TRIQ TraqIQ Inc (QB)

 

 

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) July 20, 2023

 

TRAQIQ, INC.

(Exact name of registrant as specified in charter)

 

California		000-56148		30-0580318
(State or other Jurisdiction of Incorporation or Organization)		(Commission File Number)		(IRS Employer Identification No.)

 

1931 Austin Drive Troy, Michigan		48083
(Address of Principal Executive Offices)		(zip code)

 

(425) 818-0560

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of 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(b) under the Exchange Act (17 CFR 240.14a-12(b))
☐	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
N/A		N/A		N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

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.

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On January 5, 2023, TraQiQ, Inc. (the “Company”) issued to Renovare Environmental, Inc. (“REI”) (i) 1,250,000 shares of the Company’s Series B Preferred Stock, par value $0.0001 (the “Series B Preferred Stock”), and (ii) 15,686,926 shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) that were convertible into 125,000,000 shares of Common Stock, in connection with the acquisition of certain assets related to the business of offering aerobic digestion technology solutions for the disposal of food waste at the point of generation.

 

On July 20, 2023, the Company entered into an Exchange Agreement (the “Exchange Agreement”), with REI pursuant to which REI exchanged 14,118,233 shares of Common Stock and 1,250,000 shares of Series B Preferred Stock for Series A Rights to Receive Common Stock dated July 20, 2023 (the “Series A Rights”) and Series B Rights to Receive Common Stock dated July 20, 2023 (the “Series B Rights” and, together with the Series A Rights, the “Rights”). Following the exchanges effected by the Exchange Agreement, the Company had 19,821,732 shares of Common Stock and no shares of Series B Preferred Stock issued and outstanding.

 

The Series A Rights issued to REI obligate the Company to issue to the holders upon request (without the payment of any additional consideration) an aggregate of 108,729,363 shares of Common Stock (the “Series A Right Shares”) and the Series B Rights issued to REI obligate the Company to issue to the holders upon request (without the payment of any additional consideration) an aggregate of 30,388,870 shares of Common Stock (the “Series B Right Shares” and, together with the Series A Rights Shares, the “Rights Shares”) .. The number of Right Shares issuable upon exercise of the Rights is fixed, and is only subject to customary non-price-based ratable adjustments, such as stock splits, stock combinations and the like. The Series A Rights are immediately exercisable and the Series B Rights are exercisable upon the earlier of (x) December 31, 2023 and (y) the initial date on which the Common Stock is listed for trading on The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, Nasdaq Capital Markets or the Nasdaq Global Market. All of the Rights expire on July 20, 2028.

 

Pursuant to the terms of the Rights, the holders will not be able to exercise Rights and receive Right Shares to the extent that after giving effect to such issuance after exercise, the holder would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of the applicable Right. Each holder may decrease its applicable ownership limitation at any time and each holder, upon not less than 61 days’ prior notice to the Company, may increase its applicable beneficial ownership limitation, provided that the applicable beneficial ownership limitation may in no event exceed 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of the applicable Right.

 

Following the closing of the transactions contemplated by the Exchange Agreement, the Company entered into certain Settlement Agreements (the “Settlement Agreements”) on July 20, 2023, with REI and certain stockholder of REI signatory thereto pursuant to which REI will transfer (i) Series A Rights to acquire an aggregate of 96,989,534 shares of Common Stock and (ii) Series B Rights to acquire 9,883,357 shares of Common Stock, to such stockholders, each of which was an “accredited investor,” as defined in the Securities Act of 1933, as amended (the “Securities Act”), in consideration of a release by such stockholders of any and all claims such stockholders may have had against REI or the Company.

 

The foregoing description of the Exchange Agreement is a summary and is qualified in its entirety by reference to the Exchange Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing descriptions of the Series A Rights and the Series B Rights are summaries and are qualified in their entirety by reference to the Series A Right or Series B Rights, as the case may be, which are attached hereto as Exhibits 10.2 and 10.3, respectively, and are incorporated herein by reference. The foregoing description of the Settlement Agreement is a summary and is qualified in its entirety by reference to Settlement Agreement, which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference. The Series A Rights and Series B Rights were issued by the Company in reliance upon the exemption from registration contained in Section 3(a)(9) of the Securities Act.

 

 

Item 4.01. Changes in Registrant’s Certifying Accountant.

 

On July 20, 2023, the Company dismissed T R Chadha & Co LLP (“TRC”) as the Company’s independent auditors for the fiscal year ending December 31, 2023. The Company has engaged Freed Maxick CPAs, P.C. (“Freed”) as its successor independent auditor. This change was approved by the Company’s Board of Directors.

 

The reports of TRC on the Company’s financial statements for the years ended December 31, 2022 and 2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that such reports contained an explanatory paragraph that stated that the Company had experienced losses and negative cash flows from operations, and had an accumulated deficit, which conditions raised substantial doubt about the Company’s ability to continue as a going concern.

 

In connection with the audits of the Company’s financial statements for the year ended December 31, 2022 and 2021, and in the subsequent interim period, there were (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between the Company and TRC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedure that, if not resolved to the satisfaction of TRC, would have caused it to make reference to the matter thereof in connection with its report for such years and (ii) no “reportable events” within the meaning of Item 304(a)(i)(v) of Regulation S-K except for the material weaknesses described in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

Prior to engaging Freed, the Company had not consulted Freed regarding the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements or a reportable event, nor did the Company consult with Freed regarding any disagreements with its prior auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the prior auditor, would have caused the prior auditor to make a reference to the subject matter of the disagreements in connection with its reports. However, prior to the Company’s acquisition of Titan Trucking, LLC (“Titan”) in May 2023, Titan had engaged Freed to audit its financial statements for the years ended December 31, 2022 and 2021.

 

The Company provided TRC with a copy of this Current Report on Form 8-K prior to its filing with the Securities and Exchange Commission and requested that TRC furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with above statements and, if it does not agree, the respects in which it does not agree. A copy of the letter, dated July 19, 2023, is filed as Exhibit 16.1 (which is incorporated by reference herein) to this Current Report on Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

The following exhibit is filed with this Current Report on Form 8-K:

 

Exhibit No		Description
10.1		Exchange Agreement dated as of July 20, 2023 between the Company and Renovare Environmental, Inc.
10.2		Form of Series A Right to Receive Common Stock (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated July 18, 2023).
10.3		Form of Series B Right to Receive Common Stock
10.4		Form of Settlement Agreement dated as of July 20, 2023 between the Company, Renovare Environmental Inc., and the stockholders signatory thereto.
16.1		Letter from T R Chadha & Co LLP dated July 19, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: July 21, 2023	TRAQIQ, INC.
	By:	/s/ Glen Miller
		Glen Miller
		Chief Executive Officer

 

 

Exhibit 10.1

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (this “Agreement”) is dated July 20, 2023, by and between TraqIQ, Inc., a California corporation (the “Company”) and Renovare Environmental, Inc., a Delaware corporation (the “Holder”, and, collectively with the Company the “Parties”, and each individually, a “Party”).

 

RECITALS

 

WHEREAS, on or about January 5, 2023, the Holder and its wholly-owned subsidiary BioHiTech America, LLC (“BHT” and together with the Holder, the “Sellers”) consummated the transactions contemplated by that certain Asset Purchase Agreement dated December 30, 2022 (the “Purchase Agreement”) with the Company whereby the Company acquired from the Holder and BHT certain assets related to the Sellers business and assumption of certain of the Sellers’ liabilities (the “Asset Sale”) and the Company issued to the Holder 15,686,926 shares (the “Holder Common Shares”) of common stock, $0.0001 par value of the Company (the “Common Stock”) and 1,250,000 shares of Series B Convertible Preferred Stock, $0.0001 par value of the Company (the “Holder Preferred Shares”), convertible as of the date hereof into 125,000,000 shares of Common Stock;

 

WHEREAS, certain holders of existing securities of the Holder (the “Existing Investors”) have asserted that the Holder breached certain provisions of certain existing securities and/or existing agreements with the Holder (including, without limitation, one or more certificates of designations of preferred stock of the Holder) in connection with the Asset Sale (the “Claimed Breach”);

 

WHEREAS, the Holder disputes the Claimed Breach, but the Holder and the Company desire to enter into one or more settlement agreements, in the form attached hereto as Exhibit A (the “Settlement Agreements”), each with certain Existing Investors (each, a “Settlement Party”) to settle all claims by each such Settlement Party with respect to the Claimed Breach in accordance therewith in exchange for the transfer of certain Series A Rights and/or Series B Rights, as applicable, exercisable into such aggregate number of shares of Common Stock as set forth on the signature page of the Settlement Party to such applicable Settlement Agreement (collectively, the “Settlement Consideration”);

 

WHEREAS, in connection with the transfer to each Settlement Party of the Settlement Consideration as contemplated by the Settlement Agreements, the Holder desires to exchange (the “Exchange”) 14,118,233 Holder Common Shares and 1,250,000 shares of Holder Preferred Shares (collectively, the “Transferred Securities”) into (x) Series A Rights, in the form attached hereto as Exhibit B (the “Series A Rights”), exercisable into 108,729,363 shares of Common Stock (the “Series A Rights Shares”) and (y) Series B Rights, in the form attached hereto as Exhibit C (the “Series B Rights”, and together with the Series A Rights, the “Rights”), exercisable into 30,388,870 shares of Common Stock (the “Series B Rights Shares” and together with the Series A Rights Shares, the “Rights Shares”, and together with the Rights, the “Securities”) in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”);

 

 

WHEREAS, in connection with the Settlement Agreements, the Company and each Settlement Party will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit D (the “Registration Rights Agreement”, and together with the Rights and the Settlement Agreements, the “Exchange Documents”), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the Securities Act and the rules and regulations promulgated thereunder, and applicable state securities laws;

 

WHEREAS, capitalized terms not defined herein shall have the meaning as set forth in the Registration Rights Agreement.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1. Exchange.

 

1.1 On the Closing Date (as defined below), the Holder shall consummate the Exchange by delivering to the Company the Transferred Securities and the Company shall execute and deliver the Rights to the Holder (or at the direction of the Holder, the applicable Settlement Parties). Notwithstanding the foregoing, regardless of the time such Rights have been delivered to the Holder (or the applicable Settlement Parties), as of the date hereof, the Holder shall be the record owner of the Rights, with the right to transfer such Rights to the Settlement Parties in accordance with the terms of the Settlement Agreements (without the requirement of any legal opinion or other documentation with respect thereto) and the Transferred Securities shall be deemed cancelled. The Rights shall bear a legend indicating that the issuance of such securities have not been registered under the Securities Act.

 

1.3 Upon the execution and delivery of one or more Settlement Agreements on or after the date hereof, the Company shall execute the Registration Rights Agreement or, after the initial execution of the Registration Rights Agreement, a joinder to the Registration Rights Agreement in the form attached hereto as Exhibit E (the “RRA Joinder”), as applicable, with respect to the Rights transferred to such applicable Settlement Party pursuant to such applicable Settlement Agreement.

 

1.4 The Company and the Holder shall execute and/or deliver such other documents and agreements and to take such actions as are customary and reasonably necessary to effectuate the Exchange and to consummate the terms of the Settlement Agreements.

 

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

 

The Company hereby represents and warrants as of the date hereof to, and covenants with, the Holder as follows:

 

2.1 Organization and Standing. The Company is validly existing as a corporation in good standing under the laws of California, has full corporate power and authority to own or lease its properties and conduct its business as presently conducted, and is duly qualified as a foreign corporation and in good standing in each jurisdiction in which the character of the property owned or leased or the nature of the business transacted by it makes qualification necessary, except where the failure to be so qualified would not have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its subsidiaries (the “Subsidiaries”), if any, individually or taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into (or entered into) in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under this Agreement.

 

 

2.2 Authorization; Corporate Power. This Agreement has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, and (ii) equitable principles generally, including any specific performance), and the Company has the requisite corporate power and authority to execute and deliver this Agreement and the other agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company hereunder and thereunder, and the authorization (or reservation for issuance), the Exchange, and the issuance of the Rights and, upon exercise of the Rights, the Rights Shares (collectively, the “Securities”) have been taken on or prior to the date hereof.

 

2.3 Valid Issuance and Delivery of Securities. The Rights Shares when issued and delivered in accordance with the terms of this Agreement, for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The Rights when issued in accordance with the terms of this Agreement, for the consideration expressed herein, will be duly and validly issued. The offer and issuance by the Company of the Securities is exempt from registration under the Securities Act.

 

2.4 Consents. No consent, waiver, approval or authorization of or designation, declaration or filing with any Person (as defined below) on the part of the Company is required in connection with the valid execution and delivery of this Agreement or the offer, sale or issuance of the Rights or the issuance or the reservation for issuance of the Rights Shares or the consummation of any other transaction contemplated by this Agreement, except for such consent as have been obtained by the Company. For purposes of this Agreement, (i) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof; and (ii) “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.

 

 

2.5 No Default or Violation. The execution and delivery of the Agreement and the Exchange by the Company will not (i) result in a breach of or a default under any of the terms or provisions of (A) the Company’s certificate of incorporation or by-laws, or (B) any material provision of any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its material properties or assets is bound or (ii) result in a violation of any provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company, or any of its material properties or assets except in the case of clauses (i)(B) or (ii) for any such breaches, defaults or violations which would not have a Material Adverse Effect. The Company has not violated any law or any governmental regulation or requirement which violation has had or would reasonably be expected to have a Material Adverse Effect, and the Company has not received written notice of any such violation.

 

2.6 Offering; No Consideration. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company represents and warrants that neither it nor any Person acting on its behalf, has directly or indirectly paid or given any commission or other remuneration for soliciting the transactions contemplated by this Agreement. The offer, exchange and issuance, as applicable, of the Securities as contemplated by this Agreement are exempt from the registration requirements of the Securities Act and the qualification or registration requirements of state securities laws or other applicable blue sky laws. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

 

2.7 Absence of Litigation. Except as set forth in the reports, schedules, forms, statements and other documents required to be filed by the Company with the Securities and Exchange Commission (the “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, the Common Stock, any securities of the Company or any of the Company’s officers or directors in their capacities as such, which would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

2.8 Validity; Enforcement. This Agreement have been duly and validly authorized, executed and delivered on behalf of the Company and shall constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

2.9 Blue Sky. The Company shall make all filings and reports relating to the Exchange required under applicable securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.

 

2.10 No Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf shall, directly or indirectly, make any offers or sales of any security (as defined in the Securities Act) or solicit any offers to buy any security or take any other actions, under circumstances that would require registration of any of the Securities under the Securities Act or cause this offering of the Securities to be integrated with such offering or any prior offerings by the Company for purposes of Regulation D under the Securities Act.

 

 

2.11 Outstanding Shares. As of the date hereof, the capitalization of the Company consists of 33,939,965 shares of Common Stock issued and outstanding, 1,250,000 shares of Series B Preferred Stock issued and outstanding and 701,000 shares of Series C Preferred Stock issued and outstanding.

 

3. Representations and Warranties of the Holder. As of the date hereof and the Closing Date, the Holder agrees, represents and warrants to the Company that:

 

3.1 Organization; Authority. The Holder is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Exchange Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

3.2 Enforcement. This Agreement and the Exchange Documents to which it is a party have been duly executed by the Holder and constitute legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

3.3 Consents. The Holder is not required to give any notice to, make any filing, application or registration with, obtain any authorization, consent, order or approval of or obtain any waiver from any Person or entity in order to execute and deliver this Agreement or to consummate the transactions contemplated hereby.

 

3.4 Non-contravention. Neither the execution and the delivery by the Holder of this Agreement, nor the consummation by the Holder of the transactions contemplated hereby, will (a) violate any law, rule, injunction, or judgment of any governmental agency or court to which the Holder is subject or any provision of its charter, bylaws, trust agreement, or other governing documents or (b) conflict with, result in a breach of, or constitute a default under, any agreement, contract, lease, license, instrument, or other arrangement to which the Holder is a party or by which the Holder is bound or to which any of its assets is subject, except in the case of clauses (a) and (b) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.

 

3.5 Reliance on Exemptions. The Holder agrees, acknowledges and understands that the Securities are being offered and exchanged in reliance upon specific exemptions from the registration requirements of United States federal and applicable state securities or “blue sky” laws and that the Holder and the Company are each relying upon the truth and accuracy of, and the Holder’s and Company’s compliance with, the representations, warranties, covenants, agreements, acknowledgments and understandings of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility of the Holder to acquire the Securities.

 

 

3.6 Transfer or Resale. The Holder agrees, acknowledges and understands that:

 

(a) the Securities have not been and, except as set forth herein, are not being registered under the Securities Act or any applicable state securities or “blue sky” laws. Consequently, the Holder may have to bear the risk of holding the Securities for an indefinite period of time because the Securities may not be transferred unless: (A) the resale of the Securities, is registered pursuant to an effective registration statement under the Securities Act; (B) other than with respect to the transfer of the Rights to the Settlement Parties, the Holder has delivered to the Company an opinion of counsel reasonably acceptable to the Company and its counsel (in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; or (C) the Securities are sold or transferred pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”);

 

(b) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC promulgated thereunder;

 

(c) except as set forth in the Registration Rights Agreement, neither the Holder, the Company, nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities or “blue sky” laws or to comply with the terms and conditions of any exemption thereunder;

 

(d) 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 and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Holder effecting a pledge of Securities shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document, including, without limitation, this Section 3.6(d).

 

3.7 Legends. The Holder agrees, acknowledges and understands that the certificates representing the Securities will bear restrictive legends in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES OR “BLUE SKY” LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

 

3.8 No Brokers. The Holder has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement.

 

3.9 Reliance on Representations. The Holder agrees, acknowledges and understands that the Holder and the Company, are entitled to rely on the representations, warranties and covenants made by the Holder herein.

 

4. Closing; Conditions. Subject to the conditions set forth below, the Exchange shall take place at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178, on the Business Day immediately following such date as the Company and Holder shall have satisfied all conditions to closing below, or at such other time and place as the parties hereto mutually agree (the “Closing” and the “Closing Date”).

 

4.1 Condition’s to Holder’s Obligations. The obligation of the Holder to consummate the Exchange is subject to the fulfillment, to the Holder’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:

 

(a) Delivery of Transferred Securities. The Holder shall have duly delivered to the Company the Transferred Securities.

 

(b) Issuance of Securities. At the Closing, the Company shall issue the Rights to the Holder (or, at the Holder’s direction, in whole or in part, to the applicable Settlement Parties) in exchange for the Transferred Securities.

 

(c) Transfer Agent Certificate. The Company shall have delivered to the Holder a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.

 

(d) Certified Charter. The Company shall have delivered to the Holder a certified copy of the articles of incorporation of the Company as certified by the California Secretary of State within ten (10) days of the Closing Date.

 

(e) Secretary Certificate of Company. The Company shall have delivered to the Holder a certificate, in the form acceptable to the Holder, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent authorizing the Exchange as adopted by the Company’s Board of Directors in a form reasonably acceptable to the Holder, (ii) the articles of incorporation of the Company, and (iii) the bylaws of the Company, each as in effect at the Closing.

 

(f) Officer Certificate of Company. The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) on the date hereof and on and as of the Closing Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date). The Holder shall have received a certificate, duly executed by the Chief Executive Officer of the Holder, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Holder in the form acceptable to the Holder.

 

 

(g) No Material Adverse Effect. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.

 

(h) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(i) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Holder, and the Holder shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.

 

(j) Consents. The Company shall have obtained all governmental, regulatory or third party consents and approvals (or waiver of such consents or approvals), if any, necessary for the Exchange, as applicable.

 

4.2 Condition’s to the Company’s Obligations. The obligation of the Company to consummate the Exchange is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Holder contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) on the date hereof and on and as of the Closing Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) as of such specified date).

 

(b) Surrender of Transferred Securities. At the Closing, the Holder (or at the Holder’s direction, the Holder) shall surrender the Transferred Securities to the Company for cancellation.

 

(c) Secretary Certificate of Holder. The Holder shall have delivered to the Company a certificate, in the form acceptable to the Company, executed by the Secretary of the Holder and dated as of the Closing Date, as to (i) the resolutions consistent authorizing the Exchange as adopted by the Holder’s Board of Directors in a form reasonably acceptable to the Company, (ii) certificate of incorporation of the Holder, and (iii) the bylaws of the Holder, each as in effect at the Closing.

 

 

(d) Officer Certificate of Holder. The representations and warranties of the Holder contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality, which are accurate in all respects) on the date hereof and on and as of the Closing Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality, which are accurate in all respects) as of such specified date). The Company shall have received a certificate, duly executed by the Chief Executive Officer of the Holder, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Company in the form acceptable to the Company.

 

(e) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(f) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall have received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request.

 

(g) Consents. The Company shall have obtained all governmental, regulatory or third party consents and approvals (or waiver of such consents or approvals), if any, necessary for the Exchange, as applicable.

 

5. Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, Depository Trust Company (“DTC”) fees or broker’s commissions (other than for Persons engaged by the Holder) relating to or arising out of the transactions contemplated hereby. Except as otherwise set forth in the Exchange Documents or this Agreement, each party to this Agreement shall bear its own expenses in connection therewith and with the Exchange.

 

6. Blue Sky. The Company shall make all filings and reports relating to the Exchange required under applicable securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.

 

7. Reporting Status. Until the date no Rights remain outstanding (the “Reporting Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.

 

 

8. Reservation of Shares. So long as any of the Rights remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the maximum number of shares of Common Stock issuable upon exercise of all of the Rights then outstanding (assuming for purposes hereof that any such exercise shall not take into account any limitations on the exercise of the Rights set forth therein), (collectively, the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 8 be reduced other than proportionally in connection with any exercise and/or redemption, as applicable of Rights. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Exchange Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.

 

9. Miscellaneous.

 

9.1 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

 

9.2 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. Each counterpart may be delivered by email (as a .pdf attachment) or facsimile transmission, and an emailed or faxed signature shall have the same force and effect as an original signature.

 

9.3 Entire Agreement; Amendments. This Agreement together with the other Exchange Documents, represents the entire agreement and understanding between the parties concerning the Exchange and the other matters described herein and therein and supersedes and replaces any and all prior agreements and understandings solely with respect to the subject matter hereof.

 

9.4 No Strict Construction; Currency. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Exchange Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Exchange Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

9.5 Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any provision of law or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Holder and Company hereby irrevocably submits to the exclusive jurisdiction of the state or federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or under any of the other Exchange Documents 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. Each party 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 such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. 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 or to enforce a judgment or other court ruling in favor of the Holder. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER EXCHANGE DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER EXCHANGE DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

 

9.6 Severability. If any provision of this Agreement shall be declared or determined by any court to be invalid, illegal or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected or impaired thereby so long as this Agreement 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).

 

9.7 Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:

 

	If to the Holder:
		Renovare Environmental, Inc.
		80 Red Schoolhouse Road
		Suite 101
		Chestnut Ridge, New York 10977
		Telephone: (845) 330-2522
		Attention: Chief Executive Officer
		E-Mail: bessman@renovareenv.com

 

 

	With a copy (for informational purposes only) to:
		McCarter & English, LLP
		Two Tower Center Boulevard, 24th Floor
		East Brunswick, NJ 08816
		Telephone: (732) 867-9741
		Attention: Peter Campitiello, Esq.
		E-Mail: pcampitiello@mccarter.com
	If to the Company:
		TraqIQ, Inc.
		14205 SE 37th Street, Suite 100
		Bellevue, WA 98006
		Telephone: (425) 818-0560
		Attention: Glen Miller, Chief Executive Officer
		E-Mail: GMiller@titancares.com
	With a copy (for informational purposes only) to:
		Pryor Cashman LLP
		7 Times Square
		New York, NY 10036-6569
		Telephone: (212) 326-0846
		Attention: Eric M. Hellige
		E-Mail: ehellige@pryorcashman.com
	If to the Company’s transfer agent:
		Equity Stock Transfer
		237 W 37th Street, Suite 602
		New York, NY 10018
		Telephone: (212) 575-5757
		Attention: Nora Marckwordt
		E-Mail: nora@equitystock.com

 

or to such other mailing address and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

9.8 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

 

9.9 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

 

9.10 Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

9.11 Amendments. This Agreement may not be modified, amended or supplemented, and the terms and conditions of this Agreement may not be waived, except by a written agreement executed by each Party. No failure to exercise and no delay in exercising on the part of the Holder of any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of any right, remedy, power or privilege.

 

9.12 Remedies. The Holder and in the event of assignment by the Holder of its rights and obligations hereunder, each holder of the Rights (including each Settlement Party), shall have all rights and remedies set forth in the Exchange Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The Company therefore agrees that the Holder shall be entitled 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 remedies provided in this Agreement and the other Exchange Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Exchange Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).

 

9.13 Survival. The representations, warranties, agreements and covenants shall survive the Closing. The Holder shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(Signature Page to Follow)

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first above written.

 

	COMPANY:
	RENOVARE ENVIRONMENTAL, INC.
	By:	/s/ Brian Essman
	Name:	Brian Essman
	Title:	Chief Financial Officer

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first above written.

 

	COMPANY:
	TRAQIQ, INC.
	By:	/s/ Glen Miller
	Name:	Glen Miller
	Title:	Chief Executive Officer

 

 

 

 

Exhibit 10.3

 

FORM OF SERIES B RIGHT

 

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 RIGHT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS RIGHT.

 

TraQiQ, Inc.

 

Series B Right To Receive Common Stock

 

Right No.: B-[      ]
Date of Exchange: [                   ] (“Exchange Date”)
Date of Issuance: [              ]

 

TraQiQ, Inc., a California corporation (the “Company”), hereby certifies that [BUYER], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to receive from the Company, upon exercise of this Series B Right to Receive Common Stock (including any Series B Rights to Receive Common Stock issued in exchange, transfer or replacement hereof, this “Right”), at any time or times on or after the earlier of (x) December 31, 2023 and (y) the Uplist Date (the “Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), _________________ (subject to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Right Shares”, and such number of Right Shares, the “Right Number”). Except as otherwise defined herein, capitalized terms in this Right shall have the meanings set forth in Section 19.

 

No consideration shall be required to be paid by the Holder to any Person to effect any exercise of this Right.

 

 

1. EXERCISE OF RIGHT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Right may be exercised by the Holder on any day on or after the Initial Exercisability Date (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 Right. No consideration shall be required to be paid by the Holder to any Person to effect any exercise of this Right. The Holder shall not be required to deliver an ink-original of this Right or an Exercise Notice in order to effect an exercise hereunder, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Exercise Notice form be required. Execution and delivery of an Exercise Notice with respect to less than all of the Right Shares shall have the same effect as cancellation of the original of this Right and issuance of a new Right evidencing the right to receive the remaining number of Right Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Right Shares shall have the same effect as cancellation of the original of this Right after delivery of the Right Shares in accordance with the terms hereof. On or before the first (1^st) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B with respect to issuance of free trading Rights Shares (and/or Rights Shares sold, or to be resold, by the Holder pursuant to Rule 144) and in the form attached hereto as Exhibit C with respect to issuance of restricted Rights Shares, 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 second (2nd) 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 Right Shares initiated on the applicable Exercise Date) (the “Share Delivery Deadline”), the Company shall (i) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (“FAST”) and this Right satisfies one or more Free Tradability Conditions, 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 its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (ii) if the Transfer Agent is not participating in FAST or this Right does not satisfy any Free Tradability Conditions, 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 its 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 Right Shares with respect to which this Right has been exercised, irrespective of the date such Right Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Right Shares (as the case may be). If this Right is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Right Shares represented by this Right submitted for exercise is greater than the number of Right Shares being acquired upon an exercise and upon surrender of this Right 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 two (2) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Right (in accordance with Section 7(d)) representing the right to receive the number of Right Shares issuable hereunder immediately prior to such exercise under this Right, less the number of Right Shares with respect to which this Right is exercised.

 

(b) Factional Shares; Taxes. No fractional shares of Common Stock are to be issued upon the exercise of this Right, 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 Right Shares upon exercise of this Right. Notwithstanding anything to the contrary contained in this Right or the Registration Rights Agreement, after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) 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 the Exchange Date through and including the Expiration Date, the Company shall maintain a transfer agent that participates in FAST.

 

 

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share Delivery Deadline, either (I) if the Transfer Agent is not participating in FAST or this Right does not satisfy any Free Tradability Conditions, to issue and deliver to the Holder (or its designee) a certificate for the number of Right Shares to which the Holder is entitled and register such Right Shares on the Company’s share register or, if the Transfer Agent is participating in FAST and this Right satisfies one or more Free Tradability Conditions, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of Right Shares to which the Holder is entitled upon the Holder’s exercise of this Right (as the case may be) or (II) if a Registration Statement covering the resale of the Right Shares that are the subject of the Exercise Notice (the “Unavailable Right Shares”) is not available for the resale of such Unavailable Right Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify the Holder and (y) deliver the Right Shares electronically without any restrictive legend by crediting such aggregate number of Right Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, 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 Share Delivery Deadline and during such Delivery Failure an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline 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 Share Delivery Deadline, 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 Right 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 Share Delivery Deadline either (I) the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program or this Right does not satisfy any Free Tradability Conditions, the Company shall fail to issue and deliver to the Holder (or its 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 Automated Securities Transfer Program and this Right satisfies one or more Free Tradability Conditions, 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 or (II) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder acquires (in an open market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within two (2) 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, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (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 to so 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 Right Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Right Shares) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Right Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Right Shares 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 Right Shares 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 it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Right as required pursuant to the terms hereof. While this Right is outstanding, the Company shall cause its transfer agent to participate in FAST. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable number of Right Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Deadline, then the Holder shall have the right to rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion of this Right that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise, and (ii) if a registration statement covering the issuance or resale of the Right Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable, of such Right Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration statement and the Company has not already delivered the Right Shares underlying such Exercise Notice electronically without any restrictive legend by crediting such aggregate number of Right Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, the Holder shall have the option, by delivery of notice to the Company, to rescind such Exercise Notice in whole or in part and retain or have returned, as the case may be, any portion of this Right that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise.

 

 

(d) 144 Status. For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the Settlement Date, it is intended that the Right Shares issued hereunder upon exercise of this Right, from time to time, shall be deemed to have been acquired by the Holder, and the holding period for the Right Shares shall be deemed to have commenced, as of the Settlement Date. The Company acknowledges and agrees that in accordance with Section 3(a)(9) of the 1933 Act, the Right Shares shall take on the registered characteristics of the Rights being exercised. The Company agrees not to take any position contrary to this Section 1(d).

 

(e) Disputes. In the case of a dispute as to the arithmetic calculation of the number of Right Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Right Shares that are not disputed and resolve such dispute in accordance with Section 15.

 

(f) Limitations on Exercises. The Company shall not effect the exercise of any portion of this Right, and the Holder shall not have the right to exercise any portion of this Right, pursuant to the terms and conditions of this Right 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 Right 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 Right 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) 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(f)(i). For purposes of this Section 1(f)(i), 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 Right 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 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(f)(i), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Right Shares to be acquired pursuant to such Exercise Notice (the number of shares by which such exercise is reduced, 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 electronic mail 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 Right, 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 Right 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. 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 (61^st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61^st) 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 Rights 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 Right 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 Right 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(f)(i) 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(f)(i) 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 Right.

 

 

(g) Reservation of Shares.

 

(i) Required Reserve Amount. So long as this Right remains outstanding, the Company shall at all times keep reserved for issuance under this Right a number of shares of Common Stock at least equal to 100% of 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 Rights 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(g)(i) be reduced other than proportionally in connection with any exercise or redemption of Rights or such other event covered by Section 2(a) below. 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 Rights based on number of shares of Common Stock issuable upon exercise of Rights held by each holder on the applicable Settlement 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 Rights, 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 Rights shall be allocated to the remaining holders of Rights, pro rata based on the number of shares of Common Stock issuable upon exercise of the Rights then held by such holders (without regard to any limitations on exercise).

 

(ii) Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i), and not in limitation thereof, at any time while any of the Rights 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 action 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 Rights 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. Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of this Right 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 Right 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(g); 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.

 

 

2. ADJUSTMENT OF NUMBER OF RIGHT SHARES. The number of Right Shares issuable upon exercise of this Right 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 3 or Section 4, if the Company, at any time on or after the Exchange Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each case the number of Rights Shares issuable upon exercise of the Right shall be proportionately adjusted. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

 

(b) Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100^th 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.

 

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 issuance of this Right, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Right (without regard to any limitations or restrictions on exercise of this Right, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution 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 such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) 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). 

 

 

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Right (without regard to any limitations or restrictions on exercise of this Right, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right 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 Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent 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 right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).

 

(b) Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Right in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Right a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Right, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Right (without regard to any limitations on the exercise of this Right) prior to such Fundamental Transaction and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Right 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 Right with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Right at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Right prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Right been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Right), as adjusted in accordance with the provisions of this Right. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Right. In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Right at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Right prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Right been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Right). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.

 

 

(c) Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied as if this Right (and any such subsequent rights) were fully exercisable and without regard to any limitations on the exercise of this Right (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Right (or any such other right)).

 

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation or bylaws or other organizational documents 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 Right, and will at all times in good faith carry out all the provisions of this Right and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company 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 Right.

 

6. RIGHT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Right, 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 Right be construed to confer upon the Holder, solely in its capacity as the Holder of this Right, 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 Right Shares which it is then entitled to receive upon the due exercise of this Right. In addition, nothing contained in this Right shall be construed as imposing any liabilities on the Holder to acquire any securities (upon exercise of this Right 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. REISSUANCE OF RIGHTS.

 

(a) Transfer of Right. If this Right is to be transferred, the Holder shall surrender this Right to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Right (in accordance with Section 7(d)), registered as the Holder may request, representing the right to receive the number of Right Shares being transferred by the Holder and, if less than the total number of Right Shares then underlying this Right is being transferred, a new Right (in accordance with Section 7(d)) to the Holder representing the right to receive the number of Right Shares not being transferred.

 

(b) Lost, Stolen or Mutilated Right. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Right (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 Right, the Company shall execute and deliver to the Holder a new Right (in accordance with Section 7(d)) representing the right to receive the Right Shares then underlying this Right.

 

(c) Exchangeable for Multiple Rights. This Right is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Right or Rights (in accordance with Section 7(d)) representing in the aggregate the right to receive the number of Right Shares then underlying this Right, and each such new Right will represent the right to receive such portion of such Right Shares as is designated by the Holder at the time of such surrender; provided, however, no rights for fractional shares of Common Stock shall be given.

 

(d) Issuance of New Rights. Whenever the Company is required to issue a new Right pursuant to the terms of this Right, such new Right (i) shall be of like tenor with this Right, (ii) shall represent, as indicated on the face of such new Right, the right to receive the Right Shares then underlying this Right (or in the case of a new Right being issued pursuant to Section 7(a) or Section 7(c), the Right Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Rights issued in connection with such issuance, does not exceed the number of Right Shares then underlying this Right), (iii) shall have an settlement date, as indicated on the face of such new Right which is the same as the Settlement Date, (iv) shall have an exchange date, as indicated on the face of such new Right which is the same as the Exchange Date and (v) shall have the same rights and conditions as this Right.

 

8. NOTICES. Whenever notice is required to be given under this Right, unless otherwise provided herein, such notice shall be given at its last address as it shall appear upon the right register of the Company. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Right (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) promptly upon each adjustment of the number of Right Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s), (ii) at least ten Trading Days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) 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, and (iii) the existence of a proposed Fundamental Transaction at least ten (10) Trading Days prior to the consummation of such Fundamental Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Company Subsidiary, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. 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. DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Right, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 9 shall limit any obligations of the Company, or any rights of the Holder regarding the Company’s disclosures of material, non-public information in connection with the filing of a Current Report on Form 8-K or otherwise. 

 

10. ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.

 

11. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Right (other than Section 1(f)) 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 Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

12. SEVERABILITY. If any provision of this Right 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 Right so long as this Right 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).

 

 

13. GOVERNING LAW. This Right shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Right shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. 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 its principal executive office 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 City of New York, Borough of Manhattan, 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 RIGHT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

14. CONSTRUCTION; HEADINGS. This Right 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 Right are for convenience of reference and shall not form part of, or affect the interpretation of, this Right.

 

15. DISPUTE RESOLUTION.

 

(a) Submission to Dispute Resolution.

 

(i) In the case of a dispute relating to the Closing Sale Price or fair market value or the arithmetic calculation of the number of Right Shares (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 Closing Sale Price or such fair market value or such arithmetic calculation of the number of Right Shares (as the case may be), at any time after the second (2^nd) 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 its 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 15 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5^th) 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 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.

 

(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 15 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 15, (ii) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 15 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 15 and (iii) nothing in this Section 15 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 15).

 

16. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Right shall be cumulative and in addition to all other remedies available under this Right, 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 Right. 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 Right 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 Right (including, without limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Right 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 its agent on its behalf.

 

 

17. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Right 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 Right or to enforce the provisions of this Right or (b) there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim under this Right, 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.

 

18. TRANSFER. This Right may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required to comply with the 1933 Act and applicable state securities laws.

 

19. CERTAIN DEFINITIONS. For purposes of this Right, 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 Exchange Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its 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) “Bloomberg” means Bloomberg, L.P.

 

(f) “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; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.

 

 

(g) “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 on the electronic bulletin board 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 in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). 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 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(h) “Common Stock” means (i) the Company’s shares of common stock, $0.0001 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.

 

(i) “Company Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person, or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Company Subsidiary”.

 

(j) “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(k) “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the OTCQB or the Principal Market.

 

(l) “Expiration Date” means the date that is the fifth (5^th) 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.

 

(m) “Free Tradability Condition” means the satisfaction of any of the following conditions in connection with the issuance of Rights Shares: (i) a registration statement covering the resale of such Rights Shares is effective under the 1933 Act, (ii) following any sale of such Rights Shares pursuant to Rule 144 (assuming transferor is not an affiliate of the Company), (iii) if such Rights Shares are eligible to be sold, assigned or transferred under Rule 144 (provided that the Holder provides the Company with reasonable assurances, which shall not include an opinion of such Holder’s counsel, that such Rights Shares are eligible for sale, assignment or transfer under Rule 144), or (iv) if a restrictive legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC).

 

 

(n) “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Right calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.

 

(o) “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.

 

(p) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(q) “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.

 

 

(r) “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.

 

(s) “Principal Market” means The Pink Open Market.

 

(t) “Registration Rights Agreement” means that certain registration rights agreement, dated as of the Exchange Date, by and among the Company and the initial holders of Rights relating to, among other things, the registration of the resale of the Common Stock issuable upon exercise of the Rights, as may be amended from time to time.

 

(u) “Rights” means the Company’s Series A Rights to Receive Common Stock and Series B Rights to Receive Common Stock.

 

(v) “Rule 144” means Rule 144 promulgated under the 1933 Act.

 

(w) “SEC” means the United States Securities and Exchange Commission or the successor thereto.

 

(x) “Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

 

(y) “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.

 

(z) “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.

 

(aa) “Uplist Date” means such initial date the Common Stock of the Company is listed for trading on The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, Nasdaq Capital Markets or the Nasdaq Global Market.

 

(bb) “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 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 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 in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). 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 15. 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]

 

 

IN WITNESS WHEREOF, the Company has caused this Right to Receive Common Stock to be duly executed as of the Date of Issuance set forth above.

 

	TraQiQ, Inc.
	By:
	Name:	Glen Miller
	Title:	Chief Executive Officer

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
RIGHT TO RECEIVE COMMON STOCK

 

TRAQIQ, INC.

 

The undersigned holder hereby exercises the right to receive _________________ of the shares of Common Stock (“Right Shares”) of TraQiQ, Inc., a California corporation (the “Company”), evidenced by the Series B Right to Receive Common Stock No. _______ (the “Right”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Right.

 

The Company shall deliver to Holder, or its designee or agent as specified below, __________ Right Shares in accordance with the terms of the Right. Delivery shall be made to Holder, or for its 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/Withdrawal at Custodian as follows:

 

	DTC Participant:
	DTC Number:
	Account Number:

 

☐ Check here if no registration statement registering the resale of the Rights Shares is available, but the Rights Shares are eligible to be resold by the Holder pursuant to Rule 144

 

[PLEASE INITIAL THE FOLLOWING CERTIFICATIONS AS YOUR AGREEMENT TO COMPLY THEREWITH IN CONNECTION WITH THE RESALES OF THE RIGHTS SHARES SET FORTH ABOVE IN ACCORDANCE WITH RULE 144]

 

_________

The undersigned holder acknowledges that it intends to sell the Rights Shares exercised hereunder pursuant to the exemption provided by Rule 144. Unless the one year holding period set forth in Rule 144(d) has been satisfied prior to the initial date after the date hereof that the Company is obligated to file a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K (the “Next Current Information Filing Date”), the undersigned holder represents that the undersigned holder intends to sell all such Rights Shares prior to such Next Current Information Filing Date.

 

 

_________

Until the one-year holding period set forth in Rule 144(d) has been satisfied, the undersigned holder covenants and agrees not to sell such Rights Shares pursuant to Rule 144 at any time the Company has delivered written notice to the undersigned holder that the Company is not in compliance with the reporting requirements contained in Rule 144(c)(1).

 

_________

If any such Rights Shares are not resold prior to the Next Current Information Filing Date, if requested by the Company, the undersigned holder agrees to immediately return the Rights Shares to the Transfer Agent and have a restrictive legend placed on a certificate evidencing any such unsold Right Shares.

 

Date:	_____________ __, __
Name of Registered Holder
By:
Name:
Title:

 

Tax ID:

 

E-mail Address:

 

 

EXHIBIT B

 

ACKNOWLEDGMENT

 

TRAQIQ, INC.

 

Attn: Nora Marckwordt

Equity Stock Transfer

237 West 37th Street, Suite 602

New York, NY 10018

nora@equitystock.com

 

Re:	TraQiQ, Inc. (the “Company”)

 

Please issue an aggregate of ____________ shares of the Company’s Common Stock (“Right Shares”), pursuant to the exercise of ____________ Rights by _______________ (the “Holder”).

 

The Company has received full consideration, and the Right Shares are fully paid and non-assessable. The Right Shares are [fully registered under Form S-[____] (SEC Registration Number 333-[_________])][are eligible to be resold by the Holder pursuant to Rule 144 of the Securities Act of 1933, as amended.

 

In accordance with the Transfer Agent Instructions dated ________, 2023, please issue the Right Shares pursuant to the delivery instructions disclosed in the attached Exercise Notice. Note that the Holder’s address and Tax ID is listed in the Exercise Notice.

 

If you have any questions or require any other documentation in connection herewith, please contact the undersigned.

 

	Very truly yours,
	TraQiQ, Inc.
	By:
	Name:
	Title:

 

 

EXHIBIT C

 

ACKNOWLEDGMENT

 

TRAQIQ, INC.

 

Attn: Nora Marckwordt

Equity Stock Transfer

237 West 37th Street, Suite 602

New York, NY 10018

nora@equitystock.com

 

Re:	TraQiQ, Inc. (the “Company”)

 

Please issue an aggregate of ____________ restricted shares of the Company’s Common Stock (“Right Shares”), pursuant to the exercise of ____________ Rights by _______________ (the “Holder”).

 

The Company has received full consideration, and the Right Shares are fully paid and non-assessable.

 

In accordance with the Transfer Agent Instructions dated ________, 2023, please issue the Right Shares pursuant to the delivery instructions disclosed in the attached Exercise Notice. Note that the Holder’s address and Tax ID is listed in the Exercise Notice.

 

The legend set forth below should be placed on the certificates for such Rights Shares:

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED), 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.

 

If you have any questions or require any other documentation in connection herewith, please contact the undersigned.

 

	Very truly yours,
	TraQiQ, Inc.
	By:
	Name:
	Title:

 

 

 

Exhibit 10.4

 

SETTLEMENT AGREEMENT

 

THIS SETTLEMENT AGREEMENT (this “Agreement”) is dated July 20, 2023, by and between Renovare Environmental, Inc., a Delaware corporation (the “Reno”), TraqIQ, Inc., a California corporation (the “Company”) and the undersigned investor in Reno (the “Holder”, collectively with Reno, the “Parties”, and each individually, a “Party”).

 

RECITALS

 

WHEREAS, prior to the date hereof the Holder acquired certain securities of Reno as set forth on the signature page of the Holder attached hereto (the “Existing Securities”) pursuant to certain agreements of Reno (including, without limitations, one or more certificates of designation with respect to certain of the Existing Securities, as applicable) (the “Existing Agreements”);

 

WHEREAS, on or about January 5, 2023, Reno and its wholly-owned subsidiary BioHiTech America, LLC (“BHT” and together with Reno, the “Sellers”) consummated the transactions contemplated by that certain Asset Purchase Agreement dated December 30, 2022 (the “Purchase Agreement”) with the Company whereby the Company acquired from Reno and BHT certain assets related to the Sellers business and assumption of certain of the Sellers’ liabilities (the “Asset Sale”) and the Company issued to Reno certain securities of the Company (the “Securities Consideration”);

 

WHEREAS, on or about July [  ] , 2023, Reno and the Company entered into that certain Exchange Agreement, pursuant to which the Securities Consideration was exchanged (the “Exchange”), in part, for (x) Series A Rights, in the form attached hereto as Exhibit A (the “Series A Rights”), exercisable into 108,729,363 shares of Common Stock (the “Series A Rights Shares”) and (y) Series B Rights, in the form attached hereto as Exhibit B (the “Series B Rights”, and together with the Series A Rights, the “Rights”), exercisable into 30,388,870 shares of Common Stock (the “Series B Rights Shares” and together with the Series A Rights Shares, the “Rights Shares”, and together with the Rights, the “Securities”) in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”);

 

WHEREAS, the Holder asserts that Reno has breached certain provisions of the Existing Securities and/or the Existing Agreements, as applicable, in connection with the Asset Sale (the “Claimed Breach”);

 

WHEREAS, Reno disputes the Claimed Breach, but nonetheless, Reno and the Company desire to settle all claims by the Holder with respect to the Claimed Breach in accordance therewith by the execution and delivery by the Holder to each of Reno and the Company of that certain Release attached hereto as Exhibit C (the “Release”) in exchange for the transfer (the “Transfer”) by Reno to the Holder (or its designee) of (a) Series A Rights (the “Holder Series A Rights”) exercisable into such aggregate number of shares of Common Stock as set forth on the signature page of the Holder attached hereto [(which, for the avoidance of doubt, includes an additional number of Holder Series A Rights to be delivered to the Holder in satisfaction of the assumption by the Holder of the obligations with respect to the Legal Fee Amount (as defined below) in accordance with Section 6 below] (as exercised, the “Holder Series A Rights Shares”) and/or (b) Series B Rights (the “Holder Series B Rights”, and together with the Holder Series A Rights, the “Holder Rights”), as applicable, exercisable into such aggregate number of shares of Common Stock as set forth on the signature page of the Holder attached hereto (the “Holder Series B Rights Shares”, and together with the Holder Series A Rights Shares, the “Holder Rights Shares”, and together with the Holder Rights, the “Holder Securities”) in accordance with Section 4(a)(1) of the Securities Act;

 

 

WHEREAS, on or prior to the time of the Transfer, the Company and the Holder will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit D (the “Registration Rights Agreement”) or, if the Registration Rights Agreement has previously been executed by other investors (the “Other Holders”) pursuant to one or more settlement agreements substantially similar in all material respects to this Agreement (other than reimbursement of legal fees and the aggregate number of Rights Shares issuable upon exercise of the Rights issued (or to be issued) to such Other Holders) (the “Other Agreements”), the Holder shall execute a joinder to the Registration Rights Agreement, in the form attached hereto as Exhibit E (the “RRA Joinder” and together with the Registration Rights Agreement, this Agreement, the Rights and the Release, the “Settlement Documents”), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the Securities Act and the rules and regulations promulgated thereunder, and applicable state securities laws;

 

WHEREAS, on July [  ], 2023 (the “Settlement Date”), Reno and Company have entered into certain Other Agreements with Other Holders, since the Settlement Date, Reno and Company may have entered into additional Other Agreements with Other Holders, and on the date hereof, Reno and Company may enter into additional Other Agreements with certain additional Other Holders (such Other Agreements, together with this Agreement, the “Agreements”); and

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1. Transfer; Exchange; Release.

 

1.1 Transfer. On the date hereof, Reno shall consummate the Transfer by delivering to the Holder (or its designee) the Holder Rights in certificate form at the address for delivery set forth on the signature page of the Holder attached hereto. Notwithstanding the foregoing, regardless of the time such certificates evidencing Holder Rights has been delivered to the Holder, as of the date hereof, the Holder shall be the record owner of the Holder Rights. Such Holder Rights shall bear a legend indicating that the issuance of such securities have not been registered under the Securities Act as more fully set forth in Section 4.9 hereof.

 

1.2 Release. Upon the consummation of the Transfer, the Release shall be effective.

 

 

2. Representations and Warranties of Reno. As of the date hereof and as of the Settlement Date, Reno hereby represents and warrants to the Holder as follows:

 

2.1 Organization and Qualification. Each of Reno and each of its Reno Subsidiaries (as defined below) are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of Reno and each of its Reno Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Reno Material Adverse Effect (as defined below). As used in this Agreement, “Reno Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of Reno or any Reno Subsidiary, individually or taken as a whole, (ii) the ability of Reno to consummate the transactions contemplated hereby or in any of the other Settlement Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of Reno or any of its Reno Subsidiaries to perform any of their respective obligations under any of the Settlement Documents. For the purposes of Section 2 hereof, “Reno Subsidiaries” means any Person (as defined below) in which Reno, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person, or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Reno Subsidiary”.

 

2.2 Authorization and Binding Obligation. Reno has the requisite power and authority to enter into and perform its obligations under the Settlement Documents to which it is a party and to consummate the Transfer in accordance with the terms hereof. As of the date hereof, the execution and delivery of this Agreement and the other Settlement Documents by Reno and the consummation by Reno of the transactions contemplated hereby and thereby, including, without limitation, the acquisition of the Securities Consideration in the Asset Sale and the other transactions contemplated by the Settlement Documents will have been duly authorized by Reno’s Board of Directors and no further filing, consent, or authorization will be required by Reno, its Board of Directors or its stockholders. Each Settlement Document has been, duly executed and delivered by Reno, and constitute or will constitute, as applicable, the legal, valid and binding obligations of Reno, enforceable against Reno in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

 

2.3 No Conflict.

 

(a) The execution, delivery and performance of each Settlement Documents and the consummation of the transactions contemplated hereby will be in compliance with, and will not result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, any agreement to which Reno is a party or that govern the rights and obligations with respect to the Holder Rights.

 

(b) The execution, delivery and performance of each Settlement Documents by Reno and the consummation by Reno of the transactions contemplated hereby and thereby (including, without limitation consummation of the Transfer) will not

 

(i) result in a violation of Reno Certificate of Incorporation (as defined below) or any other organizational documents of Reno or any of its Reno Subsidiaries, the terms of any capital stock of Reno or any of its Reno Subsidiaries or Reno Bylaws (as defined below) of Reno or any of its Reno Subsidiaries,

 

 

(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement (including, without limitation, the Purchase Agreement), indenture or instrument to which Reno or any of its Reno Subsidiaries is a party, or cause any acceleration of any obligation with respect to any other restriction of any kind or character to which any assets or properties of Reno, including the Holder Rights, are subject or by which Reno is bound, after giving effect to the receipt by Reno of Reno Required Consents (as defined below) and any other consents, waivers or amendments that will be obtained by Reno on or prior to the date hereof, or

 

(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and including all applicable federal laws, rules and regulations) applicable to Reno or any of its Reno Subsidiaries or by which any property or asset of Reno or any of its Reno Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that would not reasonably be expected to have a Reno Material Adverse Effect.

 

2.4 No Consents. Neither Reno nor any Reno Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than such filings as may be required by any federal or state securities laws, rules or regulations), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Settlement Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which Reno or any Reno Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the date hereof, and neither Reno nor any of its Reno Subsidiaries are aware of any facts or circumstances which might prevent Reno or any of its Reno Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Settlement Document. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.

 

2.5 Liens. Reno is the sole owner of the Holder Rights, has good, valid and marketable title to all of the Holder Rights, and the Holder Rights are owned free and clear of any preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances adverse interests, preferential purchase rights (i.e., rights of first offer or rights of first refusal), options or restrictions of any kind (“Liens”) (other than those arising solely as a result of the Holder Rights being “restricted securities” within the meaning of Rule 144 under the Securities Act). Reno has never transferred or pledged any interest in any of the Holder Rights to any Person. Reno has provided the Holder with true and correct copies of all documents in its possession relating to Reno’s ownership of the Holder Rights, including Purchase Agreement.

 

2.6 Other Contracts. Other than the Purchase Agreement, Reno is not a party to, or otherwise subject to, any agreement or understanding (including any voting trust, irrevocable proxy or other agreement or understanding), which affects or relates to the voting or giving of written consents with respect to any transfer or other disposition of the Holder Rights, or any shareholder agreement or investor rights agreement.

 

 

2.7 Compliance with Other Instruments. Reno is not in violation or default of any instrument, judgment, order, writ, decree, agreement, obligation or contract (including, without limitation, the Purchase Agreement) to which it is a party or by which it or any of its assets is bound, or of any provision of any federal or state statute, rule or regulation relating in any way to the ownership or transfer of the Holder Rights.

 

2.8 Transfer Taxes. All share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the Transfer of the Holder Rights to the Holder hereunder will be, or will have been, fully paid or provided for by Reno, and all laws imposing such taxes will be or will have been complied with.

 

2.9 Organizational Documents. True, correct and complete copies of Reno’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Reno Certificate of Incorporation”), and Reno’s Bylaws, as in effect on the date hereof (the “Reno Bylaws”).

 

2.10 Litigation. There is no action, claim, suit, investigation or proceeding, whether commenced or threatened, before any court, governmental agency or body, domestic or foreign, now pending or, to the knowledge of Reno, threatened against Reno or its Reno Subsidiaries wherein an unfavorable decision, ruling or finding would reasonably be expected to, individually or in the aggregate, (i) materially adversely affect the validity or enforceability of, or the authority or ability of Reno to perform its obligations under, the Settlement Documents, or (ii) have a Reno Material Adverse Effect. No event has occurred and no condition exists on the basis of which any such litigation, claim, action, suit, arbitration, complaint, charge, investigation or proceeding may be asserted. Reno is not a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental agency or body that could reasonably be expected to have, individually or in the aggregate, (i) materially adversely affect the validity or enforceability of, or the authority or ability of Reno to perform its obligations under, the Settlement Documents, or (ii) have a Reno Material Adverse Effect.

 

2.11 Disclosure. Reno confirms that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning Reno or any of its Reno Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Settlement Documents. Reno understands and confirms that the Holder will rely on the foregoing representations in effecting transactions in securities of Reno. All disclosure provided to the Holder regarding Reno and its Reno Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of Reno or any of its Reno Subsidiaries is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of Reno or any of its Reno Subsidiaries to the Holder pursuant to or in connection with this Agreement and the other Settlement Document, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to Reno or any of its Reno Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by Reno but which has not been so publicly disclosed. Reno acknowledges and agrees that the Holder makes or has made no representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 4 below.

 

 

3. Representations and Warranties of the Company. The Company agrees, represents and warrants to the Holder that, as of the Settlement Date:

 

3.1 Organization and Qualification. Each of the Company and each of its Company Subsidiaries (as defined below) are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Company Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have an Company Material Adverse Effect (as defined below) (and together with each Reno Material Adverse Effect, each a “Material Adverse Effect”). As used in this Agreement, “Company Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Company Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Settlement Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Company Subsidiaries to perform any of their respective obligations under any of the Settlement Document. For the purposes of Section 3 hereof, “Company Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person, or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Company Subsidiary”.

 

3.2 Authorization and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and each other Settlement Document to which it is a party (including, without limitation, the Transfer and the reservation for issuance and issuance of the Holder Rights Shares). As of the Settlement Date, the execution and delivery of the Settlement Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the Transfer, and the reservation for issuance and issuance of Rights Shares issuable upon exercise of the Rights will have been duly authorized by the Company’s Board of Directors and no further filing, consent, or authorization will be required by the Company, its Board of Directors or its stockholders (other than the filing with the Securities and Exchange Commission (the “SEC”) of one or more Registration Statements (as defined in the Registration Rights Agreement) in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies). This Agreement has been and, as of the Settlement Date, the other Settlement Documents will have been, duly executed and delivered by the Company, and constitute or will constitute, as applicable, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

 

 

3.3 No Conflict. The execution, delivery and performance of the Settlement Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the Transfer and the reservation for issuance and issuance of the Holder Rights Shares) will not:

 

(a) result in a violation of the Company Articles of Incorporation (as defined below) or any other organizational documents of the Company or any of its Company Subsidiaries, the terms of any capital stock of the Company or any of its Company Subsidiaries or the Company Bylaws (as defined below) of the Company or any of its Company Subsidiaries,

 

(b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Company Subsidiaries is a party, after giving effect to the receipt by the Company of the Company Required Consents (as defined below) and any other consents, waivers or amendments that will be obtained by the Company on or prior to the Initial Closing Date, or

 

(c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the OTCQB (the “Principal Market”) and including all applicable federal and state laws, rules and regulations) applicable to the Company or any of its Company Subsidiaries or by which any property or asset of the Company or any of its Company Subsidiaries is bound or affected except, in the case of clause (b) or (c) above, to the extent such violations that would not reasonably be expected to have an Company Material Adverse Effect.

 

3.4 No Consents. Except as set forth on Schedule 3.4 (the “Company Required Consents”, and collectively with Reno Required Consents, the “Required Consents”), neither the Company nor any Company Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than such filings as may be required by any federal or state securities laws, rules or regulations), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Settlement Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Company Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Initial Closing Date, and neither the Company nor any of its Company Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Company Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Settlement Document. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

 

 

3.5 Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the Transfer is exempt from registration under the Securities Act pursuant to the exemption provided by Section 4(a)(1) thereof.

 

3.6 Issuance of Securities. As of the Settlement Date, the Exchange was consummated in full and the Rights are outstanding, duly authorized, validly issued, fully paid and non-assessable. Upon issuance or exercise in accordance with the terms of the Rights, the Rights Shares, when issued, will be validly issued, fully paid and nonassessable, with the Holder being entitled to all rights accorded to a holder of Common Stock. By virtue of Rule 4(a)(1) under the Securities Act, the Rights will have a Rule 144 holding period that will be deemed to have commenced as of the date of the Transfer.

 

3.7 [Reserved]

 

3.8 Equity Capitalization.

 

(a) Definitions:

 

(i) “Common Stock” means (x) the Company’s shares of common stock, $0.0001 par value per share, and (y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(ii) “Preferred Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may be designated by the board of directors of the Company in a certificate of determination and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(iii) “Series A Preferred Stock” means (x) the Company’s Series A Preferred Stock, $0.0001 par value per share, the terms of which are as designated by the board of directors of the Company in the Certificate of Determination filed with the Secretary of State of California on July 21, 2017, and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(iv) “Series B Preferred Stock” means (x) the Company’s Series B Preferred Stock, $0.0001 par value per share, the terms of which are as designated by the board of directors of the Company in the Certificate of Determination filed with the Secretary of State of California on December 30, 2022, and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

 

(v) “Series C Preferred Stock” means (x) the Company’s Series C Preferred Stock, $0.0001 par value per share, the terms of which are as designated by the board of directors of the Company in the Certificate of Determination filed with the Secretary of State of California on June 9, 2023, and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(b) Authorized and Outstanding Capital Stock. As of the Settlement Date, after giving effect to the Exchange, the authorized capital stock of the Company consisted of (A) 300,000,000 shares of Common Stock, of which, 19,821,732 were issued and outstanding and 138,010,169 shares were reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Rights) exercisable or exchangeable for, or convertible into, shares of Common Stock, (B) 10,000,000 shares of Preferred Stock, 701,000 of which were issued and outstanding (including no shares of Preferred A Stock, no shares of Preferred B Stock and 701,000 shares of Series C Preferred Stock). (As of the Settlement Date, after giving effect to the cancellation of 19,118,233 shares of Common Stock and 1,470,135 shares of Series B Preferred Stock received pursuant to the Exchange, no shares of capital stock were held in the treasury of the Company.) “Convertible Securities” means any capital stock or other security of the Company or any of its Company Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Company Subsidiaries.

 

(c) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued, fully paid and nonassessable. Schedule 3.15(c) hereto accurately sets forth, as of the Settlement Date, the number of shares of Common Stock that are (A) required to be reserved for issuance pursuant to Convertible Securities (other than the Rights) and (B) that are, as of the date referred to therein, owned by Persons who are “affiliates” (as defined in Rule 405 of the Securities Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Company Subsidiaries.

 

(d) Existing Securities; Obligations. Except as disclosed in the Company’s filings with the SEC in the past year (the “SEC Documents”) or on Schedule 3.15(d) hereto, and except pursuant to the transactions contemplated by this Agreement, as of the Settlement Date: (A) none of the Company’s or any Company Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or liens suffered or permitted by the Company or any Company Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Company Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Company Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Company Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Company Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Company Subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Company Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Company Subsidiaries is or may become bound to redeem a security of the Company or any of its Company Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be (or have been) triggered by the issuance of the Rights or the Transfer; and (F) neither the Company nor any Company Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.

 

 

(e) Organizational Documents. True, correct and complete copies of the Company’s Articles of Incorporation, as amended and as in effect on the date hereof (the “Company Articles of Incorporation”), and the Company’s Amended and Restated Bylaws, as in effect on the date hereof (the “Company Bylaws”), and the terms of all Convertible Securities that are convertible into shares of Common Stock and the material rights of the holders thereof in respect thereto, are set forth in, or filed as exhibits to, the SEC Documents.

 

3.9 No Consideration Paid. No consideration, commission or other remuneration has been paid by the Holder to the Company, its Company Subsidiaries or any of their agents or affiliates in connection with the Transfer.

 

3.10 No General Solicitation; No Placement Agent. Neither the Company, nor any of its Company Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Holder Rights or the Exchange. Neither the Company nor any of its Company Subsidiaries has, directly or indirectly, engaged any placement agent or other agent in connection with the Exchange.

 

3.11 No Integrated Offering. None of the Company, its Company Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Holder Securities under the Securities Act, whether through integration with prior offerings or otherwise (other than as set forth in the Registration Rights Agreement), or cause the Transfer to require approval of stockholders of the Company for purposes of the Securities Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Company Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the exchange of any of the Holder Securities under the Securities Act or cause the offering of any of the Holder Securities to be integrated with other offerings of securities of the Company

 

 

3.12 No Additional Agreements. The Company does not have any agreement or understanding with the Holder with respect to the transactions contemplated by the Settlement Documents other than as specified in the Settlement Documents.

 

3.13 Disclosure. All disclosure provided to the Holder regarding the Company and its Company Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Company Subsidiaries is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Company Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. The Company acknowledges and agrees that the Holder makes or has made no representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 4 below.

 

4. Representations and Warranties of the Holder. As of the date hereof, the Holder agrees, represents and warrants to Reno and Company that:

 

4.1 Organization; Authority. The Holder is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Settlement Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

4.2 Enforcement. This Agreement and the Settlement Documents to which it is a party have been duly executed by the Holder and constitute legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

4.3 Consents. The Holder is not required to give any notice to, make any filing, application or registration with, obtain any authorization, consent, order or approval of or obtain any waiver from any Person or entity in order to execute and deliver this Agreement or to consummate the transactions contemplated hereby.

 

4.4 Non-contravention. Neither the execution and the delivery by the Holder of this Agreement, nor the consummation by the Holder of the transactions contemplated hereby, will (a) violate any law, rule, injunction, or judgment of any governmental agency or court to which the Holder is subject or any provision of its charter, bylaws, trust agreement, or other governing documents or (b) conflict with, result in a breach of, or constitute a default under, any agreement, contract, lease, license, instrument, or other arrangement to which the Holder is a party or by which the Holder is bound or to which any of its assets is subject, except in the case of clauses (a) and (b) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.

 

 

4.5 Investment Purpose. The Holder, if they so elect is acquiring the Holder Rights (and upon exercise of the Holder Rights, the Holder Rights Shares) for its own account and not with a present view toward the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the Securities Act; provided, however, by making the representations herein, the Holder does not agree, or make any representation or warranty, to hold any of the Holder Securities for any minimum or other specific term and reserves the right to dispose of the Holder Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the Securities Act.

 

4.6 Accredited Holder Status. The Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

 

4.7 Reliance on Exemptions. The Holder agrees, acknowledges and understands that the Holder Rights are being transferred to the Holder in reliance upon specific exemptions from the registration requirements of United States federal and applicable state securities or “blue sky” laws and that Reno and the Company are each relying upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, covenants, agreements, acknowledgments and understandings of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility of the Holder to acquire the Holder Rights.

 

4.8 Transfer or Resale. The Holder agrees, acknowledges and understands that:

 

(a) the Holder Securities have not been and, except as set forth herein, are not being registered under the Securities Act or any applicable state securities or “blue sky” laws. Consequently, the Holder may have to bear the risk of holding the Holder Securities for an indefinite period of time because the Holder Securities may not be transferred unless: (A) the resale of the Holder Securities, is registered pursuant to an effective registration statement under the Securities Act; (B) the Holder has delivered to the Company an opinion of counsel reasonably acceptable to the Company and its counsel (in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Holder Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; or (C) the Holder Securities are sold or transferred pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”);

 

(b) any sale of the Holder Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of the Holder Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Holder Securities Act or the rules and regulations of the SEC promulgated thereunder;

 

(c) except as set forth in the Registration Rights Agreement, neither Reno, the Company, nor any other Person is under any obligation to register the Holder Securities under the Securities Act or any state securities or “blue sky” laws or to comply with the terms and conditions of any exemption thereunder;

 

 

(d) notwithstanding the foregoing, the Holder Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Holder Securities and such pledge of Holder Securities shall not be deemed to be a transfer, sale or assignment of the Holder Securities hereunder, and the Holder effecting a pledge of Holder Securities shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Settlement Document, including, without limitation, this Section 4.8(d).

 

4.9 Legends. The Holder agrees, acknowledges and understands that the certificates representing the Holder Securities will bear restrictive legends in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Holder Securities):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES OR “BLUE SKY” LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

4.10 No Brokers. The Holder has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement.

 

4.11 Reliance on Representations. The Holder agrees, acknowledges and understands that Reno and the Company, are entitled to rely on the representations, warranties and covenants made by the Holder herein.

 

5. Closing; Conditions. Subject to the conditions set forth below, the Exchange and Transfer shall take place at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178, on the Business Day immediately following such date as the Company and Reno shall have satisfied all conditions to closing below, or at such other time and place as the parties hereto mutually agree (the “Closing” and the “Closing Date”).

 

5.1 Condition’s to Holder’s Obligations. The obligation of the Holder to consummate the Transfer and Exchange is subject to the fulfillment, to the Holder’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions; provided, however, that for any Closing on a date after the Settlement Agreement (a “Subsequent Closing”), the Holder shall be provided copies of the documents delivered to the Holders (the “Initial Holders”) at the Closing that occurred on the Settlement Date, but only upon the written request of the Holders that are effecting a Transfer at such Subsequent Closing:

 

(a) Delivery of Holder Rights. Reno shall have duly delivered the Holder Rights to the Holder.

 

 

(b) Irrevocable Transfer Agent Instructions. The Company shall have delivered to the Holder a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to the Holder, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.

 

(c) Transfer Agent Certificate. The Company shall have delivered to the Holder a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Settlement Date.

 

(d) Good Standing Certificate. The Company shall have delivered to the Holder a certificate evidencing the formation and good standing of the Company in the State of California issued by the Secretary of State of California as of a date within ten (10) days of the Settlement Date.

 

(e) Foreign Qualification. The Company shall have delivered to the Holder a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten (10) days of the Settlement Date.

 

(f) Secretary Certificate of Reno. Reno shall have delivered to the Holder a certificate, in the form acceptable to the Initial Holders, executed by the Secretary of Reno and dated as of the Settlement Date, as to (i) the resolutions consistent authorizing the Transfer as adopted by Reno’s Board of Directors in a form reasonably acceptable to the Holder, (ii) Reno Certificate of Incorporation, and (iii) Reno Bylaws, each as in effect as of the Settlement Date.

 

(g) Secretary Certificate of Company. The Company shall have delivered to the Holder a certificate, in the form acceptable to the Initial Holders, executed by the Secretary of the Company and dated as of the Settlement Date, as to (i) the resolutions consistent authorizing the Exchange as adopted by the Company’s Board of Directors in a form reasonably acceptable to the Holder, (ii) the Company Articles of Incorporation, and (iii) the Company Bylaws, each as in effect as of the Settlement Date.

 

(h) Officer Certificate of Reno. The representations and warranties of Reno contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) on and as of the Settlement Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date). The Holder shall have received a certificate, duly executed by the Chief Executive Officer of Reno, dated as of the Settlement Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Holder in the form acceptable to the Initial Holders.

 

 

(i) Officer Certificate of Company. The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) on and as of the Settlement Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date). The Holder shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Settlement Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Initial Holders in the form acceptable to the Initial Holders.

 

(j) Intentionally omitted.

 

(k) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(l) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Holder, and the Holder shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.

 

(m) Consents. Reno and Company shall each have obtained all governmental, regulatory or third party consents and approvals (or waiver of such consents or approvals), if any, necessary for the Transfer or Exchange, as applicable, including without limitation, those required by the Principal Market, if any, and the Required Consents.

 

(n) Listing. The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Initial Closing Date, by the SEC or the Principal Market from trading on the Principal Market.

 

5.2 Condition’s to Reno’s Obligations. The obligation of Reno to consummate the Exchange is subject to the fulfillment, to Reno’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Holder contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) on the date hereof and on and as of the Settlement Date as if made on and as of such date (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) as of such specified date).

 

(b) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

 

(c) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to Reno and Reno shall have received all such counterpart originals or certified or other copies of such documents as Reno may reasonably request.

 

(d) Release. The Holder shall have duly executed and delivered the Release to Reno and the Company.

 

5.3 Condition’s to the Company’s Obligations. The obligation of the Company to consummate the Transfer is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Holder contained in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) on the date hereof (except for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects) as of such specified date).

 

(b) No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(c) Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall have received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request.

 

(d) Release. The Holder shall have duly executed and delivered the Release to Reno and the Company.

 

 

6. Fees. [INSERT IN KEYSTONE ONLY: On or prior to the Closing Date, Reno shall pay Kelley Drye & Warren, LLP, on demand, a non-accountable amount of $140,000 (the “Legal Fee Amount”) for the costs and expenses incurred by it in connection with preparing and delivering the Settlement Documents (including, without limitation, all legal fees and disbursements in connection therewith, and due diligence in connection with the transactions contemplated thereby); provided, that in lieu of the payment by Reno of the Legal Fee Amount in cash directly to Kelley Drye & Warren, LLP, the Holder agrees to assume Reno’s obligation to pay the Legal Fee Amount to Kelley Drye & Warren, LLP, and Reno agrees to transfer such obligation to the Holder, in exchange for the delivery, by Reno of an additional 2,800,000 Series A Rights to the Holder (which, for the avoidance of doubt, shall be Holder Series A Rights Shares of the Holder for all purposes hereunder and the other Exchange Documents).] The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, Depository Trust Company (“DTC”) fees or broker’s commissions (other than for Persons engaged by the Holder) relating to or arising out of the transactions contemplated hereby. Except as otherwise set forth in the Transaction Documents, the Settlement Documents or this Agreement, each party to this Agreement shall bear its own expenses in connection therewith and with the Transfer and the Exchange.

 

7. Blue Sky. Reno shall make all filings and reports relating to the Exchange required under applicable securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.

 

8. Disclosure of Transaction.

 

(a) On or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated hereby in the form required by the Exchange Act, and attaching form of this Agreement and each other Settlement Document (including all attachments, the “8-K Filing”). On or prior to September 15, 2023 (the “Cleansing Date”), the Company shall have disclosed all material, non-public information (if any) provided to the Holder by the Company or any of its Company Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated hereby and the Company shall provide written notice to the Holder. In addition, effective upon the Cleansing Date, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Company Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and the Holder or any of its affiliates, on the other hand, with respect to this Agreement and the transactions contemplated hereby shall terminate.

 

 

(b) The Company shall not, and the Company shall cause each of its Company Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide the Holder with any material, non-public information regarding the Company or any of its Company Subsidiaries from and after the date hereof without the express prior written consent of the Holder (which may be granted or withheld in the Holder’s sole discretion). In the event of a breach of any of the foregoing covenants, or any of the covenants or agreements contained in the Rights, by the Company, any of its Company Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of the Holder), in addition to any other remedy provided herein or in the Rights, on the third (3^rd) Business Day after the Holder’s delivery of a written request to the Company to publicly disclose such information (and the failure by Reno to publicly disclosure such information prior thereto), the Holder shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its Company Subsidiaries, or any of its or their respective officers, directors, employees or agents. The Holder shall not have any liability to the Company, any of its Company Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to the Holder without the Holder’s consent, the Company hereby acknowledges and agrees that the Holder shall not have (unless expressly agreed to by the Holder after the date hereof in a written definitive and binding agreement executed by the Company and the Holder) any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Company Subsidiaries nor the Holder shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of the Holder, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) the Holder shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the Holder (which may be granted or withheld in the Holder’s sole discretion), the Company shall not (and shall cause each of its Company Subsidiaries and affiliates to not) disclose the name of the Holder in any filing, announcement, release or otherwise (other than in the exhibit of this Agreement attached to the 8-K Filing). Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees that the Holder shall not have (unless expressly agreed to by the Holder after the date hereof in a written definitive and binding agreement executed by the Company and the Holder), any duty of confidentiality with respect to, or a duty to the Company not to trade on the basis of, any material, non-public information regarding the Company or any of its Company Subsidiaries.

 

9. Reporting Status. Until the date on which the Holder shall have sold all of the Registrable Securities (the “Reporting Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.

 

10. Reservation of Shares. So long as any of the Rights remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the maximum number of shares of Common Stock issuable upon exercise of all the Rights then outstanding (assuming for purposes hereof that any such exercise shall not take into account any limitations on the exercise of the Rights set forth therein), (collectively, the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 10 be reduced other than proportionally in connection with any exercise and/or redemption, as applicable of Rights. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Settlement Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.

 

 

11. Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the Securities Act, (ii) unless the following are either filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, e-mail copies of all press releases issued by the Company or any of its Company Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.

 

12. Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms of the Settlement Documents on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Company Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 12.

 

12.1 Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Settlement Document, including, without limitation, Section 4.8 hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 4.8 hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. Reno hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by the Holder.

 

 

13. Intentionally omitted.

 

14. Register; Transfer Agent Instructions; Legend.

 

14.1 Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each Holder of Securities), a register for the Rights in which the Company shall record the name and address of the Person in whose name the Rights have been issued (including the name and address of each transferee), the aggregate number of the Rights held by such Person, the number of Rights Shares issuable pursuant to the terms of the Rights held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of the Holder or its legal representatives.

 

14.2 Transfer Agent Instructions. The Company shall issue irrevocable instructions to Transfer Agent (the “Transfer Agent”) and any subsequent transfer agent in a form acceptable to each of the Holder (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of the Holder or its respective nominee(s), for the Rights Shares in such amounts as specified from time to time by the Holder to the Company upon exercise of the Rights. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 14.2, and stop transfer instructions to give effect to Section 4.8 hereof, will be given by the Company to the Transfer Agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Settlement Documents. If the Holder effects a sale, assignment or transfer of the Securities in accordance with Section 4.8, the Company shall permit the transfer and shall promptly instruct Transfer Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by the Holder to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Rights Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the Transfer Agent shall issue such shares to the Holder, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 14.4 below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 14.2 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 14.2, that the Holder shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Transfer Agent on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.

 

 

14.3 Legends. The Holder understands that the Holder Securities have been issued (or will be issued in the case of the Holder Rights Shares) pursuant to an exemption from registration or qualification under the Securities Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY RENO), IN A FORM REASONABLY ACCEPTABLE TO RENO, 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.

 

14.4 Removal of Legends. Certificates evidencing Holder Securities shall not be required to contain the legend set forth in Section 14.3 above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Holder Securities is effective under the Securities Act, (ii) following any sale of such Holder Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Holder Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that the Holder provides the Company with reasonable assurances that such Holder Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Holder’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Holder provides the Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Holder Securities may be made without registration under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC) (each, severally, a “Free Tradability Condition”). If a legend is not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days (or such earlier date as required pursuant to the Exchange Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date the Holder delivers such legended certificate representing such Holder Securities to the Company) following the delivery by the Holder to the Company or the Transfer Agent (with notice to the Company) of a legended certificate representing such Holder Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may be required above in this Section 14.4, as directed by the Holder, either: (A) provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program (“FAST”) and the applicable Holder Rights satisfy one or more Free Tradability Conditions, credit the aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Transfer Agent is not participating in FAST or the applicable Holder Rights do not satisfy any Free Tradability Conditions, issue and deliver (via reputable overnight courier) to the Holder, a certificate representing such Holder Securities that is free from all restrictive and other legends, registered in the name of the Holder or its designee (the date by which such credit is so required to be made to the balance account of the Holder’s or the Holder’s designee with DTC or such certificate is required to be delivered to the Holder pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to the Holder or the Holder’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Holder Securities or the removal of any legends with respect to any Holder Securities in accordance herewith.

 

 

14.5 Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, on or prior to the Required Delivery Date to issue and deliver (or cause to be delivered) , either (I) if the Transfer Agent is not participating in FAST or the applicable Holder Rights do not satisfy any Free Tradability Condition, to the Holder (or its designee) a certificate for the number of Holder Rights Shares to which the Holder is entitled and register such Holder Rights Shares on the Company’s share register or, if the Transfer Agent is participating in FAST and the applicable Holder Rights satisfy one or more Free Tradability Conditions, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of Holder Rights Shares submitted for legend removal by the Holder pursuant to Section 14.4 above or (II) if after the initial Effective Date (as defined in the Registration Rights Agreement) the Registration Statement covering the resale of the Holder Rights Shares submitted for legend removal by the Holder pursuant to Section 14.4 above (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Holder Rights Agreement (x) so notify the Holder and (y) deliver the Holder Rights Shares electronically without any restrictive legend by crediting such aggregate number of Holder Rights Shares submitted for legend removal by the Holder pursuant to Section 14.4 above to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Required Delivery Date and to which the Holder is entitled, 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 date of the delivery by the Holder to the Company of the applicable Exercise Notice and ending on the applicable Required 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 the applicable Holder Rights that have 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 14.5 or otherwise. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) the Transfer Agent is not participating in FAST or the applicable Holder Rights do not satisfy any Free Tradability Conditions, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST and the applicable Holder Rights satisfy one or more Free Tradability Conditions, the Transfer Agent fails 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 submitted for legend removal by the Holder pursuant to Section 14.4 above (ii) below or (II) a Notice Failure occurs, and if on or after such Required Delivery Date the Holder acquires shares of Common Stock (in an open market transaction, stock loan or otherwise) corresponding to all or any portion of the number of shares of Common Stock submitted for legend removal by such Buyer by the Holder pursuant to Section 14.4 above that the Holder is entitled to receive from the Company and has not received from the Company in connection with such delivery or Notice Failure, as applicable (a “Buy-In”), then, in additional to all other remedies available to the Holder, the Company shall, within two (2) Business Days (as defined in the Rights) after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (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 to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the Holder’s or its designee’s balance account with DTC for the number of Rights Shares which the Holder is entitled upon the Holder’s exercise thereof (as the case may be)(and to issue such Right Shares) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificates representing such Rights Shares or certificates or credit the balance account of the Holder or the Holder’s designee, as applicable, with its obligations hereunder and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Holder Rights Shares multiplied by (B) the lowest Closing Sale Price (as defined in the Holder Rights) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Holder to the Company of the applicable Exercise Notice and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon exercise of the applicable Holder Rights as required pursuant to the terms hereof. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable number of Right Shares upon an exercise pursuant to by the applicable Required Delivery Date, then the Holder shall have the right to rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion of this Right that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 14.5 or otherwise, and (ii) if a registration statement covering the issuance or resale of the Right Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable, of such Right Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration statement and the Company has not already delivered the Right Shares underlying such Exercise Notice electronically without any restrictive legend by crediting such aggregate number of Right Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, the Holder shall have the option, by delivery of notice to the Company, to rescind such Exercise Notice in whole or in part and retain or have returned, as the case may be, any portion of the applicable Holder Right that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 14.5 or otherwise. Notwithstanding anything herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 14.5 shall not apply to the applicable Holder the extent the Company has already paid such amounts in full to the Holder with respect to such Notice Failure and/or Delivery Failure, as applicable, pursuant to the analogous sections of the Holder Rights held by the Holder.

 

 

14.6 FAST Compliance. While any Holder Rights remain outstanding, the Company shall maintain a transfer agent that participates in FAST.

 

15. Termination. If the Transaction is not consummated on or prior to [___]¹, 2023, the Holder may terminate this Agreement by written notice to Reno and Company, and this Agreement shall thereafter be null and void, ab initio.

 

16. Miscellaneous.

 

16.1 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Securities. Neither the Company nor Reno shall assign this Agreement or any rights or obligations hereunder, except in connection with a merger in which such entity is not the surviving entity (solely to the extent the Successor Entity (as defined in the Rights) complies in full with the terms and conditions of the Rights with respect thereto), without the prior written consent of the Required Holders (as defined below). The Holder may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of Reno or the Company, in which event such assignee shall be deemed to be the Holder hereunder with respect to such assigned rights.

 

16.2 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. Each counterpart may be delivered by email (as a .pdf attachment) or facsimile transmission, and an emailed or faxed signature shall have the same force and effect as an original signature.

 

16.3 Entire Agreement; Amendments.

 

(a) This Agreement together with the other Settlement Documents, represents the entire agreement and understanding between the parties concerning the Transfer and Exchange and the other matters described herein and therein and supersedes and replaces any and all prior agreements and understandings solely with respect to the subject matter hereof and thereof.

 

¹ Insert 45 days following the signing date of this agreement.

 

 

(b) No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company, Reno and the Required Holders (as defined below), and any amendment or waiver to any provision of this Agreement made in conformity with the provisions of this Section 16.3(b) shall be binding on the Holder; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding, or (B) imposes any obligation or liability on the Holder without the Holder’s prior written consent (which may be granted or withheld in such Holder’s sole discretion). Neither Reno nor the Company has, directly or indirectly, made any agreements with The Holders relating to the terms or conditions of the transactions contemplated by the Settlement Documents except as set forth in the Settlement Documents. Without limiting the foregoing, each of the Company and Reno confirms that, except as set forth in this Agreement, no holder has made any commitment or promise or has any other obligation to provide any financing to the Company, any Company Subsidiary, Reno, any Reno Subsidiary or otherwise. As a material inducement for the Holder to enter into this Agreement, each of the Company and Reno expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by the Holder, any of its advisors or any of its representatives shall affect the Holder’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s and Reno’s representations and warranties contained in this Agreement or any other Settlement Document and (y) unless a provision of this Agreement or any other Settlement Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect the Holder’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s or Reno’s representations and warranties contained in this Agreement or any other Settlement Document. “Required Holders” means (I) prior to the Initial Closing Date, each of Keystone Capital Partners, LLC and Calvary Fund I, LP, and (II) on or after the Initial Closing Date, Keystone Capital Partners, LLC, as long as it (or any of its affiliates) holds any Holder Rights, and Calvary Fund I, LP, as long as it (or any of its affiliates) holds any Holder Rights, and thereafter, the holders of a majority of the Registrable Securities as of such time (excluding any Registrable Securities held by the Company or any of its Company Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Rights.

 

16.4 No Strict Construction; Currency. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Settlement Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Settlement Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

 

16.5 Indemnification. (a) In consideration of the Holder’s execution and delivery of the Settlement Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Settlement Documents, the Company shall defend, protect, indemnify and hold harmless the Holder and each Holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company or any Company Subsidiary in any of the Settlement Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Company Subsidiary contained in any of the Settlement Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Company Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Settlement Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by the Holder pursuant to Section 8 hereof, or (D) the status of the Holder or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Settlement Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 16.5 shall be the same as those set forth in Section 6 of the Registration Rights Agreement.

 

(b) In consideration of the Holder’s execution and delivery of the Settlement Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Settlement Documents, Reno shall defend, protect, indemnify and hold harmless the Indemnitees from and against any and all Indemnified Liabilities incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by Reno or any Reno Subsidiary in any of the Settlement Documents, (ii) any breach of any covenant, agreement or obligation of Reno or any Reno Subsidiary contained in any of the Settlement Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of Reno or any Reno Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Settlement Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by the Holder pursuant to Section 8 hereof, or (D) the status of the Holder or holder of the Securities either as an investor in Reno pursuant to the transactions contemplated by the Settlement Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking Reno may be unenforceable for any reason, Reno shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 16.5 shall be the same as those set forth in Section 6 of the Registration Rights Agreement.

 

 

16.6 Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any provision of law or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Reno and Company hereby irrevocably submits to the exclusive jurisdiction of the state or federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or under any of the other Settlement Documents 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. Each party 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 such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company or Reno in any other jurisdiction to collect on the Company’s and/or Reno’s obligations, as applicable, to the Holder or to enforce a judgment or other court ruling in favor of the Holder. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER EXCHANGE DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER EXCHANGE DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

16.7 Judgment Currency.

 

(a) If for the purpose of obtaining or enforcing judgment against Reno and/or the Company, as applicable, in connection with this Agreement or any other Settlement Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 16.7 referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:

 

(i) the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or

 

(ii) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 11.7(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).

 

(b) If in the case of any proceeding in the court of any jurisdiction referred to in Section 16.6 above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.

 

 

16.8 Severability. If any provision of this Agreement shall be declared or determined by any court to be invalid, illegal or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected or impaired thereby so long as this Agreement 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).

 

16.9 Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:

 

If to Reno:

 

Renovare Environmental, Inc.

80 Red Schoolhouse Road

Suite 101

Chestnut Ridge, New York 10977

Telephone: (845) 330-2522

Attention: Chief Executive Officer

E-Mail: bessman@renovareenv.com

 

With a copy (for informational purposes only) to:

 

McCarter & English, LLP

Two Tower Center Boulevard, 24th Floor

East Brunswick, NJ 08816

Telephone: (732) 867-9741

Attention: Peter Campitiello, Esq.

E-Mail: pcampitiello@mccarter.com

 

If to the Company:

 

TraqIQ, Inc.

1931 Austin Drive

Troy, MI 48083

Telephone: (248) 775-7400

Attention: Glen Miller, Chief Executive Officer

E-Mail: GMiller@titancares.com

 

 

With a copy (for informational purposes only) to:

 

Pryor Cashman LLP

7 Times Square, 40^th Floor

New York, NY 10036

Telephone: (212) 326-0846

Attention: Eric M. Hellige, Esq.

E-Mail: ehellige@pryorcashman.com

 

If to the Company’s transfer agent:

 

Equity Stock Transfer

237 W 37th Street, Suite 602

New York, NY 10018

Telephone: (212) 575-5757

Attention: Nora Marckwordt

E-Mail: nora@equitystock.com

 

[INSERT IN KEYSTONE ONLY: If to the Holder, to its mailing address and e-mail address set forth on the signature page hereto, with copies to the Holder’s representatives as set forth on the signature page hereto,

 

with a copy (for informational purposes only) to:

 

Kelley Drye & Warren LLP

3 World Trade Center

175 Greenwich Street

New York, NY 10007

Telephone: (212) 808-7540

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com]

 

or to such other mailing address and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

16.10 Effectiveness. This Agreement shall become effective upon the execution of a counterpart hereof by each Other Holder of the Other Agreements of such Other Holders (the “Effective Time”).

 

 

16.11 Independent Nature of Holder’s Obligations and Rights. The obligations of the Holder under this Amendment or any other Settlement Document are several and not joint with the obligations of any Other Holder, and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holder under any Settlement Document or Other Agreement. Nothing contained herein or in any Other Agreement or any other Settlement Document, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and Other Holder as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investor and Other Holder are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement, any Other Agreement or any other Settlement Document and Reno and Company acknowledges that the Holders are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement, any Other Agreement and any other Settlement Document. Reno, Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, any Other Agreement or out of any other Settlement Documents, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose.

 

16.12 Most Favored Nation. Reno and Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any Other Holder (or any assignee thereof) with respect to any consent, release, amendment, settlement or waiver relating to the terms, conditions and transactions contemplated hereby, is or will be more favorable to such Other Holder than those of the Holder and this Agreement (each a “Settlement Document”). If, and whenever on or after the date hereof, Reno and/or Company enters into a Settlement Document, then (i) Reno and/or Company shall provide notice thereof to the Holder immediately following the occurrence thereof and (ii) the terms and conditions of this Agreement and the applicable Securities (other than any limitations on conversion or exercise set forth therein) shall be, without any further action by the Holder or Reno, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be), provided that upon written notice to Reno and/or Company at any time the Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Agreement or the applicable Securities (as the case may be) shall apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder. The provisions of this Section 16.12 shall apply similarly and equally to each Settlement Document.

 

16.13 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

16.14 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

 

16.15 Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

16.16 Amendments. This Agreement may not be modified, amended or supplemented, and the terms and conditions of this Agreement may not be waived, except by a written agreement executed by each Party. No failure to exercise and no delay in exercising on the part of the Holder of any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of any right, remedy, power or privilege.

 

16.17 Remedies. The Holder and in the event of assignment by the Holder of its rights and obligations hereunder, each Holder of Securities, shall have all rights and remedies set forth in the Settlement Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Each of the Company and Reno therefore agrees that the Holder shall be entitled 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 remedies provided in this Agreement and the other Settlement Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Settlement Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).

 

16.18 Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Settlement Documents, whenever the Holder exercises a right, election, demand or option under a Settlement Document and the Company, any Company Subsidiary, Reno or any Reno Subsidiary does not timely perform its related obligations within the periods therein provided, then the Holder may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any Company Subsidiary, Reno or any Reno Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

16.19 Survival. The representations, warranties, agreements and covenants shall survive the Closing. The Holder shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(Signature Page to Follow)

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first above written.

 

	COMPANY:
	RENOVARE ENVIRONMENTAL, INC.
	By:
	Name:	Brian Essman
	Title:	Chief Financial Officer

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first above written.

 

	COMPANY:
	TRAQIQ, INC.
	By:
	Name:	Glen Miller
	Title:	Chief Executive Officer

 

 

IN WITNESS WHEREOF, the Holder and Reno have executed this Agreement as of the date set forth on the first page of this Agreement.

 

	HOLDER:
Aggregate Number of	__________________________________
Existing Securities held by Holder	HOLDER
_____________________________
	By:	______________________________
Aggregate Number of	Name:
Holder Series A Rights Shares Issuable Upon	Title:
Exercise of Series A Rights to be Issued to Holder*
(if any):	Address:_____________________________
	____________________________________
___________________________	____________________________________
Aggregate Number of
Holder Series B Rights Shares Issuable Upon
Exercise of Series B Rights to be Issued to Holder*	Notice Instructions:_____________________
(if any):	_____________________________________
	_____________________________________
____________________________	_____________________________________
	_____________________________________
*Without regard to any limitations
on exercise set forth in such Holder Rights	Tax Identification No:____________________

 

 

EXHIBIT C

 

RELEASE

 

TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT:

 

Reference is hereby made to (a) that certain Settlement Agreement, dated [____, 2023], by and between the TraqIQ, Inc., a California corporation (the “Company”), Renovare Environmental, Inc., a Delaware corporation (the “Reno”), and the undersigned (the “Holder”, collectively with Reno and the Company, the “Parties”, and each individually, a “Party”) (the “Settlement Agreement”), pursuant to which the Holder agreed to execute and deliver to each of Reno and the Company this release (the “Release”) in exchange for the transfer of the Holder Rights (as defined in the Settlement Agreement) to the Holder (the “Transfer”) and (b) that certain Asset Purchase Agreement dated December 30, 2022, among Reno and its wholly-owned subsidiary BioHiTech America, LLC (“BHT”, and together with Reno, the “Sellers”) and the Company whereby the Company acquired from Reno and BHT certain assets related to the Sellers business and assumption of certain of the Sellers’ liabilities (the “Asset Sale”). Capitalized terms not defined herein shall have the meaning as set forth in the Settlement Agreement.

 

WHEREAS, the Holder asserts that Reno has breached certain provisions of the Existing Securities and/or the Existing Agreements, as applicable, in connection with the Asset Sale (the “Claimed Breach”).

 

WHEREAS, Reno and the Company each desire to obtain this Release from the Holder with respect to the Claimed Breach and any other breach of the Existing Securities and/or the Existing Agreements, as applicable arising on or prior to the date hereof (or outstanding as of the date hereof) with respect to the Claimed Breach (the “Released Claims”), effective upon the consummation of the Transfer and the payment of the Legal Fee Amount (the “Effective Time”); and

 

WHEREAS, all capitalized terms not defined in this Release shall have the meaning as set forth in the Settlement Agreement.

 

Now, therefore, for good and valuable consideration, the parties hereby agree as follows:

 

1. Holder’s Release of Reno. Effective as of the Effective Time, the Holder, on behalf of itself and its past, present and future heirs, executors, administrators, successors and assigns, shareholders, partners, employees, agents, attorneys, members, controlling persons, representatives, affiliates, subsidiaries or other entities controlled by them (hereinafter, collectively referred to as “Releasors”), in consideration of the foregoing good and valuable consideration received from Reno as of the Effective Time, release and discharge Reno, and Reno’s past, present and future heirs, executors, administrators, successors, assigns, shareholders, partners, employees, agents, members, controlling persons, representatives, attorneys, affiliates, subsidiaries or other entities controlled by them, from any and all charges, complaints, liabilities, obligations, promises, agreements, demands, costs, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands of any nature whatsoever, including class claims, direct or indirect, in law, admiralty, equity or otherwise, known or unknown, whether suspected or unsuspected, and whether concealed or hidden, solely with respect to the Released Claims, which against Reno the Releasor ever had, now have or hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing with respect to the Released Claims from the beginning of the world to, and including, the date of hereof, such that any obligation which was or could have been due to the Holder as a result of the Released Claims shall be extinguished. Except as otherwise provided herein, Reno is not released with respect to any obligation that may arise from and after the date hereof in connection with the Existing Securities, the Existing Agreements and/or any Settlement Document, as applicable, or any other instrument entered into in connection therewith.

 

2. Holder’s Release of the Company. Effective as of the Effective Time, the Releasors, in consideration of the foregoing good and valuable consideration received from the Company as of the Effective Time, release and discharge the Company, and the Company’s past, present and future heirs, executors, administrators, successors, assigns, shareholders, partners, employees, agents, members, controlling persons, representatives, attorneys, affiliates, subsidiaries or other entities controlled by them, from any and all charges, complaints, liabilities, obligations, promises, agreements, demands, costs, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands of any nature whatsoever, including class claims, direct or indirect, in law, admiralty, equity or otherwise, known or unknown, whether suspected or unsuspected, and whether concealed or hidden, solely with respect to the Released Claims, which against the Company the Releasor ever had, now have or hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing with respect to the Released Claims from the beginning of the world to, and including, the date of hereof, such that any obligation which was or could have been due to the Holder as a result of the Released Claims shall be extinguished. Except as otherwise provided herein, the Company is not released with respect to any obligation that may arise from and after the date hereof in connection with the Existing Securities, the Existing Agreements and/or any Settlement Document, as applicable, or any other instrument entered into in connection therewith.

 

This RELEASE may not be changed orally but only by a writing signed by all the parties.

 

(Signature Page to Follow)

 

 

IN WITNESS WHEREOF, the Holder has caused this RELEASE to be executed on the ___ day of ____, 2023.

 

	HOLDER

 

	By:
	Name:
	Title:

 

State of ______________________)

)ss.:

County of ____________________)

 

On the _______day of ___________ in the year_____, before me, the undersigned notary public, personally appeared _________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

 

____________________________________ Notary Public

 

 

Exhibit 16.1

 

 

 

v3.23.2

Cover	Jul. 20, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 20, 2023
Entity File Number	000-56148
Entity Registrant Name	TRAQIQ, INC.
Entity Central Index Key	0001514056
Entity Tax Identification Number	30-0580318
Entity Incorporation, State or Country Code	CA
Entity Address, Address Line One	1931 Austin Drive
Entity Address, City or Town	Troy
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48083
City Area Code	(425)
Local Phone Number	818-0560
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false

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