approvals under federal and state securities laws and other authorizations relating to the issuance of the Acquisition Stock and the transfer of the Stock shall have been received.
(b) No preliminary or permanent injunction or other order by any federal, state, or foreign court of competent jurisdiction which prohibits the consummation of the Exchange shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been enacted, entered, issued, promulgated, or enforced by any court or governmental authority which prohibits or restricts the consummation of the Exchange. All authorizations, consents, orders or approvals of, or declarations or filings with, and all expirations of waiting periods imposed by, any Governmental Body which are necessary for the consummation of the Exchange, other than those the failure to obtain which would not materially adversely affect the consummation of the Exchange or in the aggregate have a material adverse effect on Purchaser and its subsidiaries, taken as a whole, shall have been filed, occurred or been obtained (all such permits, approvals, filings and consents and the lapse of all such waiting periods being referred to as the “Requisite Regulatory Approvals”) and all such Requisite Regulatory Approvals shall be in full force and effect.
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(c) There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any Governmental Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any material condition or material restriction upon Purchaser or its subsidiaries or the Company, including, without limitation, requirements relating to the disposition of assets, which in any such case would so materially adversely impact the economic or business benefits of the Exchange as to render inadvisable the consummation of the Exchange.
6.3 Performance of Agreements.
The Company or any of the Stockholders, as the case may be, shall have executed and delivered each of the agreements, instruments and documents required to be executed and delivered, and performed all actions required to be performed by the Company or any of the Stockholders, as the case may be, pursuant to this Agreement, except as Purchaser has otherwise consented in writing.
6.4 Consents.
Each of the Consents identified or required to have been identified in the Company Disclosure Schedule shall have been obtained and shall be in full force and effect, other than those Consents, which have been expressly waived by Purchaser.
6.5 No Material Adverse Change and Satisfactory Due Diligence.
There shall not have been any material adverse change in the business, condition, assets, liabilities, operations, or financial performance of the Company since the date of this Agreement as determined by Purchaser in its discretion. Purchaser shall be satisfied in all respects, in its sole and discretion, with the results of its due diligence review of the Company.
6.6 The Company Closing Certificate.
In addition to the documents required to be received under this Agreement, Purchaser shall also have received the following documents:
(a) copies of resolutions of the Company, certified by a Secretary, Assistant Secretary, or other appropriate officer of the Company, authorizing the execution, delivery and performance of this Agreement and other Transactional Agreements;
(b) good standing certificate of the Company; and
(c) such other documents as Purchaser may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by the Company, (ii) evidencing the compliance by the Company, or the performance by the Company of, any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VII or this Article VI, or (iv) otherwise facilitating the consummation or performance of the Exchange.
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6.7 Transactional Agreements.
Each Person (other than Purchaser) shall have executed and delivered prior to or on the Closing Date all Transactional Agreements to which it is to be a party.
6.8 Delivery of Stock Certificates, Minute Book, and Corporate Seal.
The Company or any of the Stockholders shall have delivered to Purchaser the stock books, stock ledgers, minute books, and corporate seal of the Company.
ARTICLE VII.
CLOSING CONDITIONS OF THE STOCKHOLDERS
The Stockholders’ obligations to affect the Closing and consummate the Exchange are subject to the satisfaction of each of the following conditions:
7.1 Accuracy of Representations and Warranties.
The representations and warranties of Purchaser in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on and as of the Closing and Purchaser shall have performed all obligations in this Agreement required to be performed or observed by it on or prior to the Closing.
7.2 Additional Conditions to Closing.
(a) All necessary approvals under federal and state securities laws and other authorizations relating to the issuance and transfer of the Acquisition Stock by Purchaser and the transfer of the Stock by the Company shall have been received.
(b) No preliminary or permanent injunction or other order by any federal, state, or foreign court of competent jurisdiction which prohibits the consummation of the Exchange shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been enacted, entered, issued, promulgated, or enforced by any court or governmental authority which prohibits or restricts the consummation of the Exchange. All Requisite Regulatory Approvals shall have been filed, occurred, or been obtained and all such Requisite Regulatory Approvals shall be in full force and effect.
(c) There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any federal or state Governmental Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any condition or restriction upon the Surviving Corporation or its subsidiaries (or, in the case of any disposition of assets required in connection with such Requisite Regulatory Approval, upon Purchaser, its subsidiaries, the Company or any of their subsidiaries), including, without limitation, requirements relating to the disposition of assets, which in any such case would so materially adversely impact the economic or business benefits of the Exchange as to render inadvisable the consummation of the Exchange.
(d) The Company shall have entered into employment agreements with Matthew Morgan and Derek Petersen, substantially in the form attached hereto as Exhibit C. With respect to Messrs. Morgan and Peterson, the employment agreements will provide that the Purchaser may utilize up to approximately 20% of their time to provide services directly to the Purchaser although all tax reporting will occur with the Company.
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7.3 Purchaser Closing Certificates.
The Stockholders shall have received the following documents:
(a) copies of resolutions of Purchaser, certified by a Secretary, Assistant Secretary, or other appropriate officer of Purchaser, authorizing the execution, delivery, and performance of the Transactional Agreements and the Exchange;
(b) copies of recently dated good standing certificates for the State of Nevada; and
(c) such other documents as the Company may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by Purchaser, (ii) evidencing the compliance by Purchaser with, or the performance by Purchaser of, any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VI or this Article VII, or (iv) otherwise facilitating the consummation or performance of the Exchange.
7.4 No Material Adverse Change.
There shall not have been any material adverse change in Purchaser’s business, condition, assets, liabilities, operations, or financial performance since the date of this Agreement.
7.5 Performance of Agreements.
Purchaser shall have executed and delivered each of the agreements, instruments and documents required to be executed and delivered, and performed all actions required by Purchaser pursuant to this Agreement, except as the Company and each of the Stockholders have otherwise consented in writing.
7.6 Consents.
Each of the Consents identified or required to have been identified in Section 3.4 shall have been obtained and shall be in full force and effect, other than those Consents the absence of which shall not have a material adverse effect on Purchaser.
7.7 Purchaser Common Stock.
On the Closing Date, shares of Purchaser Common Stock shall be eligible for listing on a tier of The Nasdaq Stock Market LLC.
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ARTICLE VIII.
FURTHER ASSURANCES
8.1 Further Assurances. Each of the parties hereto agrees that it or he or it, respectively, will, from time to time after the date of this Agreement, execute and deliver such other certificates, documents, and instruments and take such other action as may be reasonably requested by any other party hereto to carry out the actions and transactions contemplated by this Agreement, including the closing conditions described in Articles VI and VII. The Company and all of the Stockholders shall reasonably cooperate with Purchaser in its obtaining of the books of account, minute books, and stock record books and all other books and records of the Company, or in preparing any solicitation materials to be sent to the stockholders of Purchaser in connection with the approval of the Exchange and the transactions contemplated by the Transactional Agreements.
ARTICLE IX.
TERMINATION
9.1 Termination.
This Agreement may be terminated and the Exchange abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Purchaser, the Company and each of the Stockholders;
(b) by Purchaser if (i) there is a material Breach of any covenant or obligation of the Company or any of the Stockholders; provided, however, that, if such Breach is, or Breaches are, capable of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 calendar days of delivery of the written notice of such Breach or (ii) Purchaser reasonably determines that the timely satisfaction of any condition set forth in Article VI has become impossible or impractical (other than as a result of any failure on the part of Purchaser to comply with or perform its covenants and obligations under this Agreement or any of the other Transactional Agreements);
(c) by the Company if (i) there is a material Breach of any covenant or obligation of Purchaser; provided, however, that if such Breach or Breaches are capable of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 days of delivery of the written notice of such Breach or (ii) the Company reasonably determines that the timely satisfaction of any condition set forth in Article VII has become impossible or impractical (other than as a result of any failure on the part of the Company or any Stockholder to comply with or perform any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements);
(d) by Purchaser if the Closing has not taken place on or before May 31, 2026 (except if as a result of any failure on the part of Purchaser to comply with or perform its covenants and obligations under this Agreement or in any other Transactional Agreement);
(e) by the Company if the Closing has not taken place on or before /May 31, 2026 (except if as a result of the failure on the part of the Company or the Stockholders to comply with or perform any covenant or obligation set forth in this Agreement or in any other Transactional Agreement);
(f) by the Purchaser, on the one hand, or the Company or each of the Stockholders, on the other hand, if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree, or ruling or taken any other action restraining, enjoining, or otherwise prohibiting the Exchange and such order, decree, ruling, or any other action shall have become final and non-appealable; provided, however, that the party seeking to terminate this Agreement pursuant to this clause (e) shall have used all commercially reasonable efforts to remove such order, decree, or ruling; or
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(g) The parties hereby agree and acknowledge that a breach of the provisions of Sections 4.1, 4.2, 4.3, 4.4, and 4.6 are, without limitation, material Breaches of this Agreement.
9.2 Termination Procedures.
If the Purchaser wishes to terminate this Agreement pursuant to Section 9.1, the Purchaser shall deliver to the Company and each of the Stockholders a written notice stating that the Purchaser is terminating this Agreement and setting forth a brief description of the basis on which the Purchaser is terminating this Agreement. If the Company wishes to terminate this Agreement pursuant to Section 9.1, the Company shall deliver to Purchaser a written notice stating that the Company is terminating this Agreement and setting forth a brief description of the basis on which the Company is terminating this Agreement. No Stockholder has any termination rights hereunder.
9.3 Effect of Termination.
In the event of termination of this Agreement as provided above, this Agreement shall forthwith have no further effect. Except for a termination resulting from a Breach by a party to this Agreement, there shall be no liability or obligation on the part of any party hereto. In the event of a breach, the remedies of the non-breaching party shall be to seek damages from the breaching party or to obtain an order for specific performance, in addition to or in lieu of other remedies provided herein. Upon request after termination, each party will redeliver or, at the option of the party receiving such request, destroy all reports, work papers and other material of any other party relating to the Exchange, whether obtained before or after the execution hereof, to the party furnishing same; provided, however, that the Company and each of the Stockholders shall, in all events, remain bound by and continue to be subject to Section 4.6 and all parties hereto shall in all events remain bound by and continue to be subject to Sections 5.4 and 5.5.
Notwithstanding the above, both the Purchaser, on the one hand, and the Company and each of the Stockholders, on the other hand, shall be entitled to announce the termination of this Agreement by means of a mutually acceptable press release.
ARTICLE X.
MISCELLANEOUS
10.1 Survival of Representations and Warranties.
All representations and warranties of the Company and the Stockholders in this Agreement and the Company Disclosure Schedule shall survive indefinitely. The right to indemnification, reimbursement, or other remedy based on such representations and warranties will not be affected by any investigation conducted by any of the parties hereto.
10.2 Expenses.
Except as otherwise set forth herein, each of the parties to the Exchange shall bear its or his or its respective own expenses incurred in connection with the negotiation and consummation of the transactions contemplated by this Agreement.
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10.3 Entire Agreement.
This Agreement and the other Transactional Agreements contain the entire agreement of the parties hereto, and supersede any prior written or oral agreements among them concerning the subject matter contained herein or therein. There are no representations, agreements, arrangements, or understandings, oral or written, among the parties to this Agreement relating to the subject matter contained in this Agreement and the other Transaction Agreements, which are not fully expressed herein or therein. The schedules and each exhibit attached to this Agreement or delivered pursuant to this Agreement are incorporated herein by this reference and constitute a part of this Agreement.
10.4 Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
10.5 Descriptive Headings.
The Article and Section headings in this Agreement are for convenience only and shall not affect the meanings or construction of any provision of this Agreement.
10.6 Notices.
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable international overnight courier service, (b) upon delivery in the case of delivery by hand, or (c) on the Business Day delivered in the place of such other delivery if sent by email (provided that no bounceback or similar “undeliverable” message is received by such sender) prior to 5:00 p.m. Pacific Time, otherwise on the next succeeding Business Day, in each case to the intended recipient as set forth below:
If to Purchaser:
ALT5 Sigma Corporation
8548 Rozita Lee Avenue, Suite 305
Las Vegas, Nevada 89113
Attention: Chief Executive Officer
Email: t.isaac@isaac.com
with a mandatory copy to (which shall not constitute notice):
Clark Hill
555 South Flower Street, 24th Floor
Los Angeles, California 90071
Attention: Randy Katz
Email: rkatz@clarkhill.com
If to the Company:
Block Street Corp.
701 S. Carson Street, Ste. 200
Carson City, Nevada 89701
Attention: Chief Executive Officer
Email: matthew.morgan@live.com
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with a mandatory copy to (which shall not constitute notice):
Law Offices of Thomas E. Puzzo, PLLC
3823 44th Ave. NE
Seattle, Washington 98105
Attention: Thomas Puzzo
Email: tpuzzo@puzzolaw.com
If to any of the Stockholders:
c/o Block Street Corp.
701 S. Carson Street, Ste. 200
Carson City, Nevada 89701
Attention: Chief Executive Officer
Email: matthew.morgan@live.com
or to such address or addresses as a party hereto shall have previously designated by notice to the sender given in accordance with this Section.
10.7 Choice of Law.
This Agreement shall be construed in accordance with and governed by the laws of the State of Nevada without regard to choice of law principles. Each of the parties hereto consents to the jurisdiction of the courts of the State of Nevada, Clark County and to the federal courts located in the Clark County, State of Nevada.
10.8 Binding Effect; Benefits.
This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer, except as expressly provided in Section 5.5, on any Person other than the parties or their respective successors and permitted assigns, the Stockholders, and other Persons expressly referred to herein, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.
10.9 Assignability.
Neither this Agreement nor any of the parties’ rights hereunder shall be assignable by any party without the prior written consent of the other parties, which consent may be withheld, delayed, denied, or conditioned for any reason or for no reason, and any attempted assignment without such consent shall be void.
10.10 Waiver and Amendment.
Any term or provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The parties may, by mutual agreement in writing, amend this Agreement in any respect. The Company and each of the Stockholders hereby acknowledge their intent that this Agreement includes as a party any holder of capital stock in the Company at the time of Closing. The Purchaser, the Company, and each of the Stockholders therefore agree that this Agreement may be amended, without the further consent of any party to this Agreement, (i) to add as a new Stockholder any then-existing record and beneficial stockholder of the Company and (ii) to modify Schedule 1 to reflect the addition of such stockholder.
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10.11 Attorneys’ Fees.
In the event of any action or proceeding to enforce the terms and conditions of this Agreement, the prevailing party shall be entitled to an award of reasonable attorneys’ and experts’ fees and costs, in addition to such other relief as may be granted.
10.12 Severability.
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
10.13 Construction.
In executing this Agreement, the parties severally acknowledge and represent that each: (a) has fully and carefully read and considered this Agreement; (b) has or has had the opportunity to consult independent legal counsel regarding the legal effect and meaning of this document and all terms and conditions hereof; (c) has been afforded the opportunity to negotiate as to any and all terms hereof; and (d) has executed this Agreement voluntarily, free from any influence, coercion, or duress of any kind. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.
[signature pages follow]
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written.
| Purchaser: | ||
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Acting Chief Executive Officer | |
| The Company: | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | Matthew Morgan | |
| Title: | President | |
| Stockholders of Block Street Corp.: | ||
| Name: | Matthew Morgan | |
| (record and beneficial holder of 40,000 shares of Company Common Stock)/ | ||
| Name: | Kyle Klemmer | |
| (record and beneficial holder of 25,000 shares of Company Common Stock) | ||
| Name: | Derek Petersen | |
| (record and beneficial holder of 17,500 shares of Company Common Stock) | ||
| ORTHOGONAL THINKER INC. | ||
| By: | ||
| Name: | David Nikzad | |
| Title: | Chief Executive Officer | |
| (record and beneficial holder of 17,500 shares of Company Common Stock) | ||
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Agreement. “Agreement” shall mean this Stock Exchange Agreement to which this Exhibit A is attached (including all Disclosure Schedules and all Exhibits), as it may be amended from time to time.
Approved Plans. “Approved Plans” shall mean a stock option or similar plan for the benefit of employees or others, which has been approved by the Stockholders of the Company.
Company Common Stock. “Company Common Stock” shall have the meaning specified in the Recitals.
Breach. There shall be deemed to be a “Breach” of a representation, warranty, covenant, obligation, or other provision if there is or has been any inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation, or other provision.
Certificates. “Certificates” shall have the meaning specified in Section 1.3 of the Agreement.
Purchaser. “Purchaser” shall have the meaning specified in the first paragraph of the Agreement.
Purchaser Common Stock. “Purchaser Common Stock” shall mean the shares of common stock of Purchaser.
Purchaser SEC Reports. “Purchaser SEC Reports” shall have the meaning specified in Section 3.6(a) of the Agreement.
Closing. “Closing” shall have the meaning specified in Section 1.5 of the Agreement.
Closing Date. “Closing Date” shall have the meaning specified in Section 1.5 of the Agreement.
Code. “Code” shall mean the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.
Confidential Information. “Confidential Information” shall mean all nonpublic information disclosed by one party or its agents (the “Disclosing Party”) to the other party or its agents (the “Receiving Party”) that is designated as confidential or that, given the nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential. Confidential Information includes, without limitation (i) nonpublic information relating to the Disclosing Party’s technology, customers, vendors, suppliers, business plans, intellectual property, promotional and marketing activities, finances, agreements, transactions, financial information, and other business affairs, and (ii) third-party information that the Disclosing Party is obligated to keep confidential.
| EXHIBIT A page |
Confidential Information does not include any information that (i) is or becomes publicly available without breach of this Agreement, (ii) can be shown by documentation to have been known to the Receiving Party at the time of its receipt from the Disclosing Party, (iii) is received from a third party who, to the knowledge of the Receiving Party, did not acquire or disclose such information by a wrongful or tortious act, or (iv) can be shown by documentation to have been independently developed by the Receiving Party without reference to any Confidential Information.
Consent. “Consent” shall mean any approval, consent, ratification, permission, waiver, or authorization (including any Governmental Authorization).
Company Disclosure Schedule. The “Company Disclosure Schedule” shall have the meaning specified in introduction to Article II of the Agreement.
Entity. “Entity” shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, or entity.
Environmental Laws. “Environmental Laws” shall mean any Law or other requirement relating to the protection of the environment, health, or safety from the release or disposal of hazardous materials.
Environmental Permit. “Environmental Permit” means all licenses, permits, authorizations, approvals, franchises, and rights required under any applicable Environmental Law or Order.
Equity Securities. “Equity Security” shall mean any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital stock, or any such warrant or right.
Exchange Act. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
GAAP. “GAAP” shall mean United States Generally Accepted Accounting Principles, applied on a consistent basis.
Governmental Authorization. “Governmental Authorization” shall mean any:
(a) permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance, confirmation, endorsement, waiver, certification, designation, rating, registration, qualification, or authorization that is issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law; or
(b) right under any contract with any Governmental Body.
| EXHIBIT A page |
Governmental Body. “Governmental Body” shall mean any:
(a) nation, principality, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal); or
(d) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature, including any court, arbitrator, administrative agency or commissioner, or other governmental authority or instrumentality.
Indebtedness. “Indebtedness” shall mean any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.
Intellectual Property. “Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.
Knowledge. A corporation shall be deemed to have “knowledge” of a particular fact or matter only if a director or officer of such corporation has, had, or should have had knowledge of such fact or matter.
Laws. “Laws” means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational, or other law (including common law), constitution, statute, code, ordinance, rule, regulation, or treaty applicable to such Person.
Lien. “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien, or charge, right of first refusal, encumbrance or other adverse claim or interest of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.
| EXHIBIT A page |
Material Adverse Effect. “Material Adverse Effect” means any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the affected party, in each case taken as a whole or (b) materially impair the ability of the affected party to perform its obligations under this Agreement and the Transaction Agreements, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the affected party operates.
Material Contract. “Material Contract” means any and all agreements, contracts, arrangements, understandings, leases, commitments or otherwise, providing for potential payments by or to the company in excess of $1,000, and the amendments, supplements, and modifications thereto.
Nasdaq Minimum Price. “Nasdaq Minimum Price” means a price that is the lower of: (i) the closing price per share of Purchaser Common Stock (as reflected on Nasdaq.com) immediately preceding the Closing of this Agreement; or (ii) the average closing price of the Purchaser Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the Closing Date.
Order. “Order” shall mean any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Body.
Ordinary Course of Business. “Ordinary Course of Business” shall mean an action taken by the Company if (i) such action is taken in normal operation, consistent with past practices, (ii) such action is not required to be authorized by the Stockholders, Board of Directors or any committee of the Board of the Directors or other governing body of the Company and (iii) does not require any separate or special authorization or consent of any nature by any Governmental Body or third party.
Permitted Liens. “Permitted Liens” shall mean (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and materialmen and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves; and (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business.
Person. “Person” shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. “Pre-Closing Period” shall mean the period commencing as of the date of the Agreement and ending on the Closing Date.
Proceeding. “Proceeding” shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative, or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination, or investigation, commenced, brought, conducted, or heard by or before, or otherwise has involved, any Governmental Body or any arbitrator or arbitration panel.
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Representatives. “Representatives” of a specified party shall mean officers, directors, employees, attorneys, accountants, advisors, and representatives of such party, including, without limitation, all subsidiaries of such specified party, and all such Persons with respect to such subsidiaries. The Related Persons of the Company shall be deemed to be “Representatives” of the Company, as applicable.
SEC. “SEC” shall mean the United States Securities and Exchange Commission.
Securities Act. “Securities Act” shall mean the United States Securities Act of 1933, as amended.
Taxes. “Taxes” shall mean all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.
Tax Group. “Tax Group” shall mean any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which the Company is now or was formerly a member.
Tax Return. “Tax Return” shall mean any return, declaration, report, claim for refund or credit, information return, statement, or other similar document filed with any Governmental Body with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Transaction Agreements. “Transactional Agreements” shall mean this Agreement, the Acquisition Warrants, the Employment Agreements, and any agreement or document to be executed pursuant to this Agreement.
| EXHIBIT A page |
EXHIBIT B-1
[form of Section 1.2(b)(i) Acquisition Warrant]
| EXHIBIT B- |
EXHIBIT B-2
[form of Section 1.2(b)(ii) Acquisition Warrant]
| EXHIBIT B- |
EXHIBIT C
[form of Employment Agreement]
| EXHIBIT C |
SCHEDULE 1
Stockholders
| Name |
Number of Shares of Company Common Stock Held |
Percent of Shares of Company Common Stock Held |
||||||
| Matthew Morgan | 40,000 | 40.0 | % | |||||
| Kyle Klemmer | 25,000 | 25.0 | % | |||||
| Derek Petersen | 17,500 | 17.5 | % | |||||
| Orthogonal Thinker, Inc. | 17,500 | 17.5 | % | |||||
| TOTALS | 100,000 | 100.0 | % | |||||
| Name |
Number of Shares of Acquisition Stock to be Issued |
Number of Shares of Acquisition Warrant Stock underlying Section 1.2(b)(i) and (ii) Acquisition Warrants to be Granted |
||||
| Matthew Morgan | 5,068,103 | 6,335,128 / 6,757,470 | ||||
| Kyle Klemmer | 3,167,564 | 3,959,455 / 4,223,419 | ||||
| Derek Petersen | 2,217,295 | 2,771,619 / 2,956,393 | ||||
| Orthogonal Thinker, Inc. | 2,217,295 | 2,771,619 / 2,956,393 | ||||
| TOTALS | 12,670,257 | 15,837,821 / 16,893,675 | ||||
| SCHEDULE |
Exhibit 10.139
BLOCK STREET CORP.
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is dated as of April 20, 2026 by and between Derek Peterson (“Executive”) and Block Street Corp., a Nevada corporation (the “Company”), a wholly-owned subsidiary of ALT5 Sigma Corporation, a Nevada corporation (the “Parent”).
1. Duties.
1.1 Position. Executive is employed by the Company, reporting to the chief executive officer of the Company and of the Parent. The duties and responsibilities of Executive shall be as set forth in footnote 11, as well such duties for and services to the Parent as may be assigned to the Executive from time to time, including those as set forth in footnote 22, to a maximum of approximately twenty percent (20%) of his full-time work schedule. The Executive shall perform such duties as from time to time may be prescribed for him by the Company’s chief executive officer or the Company’s board of directors or the Parent’s chief executive officer, in all cases to be consistent with Executive’s corporate offices and positions and the relationship between the Company and the Parent.
1.2 Obligations to the Company. Executive agrees to the best of his ability and experience that he will at all times loyally and conscientiously perform all of the duties and obligations required of and from Executive pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Company and, as applicable, the Parent. During the term hereof, Executive further agrees that he will devote all of his business time and attention to the business of the Company and, as applicable, the Parent. The Company and, as applicable, the Parent will be entitled to all of the benefits and profits arising from or incident to all such work services, and advice, and Executive will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the chief executive officer of the Company and the chief executive officer of the Parent, and will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company and the Parent. Nothing in this Agreement will prevent Executive from accepting speaking or presentation engagements in exchange for honoraria, from serving on boards of charitable organizations, or from beneficially owning no more than 3% of the outstanding equity securities of a corporation, other than the Parent, whose common stock is listed on the Nasdaq Capital Market, provided that such activities do not materially interfere with Executive’s obligations to the Company and, as applicable, the Parent, as described above. Executive will comply with and be bound by the Company’s and the Parent’s operating policies, procedures, and practices from time to time in effect during the term of Executive’s employment.
1 Chief Strategist – Roles and Responsibilities at the Company:
| ● | Identify and evaluate token launch opportunities and strategic partnerships | |
| ● | Lead negotiation and structuring of token launches and commercial terms | |
| ● | Develop and oversee token economics, financial models, and launch frameworks | |
| ● | Manage relationships with exchanges and coordinate listing strategy | |
| ● | Build and engage KOL, influencer, and distribution networks | |
| ● | Source and develop strategic partnerships across Web3, AI, and tokenization ecosystems | |
| ● | Guide capital deployment into token launches and related investment opportunities | |
| ● | Monitor market trends, competitive landscape, and regulatory developments | |
| ● | Support internal strategy, execution, and investor communications |
2 Chief Strategist – Roles and Responsibilities at the Parent:
| ● | Support capital raising initiatives and investor engagement | |
| ● | Assist in sourcing, structuring, and executing mergers and acquisitions | |
| ● | Advise on corporate strategy, digital asset initiatives, and balance sheet deployment | |
| ● | Support corporate messaging, press releases, and investor communications | |
| ● | Develop strategic partnerships and business development opportunities | |
| ● | Provide general strategic advisory support to management and board |
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2. Term and Renewal. The term of this Agreement shall commence on the date of this Agreement (the “Commencement Date), and shall continue for a term of three (3) years, unless terminated earlier pursuant to the terms hereof. The term of the Executive’s employment under this Agreement shall be automatically extended for an additional one (1)-year period (each, a “Renewal Term”), unless the Company or the Executive provides the other at least ninety (90) days’ prior written notice before the next extension date that the initial term or a Renewal Term, as applicable, shall not be extended.
3. Compensation. For the duties and services to be performed by Executive hereunder, the Company shall pay Executive, and Executive agrees to accept, the salary, stock options, bonuses, and other benefits described below in this Section 3.
3.1 Salary. During calendar year 2026, Executive shall receive a monthly base salary of $10,000.00, which is equivalent to $120,000.00 on an annualized basis. Executive’s monthly base salary will be payable pursuant to the Company’s normal payroll practices for payment of salary to executive employees. Executive’s base salary will be reviewed as part of the Company’s normal salary review process.
3.2 Reserved.
3.3 Discretionary Bonus. Executive is eligible for an annual discretionary cash bonus. This discretionary bonus will be based upon (i) the Company’s achievement of business and other goals solely determined by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors in November of the previous fiscal year and (ii) the Executive’s achievement of personal performance objectives established and approved by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors no later than February of each fiscal year. Payment of any earned bonus shall be made no later than March following the close of the applicable fiscal year. In addition, Executive may be entitled to other incentive bonuses as solely determined by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors from time to time.
3.4 Additional Benefits. Executive is eligible to participate in the Company’s and the Parent’s respective employee benefit plans of general application in accordance with the rules established for individual participation in any such plan and under applicable law.
3.5 Indemnification. Executive shall enter into the Parent’s standard form of Indemnification Agreement, attached hereto as Exhibit A, providing indemnification to Executive to the maximum extent permitted by law.
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3.6 Vacation. Executive is eligible to accrue up to 10 days of paid vacation per year, which vacation may be used in the year in which accrued or in a subsequent year, subject to the Parent’s policies with respect to maximum accrual of unused vacation.
4. Severance Benefits. Executive shall be entitled to receive severance benefits upon termination of employment only as set forth in this Section 4. Executive’s entitlement to such severance benefits shall be conditioned upon Executive’s execution and delivery to the Company and the Parent of (i) a general release of all claims, (ii) a resignation from all of Executive’s positions with the Company and the Parent, and (iii) an agreement not to be employed or involved, directly or indirectly, with any business developing or exploiting any products or services that are competitive with products or services (a) being commercially developed or exploited by the Company or the Parent during Executive’s employment and (b) on which Executive worked or about which Executive learned proprietary information or trade secrets of the Company or the Parent during Executive’s employment with the Company. Any payment of severance benefits under the terms of this Agreement will be subject to all applicable tax withholding.
4.1 Voluntary Termination or Termination for Cause. If Executive voluntarily elects to terminate his employment with the Company other than by Executive’s Resignation for Good Reason, as defined in Section 5.3 below, or if the Company or a successor entity terminates Executive’s employment for Cause, as defined in Section 5.2 below, or the Executive dies or becomes incapacitated or otherwise disabled in such a manner that, in the sole determination of the Parent’s Board of Directors, the Executive cannot perform reasonably the duties specified in Section 1 above, then Executive shall not be entitled to receive payment of any severance benefits. Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment and Executive’s benefits will be continued solely to the extent of the Company’s or the Parent’s then-existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination and in accordance with applicable law.
4.2 Involuntary Termination Apart From a Change of Control. If Executive’s employment is terminated by the Company or a successor entity without Cause or by Executive’s Resignation for Good Reason prior to or more than twelve (12) months after a Change of Control (as defined below), Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment, and, in addition, Executive will be entitled to receive the following severance benefits:
(i) continued payment of his base salary for a period of six (6) months following the date of termination, in accordance with the Company’s normal payroll practices;
(ii) reimbursement of his premium cost for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for the lesser of the first twelve (12) months of continuation coverage or that number of months until Executive becomes eligible for reasonably comparable benefits under any future employer’s health insurance plan, provided Executive makes a timely election for such continuation coverage and presents reasonably requested documentation of payment of such premiums; and
(iii) payment of 100% of Executive’s current year discretionary cash bonus only if the Company, the Parent, and the Executive achieve all of their goals referred to in Section 3.3 of this Agreement.
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4.3 Involuntary Termination Following a Change of Control. If Executive’s employment is terminated by the Company or a successor entity without Cause or by Executive’s Resignation for Good Reason in either case within twelve (12) months following a Change of Control, Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment, and, in addition, Executive will be entitled to receive the following severance benefits:
(i) continued payment of his base salary for a period of twelve (12) months following the date of termination, in accordance with the Company’s normal payroll practices;
(ii) reimbursement of his premium cost for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for the lesser of the first twelve (12) months of continuation coverage or that number of months until Executive becomes eligible for reasonably comparable benefits under any future employer’s health insurance plan, provided Executive makes a timely election for such continuation coverage and presents reasonably requested documentation of payment of such premiums; and
(iii) payment of 100% of Executive’s current year discretionary cash bonus only if the Company, the Parent, and the Executive achieve all of their the goals referred to in Section 3.3 of this Agreement.
5. Definitions. For purposes of this Agreement, the following definitions shall apply:
5.1 “Change of Control” shall have the meaning ascribed in Section 2(h) of the Parent’s 2024 Equity Incentive Plan.
5.2 “Cause” means the determination by the Parent’s Board of Directors of any of the following: (i) Executive’s failure to perform Executive’s duties and responsibilities to the Company or the Parent, as appropriate, in a manner satisfactory to the Parent’s Board of Directors; (ii) Executive’s violation of a Company or Parent policy; (iii) Executive’s violation of any state or federal law, including, but not limited to, any act of fraud, embezzlement, or dishonesty, or any other willful misconduct that has caused or is reasonably expected to result in injury to the Company or the Parent, including such entity’s reputation; (iv) Executive’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or the Parent or any other party to whom the Executive owes an obligation of nondisclosure as a result of his relationship with the Company and the Parent; or (v) Executive’s breach of any of his obligations under any written agreement or covenant with the Company or the Parent.
5.3 “Resignation for Good Reason” means, subject to the right of either party to arbitrate a dispute with respect thereto in accordance with Section 12 below, Executive’s resignation as a result of, and within 30 days following: (i) a change in Executive’s position such that he is not a corporate officer of the Company (or a successor company, in the event of a Change of Control); (ii) a significant and substantial reduction in Executive’s job, duties, or responsibilities in a manner that is substantially and materially inconsistent with the position, duties, or responsibilities held by Executive immediately before such reduction; or (iii) any reduction in Executive’s base salary other than in connection with and consistent with a general reduction of all officer base salaries.
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6. Confidentiality Agreement. Executive has signed a Proprietary Information and Inventions Agreement (the “Proprietary Agreement”) that is incorporated by reference and made a part of this Agreement and the form of which is attached hereto as Exhibit B. Executive hereby represents and warrants to the Company and the Parent that Executive has complied with all obligations under the Proprietary Agreement and agrees to continue to abide by the terms of the Proprietary Agreement and further agrees that the provisions of the Proprietary Agreement shall survive any termination of this Agreement or of Executive’s employment relationship with the Company in accordance with the terms of the Proprietary Agreement.
7. Confidentiality of Terms. Executive agrees to follow the Company’s and the Parent’s strict policy that employees must not disclose, either directly or indirectly, any information, including any of the terms of this Agreement, regarding salary or stock purchase allocations to any person, including other employees of the Company and of the Parent (other than such employees who have a need to know such information); provided, however, that Executive may discuss such terms with members of his immediate family and any legal, tax, or accounting specialists who provide Executive with individual legal, tax or accounting advice.
8. Covenants. In addition to the obligations to which the Executive agreed by executing the Proprietary Agreement, Executive understands and agrees that, during the term of Executive’s employment with the Company, and for the greater of (i) the duration of any payments to Executive of severance benefits pursuant to Section 4 of this Agreement or (ii) one (1) year after the termination of Executive’s employment with the Company, Executive will not do any of the following:
8.1 Compete. Without the Company’s and the Parent’s prior written consent, Executive will not directly or indirectly be employed or involved with any business developing or exploiting any products or services that are competitive with products or services (i) being commercially developed or exploited by the Company and the Parent during Executive’s employment and (ii) on which Executive worked or about which Executive learned proprietary information or trade secrets of the Company or the Parent during Executive’s employment with the Company.
8.2 Solicit Business. Solicit or influence or attempt to influence any client, customer, or other person either directly or indirectly, to direct his, her, or its purchase of the Company’s products and/or services to any person, firm, corporation, institution, or other entity in competition with the business of the Company.
8.3 Solicit Personnel. Solicit or influence or attempt to influence any of the Company’s or the Parent’s employees, consultants, or other service providers to terminate or otherwise cease his, her, or its employment, consulting, or service relationships with the Company or to become an employee, consultant, or service provider of any competitor of the Company.
9. Breach of the Agreement. Executive acknowledges that, upon his breach of this Agreement or the Proprietary Agreement, the Company would sustain irreparable harm from such breach, and, therefore, Executive agrees that, in addition to any other remedies that the Company may have under this Agreement or otherwise, the Company shall be entitled to obtain equitable relief, including specific performance and injunctions, restraining Executive from committing or continuing any such violation of the Agreement or the Proprietary Agreement. Executive acknowledges and agrees that, upon Executive’s material or intentional breach of any of the provisions of the Agreement (including Section 8) or the Proprietary Agreement, in addition to any other remedies the Company may have under this Agreement or otherwise, the Company’s obligations to provide benefits to Executive as described in this Agreement, including without limitation those benefits provided in Section 4, shall immediately terminate.
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10. Entire Agreement. This Agreement, including the Proprietary Agreement that the Executive has signed, sets forth the entire agreement and understanding of the parties relating to the subject matter herein, supersedes any prior agreement, and merges all prior discussions between them.
11. Conflicts. Executive represents and warrants that his performance of all the terms of this Agreement will not breach any other agreement or understanding to which Executive is a party. Executive has not, and will not during the term of this Agreement, enter into any oral or written agreement in conflict with any of the provisions of this Agreement.
12. Dispute Resolution. In the event of any dispute, controversy, or claim arising under or in connection with this Agreement, or the breach hereof (including a dispute as to whether Cause or Resignation for Good Reason exists), the parties hereto shall first submit their dispute to formal mediation. The Company shall select a mediator reasonably acceptable to both parties. In the event that the parties cannot reach resolution through formal mediation, the dispute shall be settled by arbitration in Las Vegas, Nevada, in accordance with the Rules of the American Arbitration Association then in effect. Each party shall pay his, her or its own costs (including attorneys’ fees) in connection with such mediation or arbitration. To the extent such mediation or arbitration requires the submission of any information that either party claims is confidential information, the parties agree that such mediation or arbitration shall be confidential proceeding. Judgment upon the award rendered by the mediator or arbitrator may be entered in any court of competent jurisdiction. If any proceeding is necessary to enforce the mediation or arbitration award, the prevailing party shall be entitled to reasonable attorney’s fees and costs and disbursements, in addition to any other relief to which such party may be entitled. Notwithstanding the foregoing, the Company shall be entitled to seek equitable relief directly from a court of competent jurisdiction (without prior arbitration) with respect to any alleged breach of the Proprietary Agreement or Section 8, including specific performance and injunctions, restraining Executive from committing or continuing to commit such alleged breach.
13. Successors. Any successor to the Company (other than to an affiliate, whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agrees expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. The terms of this Agreement and all of Executive’s rights hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.
14. Miscellaneous Provisions.
14.1 Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
14.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) one (1) business day after being sent for next business day delivery, fees prepaid, via a reputable international overnight courier service, (b) upon delivery in the case of delivery by hand, or (c) on the date delivered in the place of delivery if sent by email (provided that no bounceback or similar “undeliverable” message is received by such sender) prior to 5:00 p.m. Pacific Time, otherwise on the next succeeding Business Day, in each case to the intended recipient as set forth below:
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If to the Company of the Parent:
ALT5 Sigma Corporation
Block Street Corp.
8548 Rozita Lee Avenue, Suite 305
Las Vegas, Nevada 89113
Attention: Chief Executive Officer
Email: t.isaac@isaac.com
If to Executive:
Derek Peterson
Teneriffe 4005
Queensland Australia
Email: derkyp@gmail.com
14.3 Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Nevada, without giving effect to its or any other jurisdiction’s principles of conflict of laws.
14.4 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
14.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
14.6 Advice of Counsel. Each party to this agreement acknowledges that, in executing this Agreement, such party has had the opportunity to seek the advice of independent legal counsel, and has read and understood all of the terms and provisions of this Agreement. This Agreement shall not be construed against any party by reason of the drafting of preparation hereof.
[signatures
on next page]
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The parties have executed this Employment Agreement as of the date first written above.
| The Company: | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
| The Executive: | ||
| Name: | Derek Peterson | |
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EXHIBIT A
ALT5 SIGMA CORPORATION
BLOCK STREET CORP.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the “Agreement”) is made as of April 20, 2026, by and between ALT5 Sigma Corporation, a Nevada corporation (the “Company”), and Derek Peterson (the “Indemnitee”).
RECITALS
The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and agents of the Company may not be willing to continue to serve as agents of the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.
AGREEMENT
In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
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(b) Proceedings by or in the right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) and, to the fullest extent permitted by law, amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its stockholders, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company in the performance of Indemnitee’s duty to the Company and its stockholders unless and only to the extent that the court in which such action or proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith.
2. No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referred to in Section l(a) or Section 1(b) hereof (including amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 12(d) below. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.
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(c) Procedure. Any indemnification and advances provided for in Section 1 and this Section 3 shall be made no later than twenty (20) days after receipt of the written request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within twenty (20) days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including attorneys’ fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company and Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated under Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.
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4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Washington corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Washington corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company’s Board of Directors, the Washington Business Corporations Act, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he or she may have ceased to serve in any such capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or public policy may override applicable state law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.
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7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.
8. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.
9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated By Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under the Washington Business Corporations Act, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate;
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;
(c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent such expenses or liabilities have been paid directly to Indemnitee by an insurance carrier under a policy of officers’ and directors’ liability insurance maintained by the Company; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.
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10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the “COMPANY” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to “OTHER ENTERPRISES” shall include employee benefit plans; references to “FINES” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “SERVING AT THE REQUEST OF THE COMPANY” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “NOT OPPOSED TO THE BEST INTERESTS OF THE COMPANY” as referred to in this Agreement.
11. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.
12. Miscellaneous.
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Nevada, without giving effect to principles of conflict of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
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(c) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.
(d) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.
(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, legal representatives, and assigns.
(g) Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.
[signature page follows]
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The parties hereto have executed this Agreement as of the day and year set forth on the first page of this Agreement.
| The Company: | ||
| ALT5 SIGMA CORPORATION | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Chief Executive Officer | |
| Address: | 8548 Rozita Lee Avenue, Suite 305 | |
| Las Vegas, Nevada 89113 |
AGREED TO AND ACCEPTED:
| Indemnitee: | |
| Name: Derek Peterson |
| Address: | Teneriffe 4005 | |
| Queensland Australia |
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EXHIBIT B
ALT5 SIGMA CORPORATION
BLOCK STREET CORP.
PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT
In consideration of my employment or consultancy (as the case may be) by Block Street Corp., a Nevada corporation (the “Company”, which term includes the Company’s parent, subsidiaries, and any of its affiliates), any opportunity for advancement or reassignment that the Company may offer me, the compensation paid to me in connection with such employment, I, Derek Peterson, hereby agree as follows:
1. Whenever used in this Proprietary Information and Invention Agreement (this “Agreement”) the following terms will have the following meanings:
1.1 “Invention(s)” means discoveries, developments, designs, improvements, inventions, and/or works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. This includes, but is not limited to, any new machine, article of manufacture, biological material, method, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design, or configuration of any kind, or any improvement thereon.
1.2 “Proprietary Information” means information or physical material not generally known or available outside the Company or information or physical material entrusted to the Company by third parties. This includes, but is not limited to, Inventions, confidential knowledge, trade secrets, copyrights, product ideas, techniques, processes, formulas, object codes, mask works, and/or any other information of any type relating to documentation, data, schematics, algorithms, flow charts, mechanisms, research, manufacture, improvements, assembly, installation, marketing, forecasts, pricing, customers, the salaries, duties, qualifications, performance levels, and terms of compensation of other employees, and/or cost or other financial data concerning any of the foregoing or the Company and its operations. Proprietary Information may be contained in material such as drawings, samples, procedures, specifications, reports, studies, customer or supplier lists, budgets, cost or price lists, compilations, or computer programs, or may be in the nature of unwritten knowledge or know-how.
1.3 “Company/Parent Documents” means documents or other media that contain Proprietary Information or any other information concerning the business, operations, or plans of the Company, whether such documents have been prepared by me or by others. “Company/Parent Documents” include, but are not limited to, blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes or printouts, sound recordings, and other printed, typewritten, or handwritten documents.
2. I understand that the Company and the Parent are each engaged in continuous programs of research, development, and production. I also recognize that the Company and the Parent each possesses or has rights to Proprietary Information (including certain information developed by me during my employment or consultancy (as the case may be) by the Company that has commercial value in the Company’s and Parent’s respective businesses.
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3. I understand that the Company and the Parent each possess Company/Parent Documents that are important to their respective businesses.
4. I understand and agree that my employment or consultancy (as the case may be) creates a relationship of confidence and trust between the Company and the Parent, on the one hand, and me, on the other hand, with respect to (i) all Proprietary Information and (ii) the confidential information of another person or entity with which the Company or the Parent has a business relationship and is required by terms of an agreement with such entity or person to hold such information as confidential. At all times, both during my employment or consultancy (as the case may be) by the Company and the Parent and after its termination, I will keep in confidence and trust all such information, and I will not use or disclose any such information without the written consent of each of the Company and the Parent, except as may be necessary in the ordinary course of performing my duties under the Employment Agreement.
5. In addition, I hereby agree as follows:
5.1 All Proprietary Information will be the sole property of the Company or the Parent and their respective assigns, and the Company or the Parent and their respective assigns will be the sole owner of all trade secrets, patents, copyrights, and other rights in connection therewith. I hereby assign to the Company or the Parent (at their choice) any rights I may presently have or I may acquire in such Proprietary Information.
5.2 All Company/Parent Documents, apparatus, equipment, and other physical property, whether or not pertaining to Proprietary Information, furnished to me by the Company or the Parent or produced by me or others in connection with my employment or consultancy (as the case may be) will be and remain the sole property of the Company or the Parent, as appropriate. I will return to the Company or the Parent, as appropriate all such Company/Parent Documents, materials, and property as and when requested by the Company or the Parent, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Parent; and (iii) my copy of this Agreement (my “Personal Documents”). Even if the Company or the Parent does not so request, I will return all such Company/Parent Documents, materials, and property upon termination of my employment or consultancy (as the case may be) by me or by the Company for any reason, and, except for my Personal Documents, I will not take with me any such Company/Parent Documents, material, or property or any reproduction thereof upon such termination.
5.3 I will promptly disclose to the Company or the Parent, or any persons designated by either such entity, all Inventions relating to the Field, as defined below, made or conceived, reduced to practice, or learned by me, either alone or jointly with others, prior to the term of my employment or consultancy (as the case may be) and for one (1) year thereafter. For purposes of this Agreement, “Field” means research, development, marketing, or manufacturing of any products or services also researched, developed, marketed, or manufactured by the Company or the Parent.
5.4 All Inventions that I conceive, reduce to practice, develop, or have developed (in whole or in part, either alone or jointly with others) during the term of my employment or consultancy (as the case may be) will be the sole property of the Company or the Parent and their respective assigns to the maximum extent permitted by law (and to the fullest extent permitted by law will be deemed “works made for hire”), and the Company or the Parent and their respective assigns will be the sole owner of all patents, copyrights, and other rights in connection therewith. I hereby assign to the Company or, at the option of the Parent, to the Parent my entire right, title, and interest, whether possessed now or later acquired, in and to such Inventions. I agree that any Invention required to be disclosed hereunder within one (1) year after the term of my employment or consultancy (as the case may be) will be presumed to have been conceived during my employment or consultancy (as the case may be). I understand that I may overcome the presumption by showing that such Invention was conceived after the termination of my employment or consultancy (as the case may be).
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5. As a matter of record I attach hereto as Exhibit C a complete list of all Inventions (including patent applications and patents) relevant to the Field that have been made, conceived, developed, or first reduced to practice by me, alone or jointly with others, prior to my employment or consultancy (as the case may be) with the Company that I desire to remove from the operation of this Agreement, and I covenant that such list is complete. If no such list is attached to this Agreement, I represent that I have no such Inventions at the time of signing this Agreement. If in the course of my employment or consultancy with the Company, I use or incorporate into a product or process an Invention not covered by this Agreement in which I have an interest, the Company and the Parent are each hereby granted a nonexclusive, fully paid-up, royalty-free, perpetual, worldwide license of my interest to use and sublicense such Invention without restriction of any kind.
6. I represent that my execution of this Agreement, my employment or consultancy (as the case may be) with the Company, and my performance of my proposed duties to the Company and to the Parent in the development of their respective businesses will not violate any obligations I may have to any former employer, or other person, or entity, including any obligations to keep confidential any proprietary or confidential information of any such employer. I have not entered into, and I will not enter into, any agreement that conflicts with or would, if performed by me, cause me to breach this Agreement.
7. In the course of performing my duties to the Company and the Parent, I will not utilize any proprietary or confidential information of any former employer.
8. I agree that this Agreement does not constitute an employment or consultancy (as the case may be) agreement for a specific duration and that (i) my employment or consultancy (as the case may be) with the Company (and, potentially, derivatively, with the Parent) is “at will” and (ii) I will have the right to resign my employment or consultancy (as the case may be), and the Company (and, potentially, derivatively, with the Parent) will have the right to terminate my employment or consultancy (as the case may be), at any time and for any reason, with or without cause, all as set forth in that certain Employment Agreement between the Company and me, dated April 20, 2026.
9. This Agreement will be effective as of the first day of my employment or consultancy (as the case may be) by the Company and the obligations hereunder will continue beyond the termination of my employment and will be binding on my heirs, assigns, and legal representatives. This Agreement is for the benefit of the Company, its successors, and assigns (including all subsidiaries, affiliates, joint ventures, and associated companies) and is not conditioned on my employment for any period of time or compensation therefor. I agree that the Company and the Parent are each entitled to communicate any obligations under this Agreement to any future employer or potential employer of mine.
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10. During the term of my employment and for one (1) year thereafter, I will not, without the Company’s written consent, directly or indirectly be employed or involved with any business developing or exploiting any products or services that are competitive with products or services (a) being commercially developed or exploited by the Company during my employment and (b) on which I worked or about which I learned Proprietary Information during my employment under the Employment Agreement.
11. During the term of my employment and for one (1) year thereafter, I will not personally or through others recruit, solicit or induce in any way any employee, advisor or consultant of the Company to terminate his or her relationship with the Company.
12. I acknowledge that any violation of this Agreement by me will cause irreparable injury to the Company and, potentially, to the Parent. I agree that the Company will be entitled to extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions, and permanent injunctions without the necessity of posting a bond or other security and without prejudice to any other rights and remedies that the Company and the Parent may have for a breach of this Agreement.
13. I agree that any dispute in the meaning, effect, or validity of this Agreement will be resolved in accordance with the laws of the State of Nevada without regard to its or any other jurisdiction’s conflict of laws provisions. I further agree that if, one or more provisions of this Agreement are held to be unenforceable under applicable Nevada law, such provision(s) will be excluded from this Agreement and the balance of this Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.
14. I HAVE READ AND UNDERSTOOD THIS AGREEMENT. THIS AGREEMENT MAY ONLY BE MODIFIED BY A SUBSEQUENT WRITTEN AGREEMENT EXECUTED BY THE CHIEF OPERATING OFFICER OF THE COMPANY.
Dated: April 20, 2026.
| By: | ||
| Name: | Derek Peterson | |
| Accepted and Agreed to: | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Chief Executive Officer | |
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EXHIBIT C
ALT5 Sigma Corporation
Block Street Corp.
8548 Rozita Lee Avenue, Suite 305
Las Vegas, Nevada 89113
Ladies and Gentlemen:
1. The following is a complete list of all inventions or improvements relevant to the subject matter of my employment or consultancy (as the case may be) by Block Street Corp. (the “Company”) that have been made or conceived or first reduced to practice by me, alone or jointly with others, prior to my employment or consultancy (as the case may be) by the Company that I desire to remove from the operation of the Proprietary Information and Inventions Agreement entered into between the Company and me.
________ No inventions or improvements.
________ Any and all inventions regarding:
________ Additional sheets attached.
2. I propose to bring to my employment or consultancy (as the case may be) the following materials and documents of a former employer:
________ No materials or documents.
________ See below:
| Name: | Derek Peterson |
| EXHIBIT C |
Exhibit 10.140
BLOCK STREET CORP.
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is dated as of April 20, 2026 by and between Matthew Lee Morgan (“Executive”) and Block Street Corp., a Nevada corporation (the “Company”), a wholly-owned subsidiary of ALT5 Sigma Corporation, a Nevada corporation (the “Parent”).
1. Duties.
1.1 Position. Executive is employed by the Company, reporting to the chief executive officer of the Company and of the Parent. The duties and responsibilities of Executive shall be as set forth in footnote 11, as well such duties for and services to the Parent as may be assigned to the Executive from time to time, including those as set forth in footnote 22, to a maximum of approximately twenty percent (20%) of his full-time work schedule. The Executive shall perform such duties as from time to time may be prescribed for him by the Company’s chief executive officer or the Company’s board of directors or the Parent’s chief executive officer, in all cases to be consistent with Executive’s corporate offices and positions and the relationship between the Company and the Parent.
1.2 Obligations to the Company. Executive agrees to the best of his ability and experience that he will at all times loyally and conscientiously perform all of the duties and obligations required of and from Executive pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Company and, as applicable, the Parent. During the term hereof, Executive further agrees that he will devote all of his business time and attention to the business of the Company and, as applicable, the Parent. The Company and, as applicable, the Parent will be entitled to all of the benefits and profits arising from or incident to all such work services, and advice, and Executive will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the chief executive officer of the Company and the chief executive officer of the Parent, and will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company and the Parent. Nothing in this Agreement will prevent Executive from accepting speaking or presentation engagements in exchange for honoraria, from serving on boards of charitable organizations, or from beneficially owning no more than 3% of the outstanding equity securities of a corporation, other than the Parent, whose common stock is listed on the Nasdaq Capital Market, provided that such activities do not materially interfere with Executive’s obligations to the Company and, as applicable, the Parent, as described above. Executive will comply with and be bound by the Company’s and the Parent’s operating policies, procedures, and practices from time to time in effect during the term of Executive’s employment.
1 Global Head of Vision – Roles and Responsibilities at the Company:
| ● | Define and drive the long term vision, strategic direction, and market positioning of the platform | |
| ● | Oversee pipeline development and ensure alignment of token launch opportunities with company vision | |
| ● | Provide high level guidance on transaction structuring, token economics, and platform standards | |
| ● | Shape global partnerships across Web3, AI, tokenization, and financial infrastructure ecosystems | |
| ● | Guide exchange relationships and overall distribution strategy at a strategic level | |
| ● | Oversee brand, narrative, and market positioning in coordination with leadership | |
| ● | Identify emerging market trends and expansion opportunities across sectors and geographies | |
| ● | Align internal teams around strategic priorities, growth initiatives, and execution roadmap |
2 Global Head of Vision – Roles and Responsibilities at the Parent:
| ● | Provide strategic oversight on corporate direction, growth initiatives, and digital asset strategy | |
| ● | Guide M&A strategy including target identification and strategic fit | |
| ● | Support capital markets strategy and high level investor positioning | |
| ● | Oversee corporate narrative, branding, and market messaging | |
| ● | Advise on key partnerships and ecosystem development | |
| ● | Provide strategic guidance to executive team and board on long term value creation |
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2. Term and Renewal. The term of this Agreement shall commence on the date of this Agreement (the “Commencement Date), and shall continue for a term of three (3) years, unless terminated earlier pursuant to the terms hereof. The term of the Executive’s employment under this Agreement shall be automatically extended for an additional one (1)-year period (each, a “Renewal Term”), unless the Company or the Executive provides the other at least ninety (90) days’ prior written notice before the next extension date that the initial term or a Renewal Term, as applicable, shall not be extended.
3. Compensation. For the duties and services to be performed by Executive hereunder, the Company shall pay Executive, and Executive agrees to accept, the salary, stock options, bonuses, and other benefits described below in this Section 3.
3.1 Salary. During calendar year 2026, Executive shall receive a monthly base salary of Ten Thousand Dollars ($10,000.00), which is equivalent to One Hundred Twenty Thousand Dollars ($120,000.00) on an annualized basis. Executive’s monthly base salary will be payable pursuant to the Company’s normal payroll practices for payment of salary to executive employees. Executive’s base salary will be reviewed as part of the Company’s normal salary review process.
3.2 Reserved.
3.3 Discretionary Bonus. Executive is eligible for an annual discretionary cash bonus. This discretionary bonus will be based upon (i) the Company’s achievement of business and other goals solely determined by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors in November of the previous fiscal year and (ii) the Executive’s achievement of personal performance objectives established and approved by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors no later than February of each fiscal year. Payment of any earned bonus shall be made no later than March following the close of the applicable fiscal year. In addition, Executive may be entitled to other incentive bonuses as solely determined by the Company’s chief executive officer with the concurrence of the Parent’s Board of Directors from time to time.
3.4 Additional Benefits. Executive is eligible to participate in the Company’s and the Parent’s respective employee benefit plans of general application in accordance with the rules established for individual participation in any such plan and under applicable law.
3.5 Indemnification. Executive shall enter into the Parent’s standard form of Indemnification Agreement, attached hereto as Exhibit A, providing indemnification to Executive to the maximum extent permitted by law.
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3.6 Vacation. Executive is eligible to accrue up to 10 days of paid vacation per year, which vacation may be used in the year in which accrued or in a subsequent year, subject to the Parent’s policies with respect to maximum accrual of unused vacation.
4. Severance Benefits. Executive shall be entitled to receive severance benefits upon termination of employment only as set forth in this Section 4. Executive’s entitlement to such severance benefits shall be conditioned upon Executive’s execution and delivery to the Company and the Parent of (i) a general release of all claims, (ii) a resignation from all of Executive’s positions with the Company and the Parent, and (iii) an agreement not to be employed or involved, directly or indirectly, with any business developing or exploiting any products or services that are competitive with products or services (a) being commercially developed or exploited by the Company or the Parent during Executive’s employment and (b) on which Executive worked or about which Executive learned proprietary information or trade secrets of the Company or the Parent during Executive’s employment with the Company. Any payment of severance benefits under the terms of this Agreement will be subject to all applicable tax withholding.
4.1 Voluntary Termination or Termination for Cause. If Executive voluntarily elects to terminate his employment with the Company other than by Executive’s Resignation for Good Reason, as defined in Section 5.3 below, or if the Company or a successor entity terminates Executive’s employment for Cause, as defined in Section 5.2 below, or the Executive dies or becomes incapacitated or otherwise disabled in such a manner that, in the sole determination of the Parent’s Board of Directors, the Executive cannot perform reasonably the duties specified in Section 1 above, then Executive shall not be entitled to receive payment of any severance benefits. Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment and Executive’s benefits will be continued solely to the extent of the Company’s or the Parent’s then-existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination and in accordance with applicable law.
4.2 Involuntary Termination Apart From a Change of Control. If Executive’s employment is terminated by the Company or a successor entity without Cause or by Executive’s Resignation for Good Reason prior to or more than twelve (12) months after a Change of Control (as defined below), Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment, and, in addition, Executive will be entitled to receive the following severance benefits:
(i) continued payment of his base salary for a period of six (6) months following the date of termination, in accordance with the Company’s normal payroll practices;
(ii) reimbursement of his premium cost for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for the lesser of the first twelve (12) months of continuation coverage or that number of months until Executive becomes eligible for reasonably comparable benefits under any future employer’s health insurance plan, provided Executive makes a timely election for such continuation coverage and presents reasonably requested documentation of payment of such premiums; and
(iii) payment of 100% of Executive’s current year discretionary cash bonus only if the Company, the Parent, and the Executive achieve all of their goals referred to in Section 3.3 of this Agreement.
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4.3 Involuntary Termination Following a Change of Control. If Executive’s employment is terminated by the Company or a successor entity without Cause or by Executive’s Resignation for Good Reason in either case within twelve (12) months following a Change of Control, Executive will receive payment for all salary and unpaid vacation accrued as of the date of Executive’s termination of employment, and, in addition, Executive will be entitled to receive the following severance benefits:
(i) continued payment of his base salary for a period of twelve (12) months following the date of termination, in accordance with the Company’s normal payroll practices;
(ii) reimbursement of his premium cost for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for the lesser of the first twelve (12) months of continuation coverage or that number of months until Executive becomes eligible for reasonably comparable benefits under any future employer’s health insurance plan, provided Executive makes a timely election for such continuation coverage and presents reasonably requested documentation of payment of such premiums; and
(iii) payment of 100% of Executive’s current year discretionary cash bonus only if the Company, the Parent, and the Executive’s achieve all of their goals referred to in Section 3.3 of this Agreement.
5. Definitions. For purposes of this Agreement, the following definitions shall apply:
5.1 “Change of Control” shall have the meaning ascribed in Section 2(h) of the Parent’s 2024 Equity Incentive Plan.
5.2 “Cause” means the determination by the Parent’s Board of Directors of any of the following: (i) Executive’s failure to perform Executive’s duties and responsibilities to the Company or the Parent, as appropriate, in a manner satisfactory to the Parent’s Board of Directors; (ii) Executive’s violation of a Company or Parent policy; (iii) Executive’s violation of any state or federal law, including, but not limited to, any act of fraud, embezzlement, or dishonesty, or any other willful misconduct that has caused or is reasonably expected to result in injury to the Company or the Parent, including such entity’s reputation; (iv) Executive’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or the Parent or any other party to whom the Executive owes an obligation of nondisclosure as a result of his relationship with the Company and the Parent; or (v) Executive’s breach of any of his obligations under any written agreement or covenant with the Company or the Parent.
5.3 “Resignation for Good Reason” means, subject to the right of either party to arbitrate a dispute with respect thereto in accordance with Section 12 below, Executive’s resignation as a result of, and within 30 days following: (i) a change in Executive’s position such that he is not a corporate officer of the Company (or a successor company, in the event of a Change of Control); (ii) a significant and substantial reduction in Executive’s job, duties, or responsibilities in a manner that is substantially and materially inconsistent with the position, duties, or responsibilities held by Executive immediately before such reduction; or (iii) any reduction in Executive’s base salary other than in connection with and consistent with a general reduction of all officer base salaries.
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6. Confidentiality Agreement. Executive has signed a Proprietary Information and Inventions Agreement (the “Proprietary Agreement”) that is incorporated by reference and made a part of this Agreement and the form of which is attached hereto as Exhibit B. Executive hereby represents and warrants to the Company and the Parent that Executive has complied with all obligations under the Proprietary Agreement and agrees to continue to abide by the terms of the Proprietary Agreement and further agrees that the provisions of the Proprietary Agreement shall survive any termination of this Agreement or of Executive’s employment relationship with the Company in accordance with the terms of the Proprietary Agreement.
7. Confidentiality of Terms. Executive agrees to follow the Company’s and the Parent’s strict policy that employees must not disclose, either directly or indirectly, any information, including any of the terms of this Agreement, regarding salary or stock purchase allocations to any person, including other employees of the Company and of the Parent (other than such employees who have a need to know such information); provided, however, that Executive may discuss such terms with members of his immediate family and any legal, tax, or accounting specialists who provide Executive with individual legal, tax or accounting advice.
8. Covenants. In addition to the obligations to which the Executive agreed by executing the Proprietary Agreement, Executive understands and agrees that, during the term of Executive’s employment with the Company, and for the greater of (i) the duration of any payments to Executive of severance benefits pursuant to Section 4 of this Agreement or (ii) one (1) year after the termination of Executive’s employment with the Company, Executive will not do any of the following:
8.1 Compete. Without the Company’s and the Parent’s prior written consent, Executive will not directly or indirectly be employed or involved with any business developing or exploiting any products or services that are competitive with products or services (i) being commercially developed or exploited by the Company and the Parent during Executive’s employment and (ii) on which Executive worked or about which Executive learned proprietary information or trade secrets of the Company or the Parent during Executive’s employment with the Company.
8.2 Solicit Business. Solicit or influence or attempt to influence any client, customer, or other person either directly or indirectly, to direct his, her, or its purchase of the Company’s products and/or services to any person, firm, corporation, institution, or other entity in competition with the business of the Company.
8.3 Solicit Personnel. Solicit or influence or attempt to influence any of the Company’s or the Parent’s employees, consultants, or other service providers to terminate or otherwise cease his, her, or its employment, consulting, or service relationships with the Company or to become an employee, consultant, or service provider of any competitor of the Company.
9. Breach of the Agreement. Executive acknowledges that, upon his breach of this Agreement or the Proprietary Agreement, the Company would sustain irreparable harm from such breach, and, therefore, Executive agrees that, in addition to any other remedies that the Company may have under this Agreement or otherwise, the Company shall be entitled to obtain equitable relief, including specific performance and injunctions, restraining Executive from committing or continuing any such violation of the Agreement or the Proprietary Agreement. Executive acknowledges and agrees that, upon Executive’s material or intentional breach of any of the provisions of the Agreement (including Section 8) or the Proprietary Agreement, in addition to any other remedies the Company may have under this Agreement or otherwise, the Company’s obligations to provide benefits to Executive as described in this Agreement, including without limitation those benefits provided in Section 4, shall immediately terminate.
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10. Entire Agreement. This Agreement, including the Proprietary Agreement that the Executive has signed, sets forth the entire agreement and understanding of the parties relating to the subject matter herein, supersedes any prior agreement, and merges all prior discussions between them.
11. Conflicts. Executive represents and warrants that his performance of all the terms of this Agreement will not breach any other agreement or understanding to which Executive is a party. Executive has not, and will not during the term of this Agreement, enter into any oral or written agreement in conflict with any of the provisions of this Agreement.
12. Dispute Resolution. In the event of any dispute, controversy, or claim arising under or in connection with this Agreement, or the breach hereof (including a dispute as to whether Cause or Resignation for Good Reason exists), the parties hereto shall first submit their dispute to formal mediation. The Company shall select a mediator reasonably acceptable to both parties. In the event that the parties cannot reach resolution through formal mediation, the dispute shall be settled by arbitration in Las Vegas, Nevada, in accordance with the Rules of the American Arbitration Association then in effect. Each party shall pay his, her or its own costs (including attorneys’ fees) in connection with such mediation or arbitration. To the extent such mediation or arbitration requires the submission of any information that either party claims is confidential information, the parties agree that such mediation or arbitration shall be confidential proceeding. Judgment upon the award rendered by the mediator or arbitrator may be entered in any court of competent jurisdiction. If any proceeding is necessary to enforce the mediation or arbitration award, the prevailing party shall be entitled to reasonable attorney’s fees and costs and disbursements, in addition to any other relief to which such party may be entitled. Notwithstanding the foregoing, the Company shall be entitled to seek equitable relief directly from a court of competent jurisdiction (without prior arbitration) with respect to any alleged breach of the Proprietary Agreement or Section 8, including specific performance and injunctions, restraining Executive from committing or continuing to commit such alleged breach.
13. Successors. Any successor to the Company (other than to an affiliate, whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agrees expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. The terms of this Agreement and all of Executive’s rights hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.
14. Miscellaneous Provisions.
14.1 Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
14.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) one (1) business day after being sent for next business day delivery, fees prepaid, via a reputable international overnight courier service, (b) upon delivery in the case of delivery by hand, or (c) on the date delivered in the place of delivery if sent by email (provided that no bounceback or similar “undeliverable” message is received by such sender) prior to 5:00 p.m. Pacific Time, otherwise on the next succeeding Business Day, in each case to the intended recipient as set forth below:
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If to the Company of the Parent:
ALT5 Sigma Corporation
Block Street Corp.
8548 Rozita Lee Avenue, Suite 305
Las Vegas, Nevada 89113
Attention: Chief Executive Officer
Email: t.isaac@isaac.com
If to Executive:
Matthew Lee Morgan
4400 N. Scottsdale Road #498
Scottsdale, Arizona 85251
Email: matthew.morgan@live.com
14.3 Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Nevada, without giving effect to its or any other jurisdiction’s principles of conflict of laws.
14.4 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
14.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
14.6 Advice of Counsel. Each party to this agreement acknowledges that, in executing this Agreement, such party has had the opportunity to seek the advice of independent legal counsel, and has read and understood all of the terms and provisions of this Agreement. This Agreement shall not be construed against any party by reason of the drafting of preparation hereof.
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The parties have executed this Employment Agreement as of the date first written above.
| The Company: | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
| The Executive: | ||
| Name: | Matthew Lee Morgan | |
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EXHIBIT A
ALT5 SIGMA CORPORATION
BLOCK STREET CORP.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the “Agreement”) is made as of April 20, 2026, by and between ALT5 Sigma Corporation, a Nevada corporation (the “Company”), and Matthew Lee Morgan (the “Indemnitee”).
RECITALS
The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and agents of the Company may not be willing to continue to serve as agents of the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.
AGREEMENT
In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
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(b) Proceedings by or in the right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) and, to the fullest extent permitted by law, amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its stockholders, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company in the performance of Indemnitee’s duty to the Company and its stockholders unless and only to the extent that the court in which such action or proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith.
2. No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referred to in Section l(a) or Section 1(b) hereof (including amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 12(d) below. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.
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(c) Procedure. Any indemnification and advances provided for in Section 1 and this Section 3 shall be made no later than twenty (20) days after receipt of the written request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within twenty (20) days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including attorneys’ fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company and Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated under Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.
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4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Washington corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Washington corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company’s Board of Directors, the Washington Business Corporations Act, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he or she may have ceased to serve in any such capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or public policy may override applicable state law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.
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7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.
8. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.
9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated By Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under the Washington Business Corporations Act, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate;
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;
(c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent such expenses or liabilities have been paid directly to Indemnitee by an insurance carrier under a policy of officers’ and directors’ liability insurance maintained by the Company; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.
| EXHIBIT A page |
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the “COMPANY” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to “OTHER ENTERPRISES” shall include employee benefit plans; references to “FINES” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “SERVING AT THE REQUEST OF THE COMPANY” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “NOT OPPOSED TO THE BEST INTERESTS OF THE COMPANY” as referred to in this Agreement.
11. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.
12. Miscellaneous.
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Nevada, without giving effect to principles of conflict of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.
| EXHIBIT A page |
(c) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.
(d) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.
(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, legal representatives, and assigns.
(g) Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.
[signature page follows]
| EXHIBIT A page |
The parties hereto have executed this Agreement as of the day and year set forth on the first page of this Agreement.
| The Company: | ||
| ALT5 SIGMA CORPORATION | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Chief Executive Officer | |
| Address: | 8548 Rozita Lee Avenue, Suite 305 | |
| Las Vegas, Nevada 89113 |
AGREED TO AND ACCEPTED:
| Indemnitee: | |
| Name: Matthew Lee Morgan |
| Address: | 4400 N. Scottsdale Road #498 | |
| Scottsdale, Arizona 85251 |
| EXHIBIT A page |
EXHIBIT B
ALT5 SIGMA CORPORATION
BLOCK STREET CORP.
PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT
In consideration of my employment or consultancy (as the case may be) by Block Street Corp., a Nevada corporation (the “Company”, which term includes the Company’s parent, subsidiaries, and any of its affiliates), any opportunity for advancement or reassignment that the Company may offer me, the compensation paid to me in connection with such employment, I, Matthew Lee Morgan, hereby agree as follows:
1. Whenever used in this Proprietary Information and Invention Agreement (this “Agreement”) the following terms will have the following meanings:
1.1 “Invention(s)” means discoveries, developments, designs, improvements, inventions, and/or works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. This includes, but is not limited to, any new machine, article of manufacture, biological material, method, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design, or configuration of any kind, or any improvement thereon.
1.2 “Proprietary Information” means information or physical material not generally known or available outside the Company or information or physical material entrusted to the Company by third parties. This includes, but is not limited to, Inventions, confidential knowledge, trade secrets, copyrights, product ideas, techniques, processes, formulas, object codes, mask works, and/or any other information of any type relating to documentation, data, schematics, algorithms, flow charts, mechanisms, research, manufacture, improvements, assembly, installation, marketing, forecasts, pricing, customers, the salaries, duties, qualifications, performance levels, and terms of compensation of other employees, and/or cost or other financial data concerning any of the foregoing or the Company and its operations. Proprietary Information may be contained in material such as drawings, samples, procedures, specifications, reports, studies, customer or supplier lists, budgets, cost or price lists, compilations, or computer programs, or may be in the nature of unwritten knowledge or know-how.
1.3 “Company/Parent Documents” means documents or other media that contain Proprietary Information or any other information concerning the business, operations, or plans of the Company, whether such documents have been prepared by me or by others. “Company/Parent Documents” include, but are not limited to, blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes or printouts, sound recordings, and other printed, typewritten, or handwritten documents.
2. I understand that the Company and the Parent are each engaged in continuous programs of research, development, and production. I also recognize that the Company and the Parent each possesses or has rights to Proprietary Information (including certain information developed by me during my employment or consultancy (as the case may be) by the Company that has commercial value in the Company’s and Parent’s respective businesses.
| EXHIBIT B page |
3. I understand that the Company and the Parent each possess Company/Parent Documents that are important to their respective businesses.
4. I understand and agree that my employment or consultancy (as the case may be) creates a relationship of confidence and trust between the Company and the Parent, on the one hand, and me, on the other hand, with respect to (i) all Proprietary Information and (ii) the confidential information of another person or entity with which the Company or the Parent has a business relationship and is required by terms of an agreement with such entity or person to hold such information as confidential. At all times, both during my employment or consultancy (as the case may be) by the Company and the Parent and after its termination, I will keep in confidence and trust all such information, and I will not use or disclose any such information without the written consent of each of the Company and the Parent, except as may be necessary in the ordinary course of performing my duties under the Employment Agreement.
5. In addition, I hereby agree as follows:
5.1 All Proprietary Information will be the sole property of the Company or the Parent and their respective assigns, and the Company or the Parent and their respective assigns will be the sole owner of all trade secrets, patents, copyrights, and other rights in connection therewith. I hereby assign to the Company or the Parent (at their choice) any rights I may presently have or I may acquire in such Proprietary Information.
5.2 All Company/Parent Documents, apparatus, equipment, and other physical property, whether or not pertaining to Proprietary Information, furnished to me by the Company or the Parent or produced by me or others in connection with my employment or consultancy (as the case may be) will be and remain the sole property of the Company or the Parent, as appropriate. I will return to the Company or the Parent, as appropriate all such Company/Parent Documents, materials, and property as and when requested by the Company or the Parent, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Parent; and (iii) my copy of this Agreement (my “Personal Documents”). Even if the Company or the Parent does not so request, I will return all such Company/Parent Documents, materials, and property upon termination of my employment or consultancy (as the case may be) by me or by the Company for any reason, and, except for my Personal Documents, I will not take with me any such Company/Parent Documents, material, or property or any reproduction thereof upon such termination.
5.3 I will promptly disclose to the Company or the Parent, or any persons designated by either such entity, all Inventions relating to the Field, as defined below, made or conceived, reduced to practice, or learned by me, either alone or jointly with others, prior to the term of my employment or consultancy (as the case may be) and for one (1) year thereafter. For purposes of this Agreement, “Field” means research, development, marketing, or manufacturing of any products or services also researched, developed, marketed, or manufactured by the Company or the Parent.
5.4 All Inventions that I conceive, reduce to practice, develop, or have developed (in whole or in part, either alone or jointly with others) during the term of my employment or consultancy (as the case may be) will be the sole property of the Company or the Parent and their respective assigns to the maximum extent permitted by law (and to the fullest extent permitted by law will be deemed “works made for hire”), and the Company or the Parent and their respective assigns will be the sole owner of all patents, copyrights, and other rights in connection therewith. I hereby assign to the Company or, at the option of the Parent, to the Parent my entire right, title, and interest, whether possessed now or later acquired, in and to such Inventions. I agree that any Invention required to be disclosed hereunder within one (1) year after the term of my employment or consultancy (as the case may be) will be presumed to have been conceived during my employment or consultancy (as the case may be). I understand that I may overcome the presumption by showing that such Invention was conceived after the termination of my employment or consultancy (as the case may be).
| EXHIBIT B page |
5. As a matter of record I attach hereto as Exhibit C a complete list of all Inventions (including patent applications and patents) relevant to the Field that have been made, conceived, developed, or first reduced to practice by me, alone or jointly with others, prior to my employment or consultancy (as the case may be) with the Company that I desire to remove from the operation of this Agreement, and I covenant that such list is complete. If no such list is attached to this Agreement, I represent that I have no such Inventions at the time of signing this Agreement. If in the course of my employment or consultancy with the Company, I use or incorporate into a product or process an Invention not covered by this Agreement in which I have an interest, the Company and the Parent are each hereby granted a nonexclusive, fully paid-up, royalty-free, perpetual, worldwide license of my interest to use and sublicense such Invention without restriction of any kind.
6. I represent that my execution of this Agreement, my employment or consultancy (as the case may be) with the Company, and my performance of my proposed duties to the Company and to the Parent in the development of their respective businesses will not violate any obligations I may have to any former employer, or other person, or entity, including any obligations to keep confidential any proprietary or confidential information of any such employer. I have not entered into, and I will not enter into, any agreement that conflicts with or would, if performed by me, cause me to breach this Agreement.
7. In the course of performing my duties to the Company and the Parent, I will not utilize any proprietary or confidential information of any former employer.
8. I agree that this Agreement does not constitute an employment or consultancy (as the case may be) agreement for a specific duration and that (i) my employment or consultancy (as the case may be) with the Company (and, potentially, derivatively, with the Parent) is “at will” and (ii) I will have the right to resign my employment or consultancy (as the case may be), and the Company (and, potentially, derivatively, with the Parent) will have the right to terminate my employment or consultancy (as the case may be), at any time and for any reason, with or without cause, all as set forth in that certain Employment Agreement between the Company and me, dated April 20, 2026.
9. This Agreement will be effective as of the first day of my employment or consultancy (as the case may be) by the Company and the obligations hereunder will continue beyond the termination of my employment and will be binding on my heirs, assigns, and legal representatives. This Agreement is for the benefit of the Company, its successors, and assigns (including all subsidiaries, affiliates, joint ventures, and associated companies) and is not conditioned on my employment for any period of time or compensation therefor. I agree that the Company and the Parent are each entitled to communicate any obligations under this Agreement to any future employer or potential employer of mine.
| EXHIBIT B page |
10. During the term of my employment and for one (1) year thereafter, I will not, without the Company’s written consent, directly or indirectly be employed or involved with any business developing or exploiting any products or services that are competitive with products or services (a) being commercially developed or exploited by the Company during my employment and (b) on which I worked or about which I learned Proprietary Information during my employment under the Employment Agreement.
11. During the term of my employment and for one (1) year thereafter, I will not personally or through others recruit, solicit or induce in any way any employee, advisor or consultant of the Company to terminate his or her relationship with the Company.
12. I acknowledge that any violation of this Agreement by me will cause irreparable injury to the Company and, potentially, to the Parent. I agree that the Company will be entitled to extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions, and permanent injunctions without the necessity of posting a bond or other security and without prejudice to any other rights and remedies that the Company and the Parent may have for a breach of this Agreement.
13. I agree that any dispute in the meaning, effect, or validity of this Agreement will be resolved in accordance with the laws of the State of Nevada without regard to its or any other jurisdiction’s conflict of laws provisions. I further agree that if, one or more provisions of this Agreement are held to be unenforceable under applicable Nevada law, such provision(s) will be excluded from this Agreement and the balance of this Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.
14. I HAVE READ AND UNDERSTOOD THIS AGREEMENT. THIS AGREEMENT MAY ONLY BE MODIFIED BY A SUBSEQUENT WRITTEN AGREEMENT EXECUTED BY THE CHIEF OPERATING OFFICER OF THE COMPANY.
Dated: April 20, 2026.
| By: | ||
| Name: | Matthew Lee Morgan | |
| Accepted and Agreed to: | ||
| BLOCK STREET CORP. | ||
| By: | ||
| Name: | Tony Isaac | |
| Title: | Chief Executive Officer | |
| EXHIBIT B page |
EXHIBIT C
ALT5 Sigma Corporation
Block Street Corp.
8548 Rozita Lee Avenue, Suite 305
Las Vegas, Nevada 89113
Ladies and Gentlemen:
1. The following is a complete list of all inventions or improvements relevant to the subject matter of my employment or consultancy (as the case may be) by Block Street Corp. (the “Company”) that have been made or conceived or first reduced to practice by me, alone or jointly with others, prior to my employment or consultancy (as the case may be) by the Company that I desire to remove from the operation of the Proprietary Information and Inventions Agreement entered into between the Company and me.
________ No inventions or improvements.
________ Any and all inventions regarding:
________ Additional sheets attached.
2. I propose to bring to my employment or consultancy (as the case may be) the following materials and documents of a former employer:
________ No materials or documents.
________ See below:
| Name: | Matthew Lee Morgan |
| EXHIBIT C |