Document:

Exhibit 10.1

       

       

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
 

    
    
      	 		 

    

    

    
   
AGREEMENT
                                         RELATING TO THE ACQUISITION OF MONOCHROME CORP. BY FIRMA HOLDINGS CORP. (as amended)
                                         DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 2 This AGREEMENT, made this
                                         15th day of July 2020, by and between Firma Holdings Corp. (“Firma”) and
                                         Monochrome Corp. (“MC”), and the shareholders of MC, is made for the purpose
                                         of setting forth the terms and conditions upon which Firma will acquire all of the outstanding
                                         shareholdership interests in of MC. In consideration of the mutual promises, covenants,
                                         and representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS: ARTICLE I
                                         ACQUISITION OF MC Subject to the terms and conditions of this Agreement, Firma agrees
                                         to acquire all of the outstanding shares of MC for the consideration shown below. 1.01
                                         At Closing, MC will become a wholly owned subsidiary of Firma. In connection with the
                                         acquisition, Firma will issue 40,000,000 shares of common stock to the shareholders of
                                         MC in consideration for their interests in MC. 1.02 If the operations of MC do not generate,
                                         during the period ending one year after the Closing, but prior to the second anniversary
                                         of the Closing, more than $1,500,000 of gross revenue with EBITDA of at least $375,000,
                                         then the shareholders of MC will return to Firma 7,500,000 shares of common stock. 1.03
                                         All shares of Firma’s common stock pursuant to Section 1.01, will be delivered,
                                         returned or paid, in accordance with Exhibit A. ARTICLE II REPRESENTATIONS AND WARRANTIES
                                         MC and the shareholders of MC, jointly and severally, represents and warrant to Firma
                                         that: 2.0l Organization. MC is a corporation duly organized, validly existing, and in
                                         good standing under the laws of Colorado, has all necessary powers to own its properties
                                         and to carry on its business as now owned and operated by it, and is duly qualified to
                                         do business and is in good standing in each of the states where its business requires
                                         qualification. 2.02 Capital. The shareholders of MC, and their respective shareholdership
                                         interests in MC, are shown on Exhibit A. No person has the right to acquire any additional
                                         shareholdership interests in MC. 2.03 Shareholders, Officers, Banks. Exhibit B to this
                                         Agreement contains: the names and the titles of all officers of MC DocuSign Envelope
                                         ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 3 2.04 Absence of Changes. Since the date signified
                                         above, there has not been any change in the financial condition or operations of MC,
                                         except changes reflected on Exhibit C or changes in the ordinary course of business,
                                         which changes have not in the aggregate been materially adverse. 2.05 Investigation of
                                         Financial Condition. Without in any manner reducing or otherwise mitigating the representations
                                         contained herein, Firma shall have the opportunity to meet with MC's accountants and
                                         attorneys to discuss the financial condition of MC. MC shall make available to Firma
                                         the books and records of MC. The minutes of MC are a complete and accurate record of
                                         all meetings of the managers and shareholders of MC and accurately reflect all actions
                                         taken at such meetings. The signatures of the managers and shareholders on such minutes
                                         are the valid signatures of MC's managers and shareholders who were duly elected or appointed,
                                         or who held such shareholdership interests, on the dates that the minutes were signed
                                         by such persons. 2.06 Assets. Exhibit D attached hereto and made a part hereof lists
                                         all assets of MC. MC has good and marketable title to all of its assets, free and clear
                                         of all liens or encumbrances, other than those shown on Exhibit D. 2.07 Compliance with
                                         Laws. MC has complied with, and is not in violation of, applicable federal, state, or
                                         local statutes, laws, and regulations affecting its properties or the operation of its
                                         business, including but not limited to applicable federal and state securities laws.
                                         2.08 Litigation. MC is not a party to any suit, action, arbitration, or legal, administrative,
                                         or other proceeding, or governmental investigation pending or, to the best knowledge
                                         of MC threatened, against or affecting MC or its business, assets, or financial condition.
                                         MC is not in default with respect to any order, writ, injunction, or decree of any federal,
                                         state, local, or foreign court, department, agency, or instrumentality. MC is not engaged
                                         in any legal action to recover moneys due to MC or damages sustained by MC. 2.09 Full
                                         Disclosure. None of representations and warranties made by MC, or in any certificate
                                         or memorandum furnished or to be furnished by MC, or on its behalf, contains or will
                                         contain any untrue statement of material fact, or omit any material fact the omission
                                         of which would be misleading. MC has disclosed to Firma all reasonably foreseeable contingencies
                                         which, if such contingencies transpired, would have a material adverse effect on MC's
                                         business. Firma represents and warrants to MC and the shareholders of MC that: 2A. Organization.
                                         Firma is a corporation duly organized, validly existing, and in good standing under the
                                         laws of Nevada, has all necessary corporate powers to own its properties and to carry
                                         on its business as now owned and operated by it, and is duly qualified to do business
                                         and is in good standing in each of the states where its business requires qualification,
                                         except in those states where the failure to be so qualified would not have a material
                                         adverse effect on Firma. 2B. Ability to Carry Out Obligations. Firma has the right, power,
                                         and authority to enter into, and perform its obligations under, this Agreement. The execution
                                         and delivery of this Agreement by Firma and the performance by Firma of its obligations
                                         hereunder will not cause, DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         4 constitute, or conflict with or result in (a) any breach or violation or any of the
                                         provisions of, or constitute a default under, any license, indenture, mortgage, charter,
                                         instrument, articles of incorporation, by-law, or other agreement or instrument to which
                                         Firma is a party, or by which it may be bound, nor will any consents or authorizations
                                         of any party other than those hereto be required, (b) an event that would permit any
                                         party to any agreement or instrument to terminate it or to accelerate the maturity of
                                         any indebtedness or other obligation of Firma, or (c) an event that would result in the
                                         creation or imposition or any lien, charge, or encumbrance on any asset of Firma or would
                                         create any obligations for which Firma would be liable, except as contemplated by this
                                         Agreement. 2C. Full Disclosure. None of the representations and warranties made by Firma,
                                         or in any certificate or memorandum furnished or to be furnished by Firma, or on its
                                         behalf, contains or will contain any untrue statement of material fact, or omit any material
                                         fact the omission of which would be misleading. Firma has disclosed to MC and the shareholders
                                         of MC all reasonably foreseeable contingencies which, if such contingencies transpired,
                                         would have a material adverse effect on Firma. DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         5 ARTICLE III REPRESENTATIONS 3.01 Authority. Each Officer and Director of MC represents
                                         to Firma that he or she has the right, power, and authority to enter into, and perform
                                         his or her obligations under this Agreement. The execution and delivery of this Agreement
                                         and the delivery by such member of his or her shareholdership interest in MC pursuant
                                         to Exhibit A will not cause, constitute, or conflict with or result in any breach or
                                         violation or any of the provisions of or constitute a default under any license, indenture,
                                         mortgage, charter, instrument, or agreement to which he or she is a party, or by which
                                         he or she may be bound, nor will any consents or authorizations of any party be required.
                                         Each member of MC represents and warrants to Firma that the member interests of MC that
                                         such holder will deliver at closing will be free of any liens or encumbrances. 3.02 Restrictions
                                         on Resale. Each member of MC understands that the shares being acquired from Firma represent
                                         restricted securities as that term is defined in Rule l44 of the Securities and Exchange
                                         Commission. 3.03 Intended Amendment. Each shareholder, director, or Officer of MC (Exhibit
                                         A), has the right to maintain interests in or operate other businesses. ARTICLE IV OBLIGATIONS
                                         BEFORE CLOSING 4.01 Investigative Rights. From the date of this Agreement until the date
                                         of closing, each party shall provide to the other party, and such other party's counsel,
                                         accountants, auditors, and other authorized representatives, full access during normal
                                         business hours to all of each party's properties, books, contracts, commitments, records
                                         and correspondence and communications with regulatory agencies for the purpose of examining
                                         the same. Each party shall furnish the other party with all information concerning each
                                         party's affairs as the other party may reasonably request. All confidential information
                                         obtained from any party in the course of such investigation shall be kept confidential,
                                         except for such information which is required to be disclosed by court order or decree
                                         or in compliance with applicable laws, rules or regulations of any government agency,
                                         or that otherwise becomes available in the public domain without the fault of the party
                                         conducting the investigation. 4.02 Conduct of Business. Prior to the closing, and except
                                         as contemplated by this Agreement, each party shall conduct its business in the normal
                                         course, and shall not sell, pledge, or assign any assets, without the prior written approval
                                         of the other party, except in the regular course of business. Except as contemplated
                                         by this Agreement, neither party to this Agreement shall amend its Articles of Incorporation,
                                         By-laws, articles of organization, or operating agreements, declare dividends, redeem
                                         or sell stock, limited liability interests or other securities, incur additional or newly-funded
                                         material liabilities, acquire or dispose of fixed assets, change senior management, change
                                         employment terms, enter into any material or long-term contract, guarantee obligations
                                         of any third party, settle or discharge any balance sheet receivable for less than its
                                         DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 6 stated amount, pay more
                                         on any liability than its stated amount, or enter into any other transaction other than
                                         in the regular course of business. ARTICLE V CONDITIONS PRECEDENT TO PERFORMANCE BY FIRMA
                                         5.01 Conditions. Firma's obligations hereunder shall be subject to the satisfaction,
                                         at or before the Closing, of all the conditions set forth in this Article V. Firma may
                                         waive any or all of these conditions in whole or in part without prior notice; provided,
                                         however, that no such waiver of a condition shall constitute a waiver by Firma of any
                                         other condition of or any of Firma's other rights or remedies, at law or in equity, if
                                         MC of the shareholders of MC shall be in default of any of their representations, warranties,
                                         or covenants under this agreement. 5.02 Accuracy of Representations. Except as otherwise
                                         permitted by this Agreement, all representations and warranties by MC or the shareholders
                                         of MC in this Agreement or in any written statement that shall be delivered to Firma
                                         under this Agreement shall be true on and as of the closing date as though made at those
                                         times. 5.03 Performance. MC and the shareholders of MC shall have performed, satisfied,
                                         and complied with all covenants, agreements, and conditions required by this Agreement
                                         to be performed or complied with by them, on or before the Closing. MC and the shareholders
                                         of MC shall have obtained all necessary consents and approvals necessary to consummate
                                         the transactions contemplated hereby. 5.04 Absence of Litigation. No action, suit, or
                                         proceeding before any court or any governmental body or authority, pertaining to the
                                         transaction contemplated by this agreement or to its consummation, shall have been instituted
                                         or threatened on or before the closing. 5.05 Other. In addition to the other provisions
                                         of this Article V, Firma’s obligations hereunder shall be subject, at or before
                                         Closing, to the following:  On the closing date MC will not have liabilities
                                         exceeding $10,000.00.  MC will have delivered to Firma, in the form required
                                         by the rules and regulations of the Securities and Exchange Commission, the following
                                         financial statements: (i) financial statements, audited by an independent certified public
                                         accountanting firm, for its two full fiscal years prior to the date of this Agreement.
                                         (ii) interim financial statements for MC fiscal quarters since the date of the last audited
                                         financial statements of MC. (iii) proforma financial statements giving effect to the
                                         acquisition of MC.  completion of business and legal review of MC, the results
                                         of which are satisfactory to Firma; DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         7  obtaining all required governmental consents and approvals;  expiration
                                         of any required waiting periods;  MC entering into employment agreements with
                                         its management on terms and conditions satisfactory to Firma;  MC entering into
                                         non-competition agreements with Firma, pursuant to which they will agree not to engage
                                         in a business similar to the business of MC and not to solicit any customers, suppliers,
                                         employees or business prospects of MC for a period of five (2) years following the Closing;
                                         ARTICLE VI CONDITIONS PRECEDENT TO PERFORMANCE BY MC 6.01 Conditions. MC's obligations
                                         hereunder shall be subject to the satisfaction, at or before the Closing, of the conditions
                                         set forth in this Article VI. MC may waive any or all of these conditions in whole or
                                         in part without prior notice; provided, however, that no such waiver of a condition shall
                                         constitute a waiver by MC of any other condition of or any of MC's other rights or remedies,
                                         at law or in equity, if Firma shall be in default of any of its representations, warranties,
                                         or covenants under this agreement. 6.02 Accuracy of Representations. Except as otherwise
                                         permitted by this Agreement, all representations and warranties by Firma in this Agreement
                                         or in any written statement that shall be delivered to MC by Firma under this Agreement
                                         shall be true on and as of the closing date as though made at those times. 6.03 Performance.
                                         Firma shall have performed, satisfied, and complied with all covenants, agreements, and
                                         conditions required by this Agreement to be performed or complied with by it, on or before
                                         the closing. Firma shall have obtained all necessary consents and approvals necessary
                                         to consummate the transactions contemplated hereby. 6.04 Absence of Litigation. No action,
                                         suit, or proceeding before any court or any governmental body or authority, pertaining
                                         to the transaction contemplated by this agreement or to its consummation, shall have
                                         been instituted or threatened on or before the closing. 6.05 Other. In addition to the
                                         other provisions of this Article VI, the obligations of the shareholders of MC hereunder
                                         shall be subject, at or before the Closing, to the following:  None DocuSign
                                         Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 8 ARTICLE VII CLOSING 7.01 Closing.
                                         The closing of this transaction shall be held at the offices of Firma. Unless the closing
                                         of this transaction takes place before August 15, 2020, then either party may terminate
                                         this Agreement without liability to the other party, except as otherwise provided in
                                         Section 9.12. At the closing all representations, warranties, covenants, and conditions
                                         set forth in this Agreement on behalf of each party will true and correct as of, or will
                                         have been fully performed and complied with by, the closing date, except as may be disclosed
                                         in writing by one party to the other. 7.02 Exchange of Common Stock Interests. On the
                                         closing date, each outstanding shareholdership interest of MC will be exchanged for fully
                                         paid and nonassessable shares of Firma in accordance with Exhibit A to this Agreement.
                                         ARTICLE VIII REMEDIES 8.01 Arbitration. Any controversy or claim arising out of, or relating
                                         to, this Agreement, or the making, performance, or interpretation thereof, shall be settled
                                         by binding arbitration in Chicago, Illinois in accordance with the rules of the American
                                         Arbitration Association then existing, and judgment on the arbitration award may be entered
                                         in any court having jurisdiction over the subject matter of the controversy. 8.02 Costs.
                                         If any legal action or any arbitration or other proceeding is brought for the enforcement
                                         of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation
                                         in connection with any of the provisions of this Agreement, the successful or prevailing
                                         party or parties shall be entitled to recover reasonable attorney's fees and other costs
                                         incurred in that action or proceeding, in addition to any other relief to which it or
                                         they may be entitled. 8.03 Termination. In addition to the other remedies, Firma or the
                                         shareholders of MC may on or prior to the closing date terminate this Agreement, without
                                         liability to the other party: (i) If any bona fide action or proceeding shall be pending
                                         against Firma, or MC, or the shareholders of MC on the closing date that could result
                                         in an unfavorable judgment, decree, or order that would prevent or make unlawful the
                                         carrying out of this Agreement or if any agency of the federal or of any state government
                                         shall have objected at or before the closing date to this acquisition or to any other
                                         action required by or in connection with this Agreement; (ii) If the legality and sufficiency
                                         of all steps taken and to be taken by each party in carrying out this Agreement shall
                                         not have been approved by the respective party's counsel, which approval shall not be
                                         unreasonably withheld. DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 9 (iv)
                                         If a party breaches any representation, warranty, covenant or obligation of such party
                                         set forth herein and such breach is not corrected within ten days of receiving written
                                         notice from the other party of such breach. (v) If it is determined that this transaction
                                         is not in the best interest of it’s shareholders ARTICLE IX MISCELLANEOUS 9.01
                                         Captions and Headings. The Article and paragraph headings throughout this Agreement are
                                         for convenience and reference only, and shall in no way be deemed to define, limit, or
                                         add to the meaning of any provision of this Agreement. 9.02 No Oral Change. This Agreement
                                         and any provision hereof, may not be waived, changed, modified, or discharged orally,
                                         but only by an agreement in writing signed by the party against whom enforcement of any
                                         waiver, change, modification, or discharge is sought. 9.03 Non-Waiver. Except as otherwise
                                         expreMCy provided herein, no waiver of any covenant, condition, or provision of this
                                         Agreement shall be deemed to have been made unless expreMCy in writing and signed by
                                         the party against whom such waiver is charged; and (i) the failure of any party to insist
                                         in any one or more cases upon the performance of any of the provisions, covenants, or
                                         conditions of this Agreement or to exercise any option herein contained shall not be
                                         construed as a waiver or relinquishment for the future of any such provisions, convenants,
                                         or conditions, (ii) the acceptance of performance of anything required by this Agreement
                                         to be performed with knowledge of the breach or failure of a covenant, condition, or
                                         provision hereof shall not be deemed a waiver of such breach or failure, and (iii) no
                                         waiver by any party of one breach by another party shall be construed as a waiver with
                                         respect to any other or subsequent breach. 9.04 Time of Essence. Time is of the essence
                                         of this Agreement and of each and every provision hereof. 9.05 Entire Agreement. This
                                         Agreement contains the entire Agreement and understanding between the parties hereto,
                                         and supersedes all prior agreements, understandings and the letters of intent between
                                         the parties. 9.06 Governing Law. This Agreement and its application shall be governed
                                         by the laws of Nevada. 9.07 Counterparts. This Agreement may be executed simultaneously
                                         in one or more counterparts, each of which shall be deemed an original, but all of which
                                         together shall constitute one and the same instrument. Signature pages may be transmitted
                                         by facsimile or other electronice means. DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         10 9.08 Notices. All notices, requests, demands, and other communications under this
                                         Agreement shall be in writing and shall be deemed to have been duly given on the date
                                         of service if served personally on the party to whom notice is to be given, or on the
                                         third day after mailing if mailed to the party to whom notice is to be given, by first
                                         class mail, registered or certified, postage prepaid, and properly addressed as follows:
                                         Firma Holdings Corp. 181 Arroyo Grande Blvd., Suite. 140B Henderson, NV 89074 Monochrome
                                         Corp and its Shareholders 20 Danada Square, W. 214 Wheaton, IL 60189 9.09 Binding Effect.
                                         This Agreement shall inure to and be binding upon the heirs, executors, personal representatives,
                                         successors and assigns of each of the parties to this Agreement. 9.10 Effect of Closing.
                                         All representations, warranties, covenants, and agreements of the parties contained in
                                         this Agreement, or in any instrument, certificate, opinion, or other writing provided
                                         for in it, shall survive the closing of this Agreement. In the event there is any material
                                         misrepresentation or warranty of any party to this Agreement, then Firma (if such misrepresentation
                                         is made by MC or the MC shareholders) or the shareholders of MC ( if such misrepresentation
                                         is made by Firma) may recind this Agreement during the 90 day period following the closing
                                         of this Agreement. 9.11 Mutual Cooperation. The parties hereto shall cooperate with each
                                         other to achieve the purpose of this Agreement, and shall execute such other and further
                                         documents and take such other and further actions as may be necessary or convenient to
                                         effect the transaction described herein. Neither party will intentionally take any action,
                                         or omit to take any action, which will cause a breach of such party's obligations pursuant
                                         to this Agreement. MC and the shareholders of MC agree that, until the Closing or the
                                         Termination of this Agreement pursuant to Section 8.03, neither MC, nor the shareholders
                                         of MC, shall accept or induce an offer from a third party, enter into negotiations with
                                         any third party, or provide information to any third party in anticipation of negotiations
                                         with any third party, with respect to any possible sale of MC, its assets, rights or
                                         operations or any securities or other equity interests of MC or any other transaction
                                         that would have the effect of materially reducing the benefit of this Agreement to Firma.
                                         9.12 Expenses. Each of the parties hereto agrees to pay all of its own expenses (including
                                         without limitation, attorneys' and accountants' fees) incurred in connection with this
                                         DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341 11 Agreement, the transactions
                                         contemplated herein and negotiations leading to the same and the preparations made for
                                         carrying the same into effect. Each of the parties expreMCy represents and warrants that
                                         no finder or broker has been involved in this transaction and each party agrees to indemnify
                                         and hold the other party harmless from any commission, fee or claim of any person, firm
                                         or corporation employed or retained by such party (or claiming to be employed or retained
                                         by such party) to bring about or represent such party in the transactions contemplated
                                         by this Agreement. AGREED TO AND ACCEPTED as of the date first above written. FIRMA HOLDINGS
                                         CORP. By David Barefoot – Director / COO MONOCHROME CORP By Sebastien C. Dufort
                                         – Director / President DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         12 EXHIBIT A Allocation of Shares MC Shareholder Share Interest in MC (as of a %) Shares
                                         of Firma to be issued pursuant to Section Shares of Firma to return pursuant to Section:
                                         1.01 1.02 Sebastien C Dufort 100% 40,000,000 7,500,000 DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         13 EXHIBIT B SHAREHOLDERS, OFFICERS, BANKS DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         14 EXHIBIT C MATERIAL CHANGES ( SECTION 2.04 ) DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341
                                         15 EXHIBIT D ASSETS All trademarks, trademark registrations or applications, trade names,
                                         service marks, copyrights, copyright registrations or applications which are owned by
                                         MC. No person other than MC owns any trademark, trademark registration or application,
                                         service mark, trade name, copyright, or copyright registration or application the use
                                         of which is necessary or contemplated in connection with the operation of MC's business.
                                         All contracts, leases, and other agreements of MC presently in existance or which have
                                         been agreed to by MC (whether written or oral). MC is not in default under of these agreements
                                         or leases. DocuSign Envelope ID: C104ADD5-A108-4A92-9B95-6BA6D9BE0341ex_156683.htm

Exhibit 4.12

 

CONTANGO ORE, INC.

 

DESCRIPTION OF SECURITIES

 

 

The following summary of each of our capital stock, Certificate of Incorporation, Bylaws and Rights Agreement (each, as defined below) does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our Certificate of Incorporation, Bylaws and Rights Agreement.

 

Authorized and outstanding capital stock

 

Contango ORE, Inc., a Delaware corporation (“we”, or the “Company”) has authorized capital stock consisting of 30,000,000 shares of common stock and 15,000,000 shares of preferred stock. As of September 25, 2020, there were 6,804,411 shares of the Company’s common stock outstanding.

 

Common Stock

 

Our Certificate of Incorporation (the “Certificate of Incorporation”) authorizes us to issue 30,000,000 shares of common stock (the “Common Stock”), par value $0.01 per share. As of September 25, 2020, there were 6,804,411 shares of the Common Stock outstanding, all of which are fully paid and non-assessable. Our common stock is traded on the OTCQB tier of the OTC Markets Group Inc. under the symbol “CTGO”.

 

Holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders and are not entitled to cumulative voting for the election of directors. Upon the liquidation, dissolution or winding up of our business, after payment of all liabilities and payment of preferential amounts to the holders of preferred stock, if any, the shares of Common Stock are entitled to share equally in our remaining assets. Pursuant to our Certificate of Incorporation, no stockholder has any preemptive rights to subscribe for our securities. The Common Stock is not subject to redemption.

 

We do not intend to declare or pay any cash dividends on our Common Stock. We currently intend to retain future earnings in excess of preferred stock dividends, if any, for operations and to develop and expand our business. We do not anticipate paying any dividends on our Common Stock in the foreseeable future. Any future determination with respect to the payment of dividends on the Common Stock will be at the discretion of the board of directors of the Company (the “Board”) and will depend on, among other things, operating results, financial condition and capital requirements, the terms of then-existing indebtedness, general business conditions and other factors the Board deems relevant.

 

 

Other Rights

 

The holders of our Common Stock have no preemptive rights and no rights to convert their common shares into any other securities, and our common shares are not subject to any redemption or sinking fund provisions.

 

Preferred Stock

 

Our Certificate of Incorporation, authorizes us to issue 15,000,000 shares of preferred stock, par value $0.01 per share, in one or more series with such voting powers, full or limited, or no voting powers and such designations, preferences and relative participation, optional or other special rights, and the qualifications, limitations or restrictions thereof as shall be stated in the resolutions of the Board providing for their issuance. As of September 25, 2020, there were no shares of preferred stock issued and outstanding. In addition, in connection with the adoption of the Rights Agreement (defined below), effective September 23, 2020, the Company filed a Certificate of Designations of Series A-1 Junior Participating Preferred Stock (the “Certificate of Designations”) with the Secretary of State of the State of Delaware designating 100,000 shares of Series A-1 Junior Participating Preferred Stock.

 

 

 

 

Stock Options and Warrants

 

 

As of September 25, 2020, we had no outstanding warrants to purchase shares of Common Stock. As of September 25, 2020, we had 100,000 options to purchase shares of Common Stock outstanding, which were issued under the Company’s Amended and Restated 2010 Equity Compensation Plan, as amended.][1] We have in the past issued, and may in the future issue restricted shares of Common Stock to certain officers and directors and to third-party consultants.

 

Rights Plan

 

On September 23, 2020, the Company and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”), entered into an Amendment No. 7 (the “Amendment”) to the Company’s Rights Agreement, dated as of December 20, 2012, by and between the Company and the Rights Agent (as amended to date, the “Existing Rights Agreement”). The Amendment accelerates the expiration date of the Existing Rights Agreement from December 31, 2021 to September 23, 2020, such that, at the close of business on September 23, 2020, the purchase rights will expire and no longer be outstanding and the Existing Rights Agreement will terminate and be of no further force or effect. In connection with the termination of the Existing Rights Agreement, effective September 23, 2020, the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware, eliminating all provisions of the Certificate of Designations, Preferences, and Relative Rights and Limitations filed by the Company with the Secretary of State of the State of Delaware effective December 20, 2012, related to the Series A Junior Preferred Stock, par value $0.01 per share, of the Company. No shares of Series A Junior Preferred Stock were issued or outstanding at the time of filing of the Certificate of Elimination.

 

On September 23, 2020, the Board declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of Common Stock. The dividend will be paid to the stockholders of record at the close of business October 5, 2020 (the “Record Date”). Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one one-thousandth (subject to adjustment) of one share of Series A-1 Junior Participating Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a price of $100.00, subject to certain adjustments (as adjusted from time to time, the “Exercise Price”). The description and terms of the Rights are set forth in the Rights Agreement, dated as of September 23, 2020 (the “Rights Agreement”), between the Company and Rights Agent.

 

Subject to certain exceptions, the Rights will not be exercisable until the earlier to occur of (i) the close of business on the tenth business day after a public announcement or filing (A) that a person has, or group of affiliated or associated persons have, become an “Acquiring Person,” which is defined as a person or group of affiliated or associated persons who, at any time after the date of the Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 18% or more of the Company’s outstanding shares of Common Stock, subject to certain exceptions, or (B) that discloses information which reveals the existence of an Acquiring Person or (ii) the close of business on the tenth business day after the commencement by any person of, or the first public announcement of the intention of any person to commence, a tender offer or exchange offer or other transaction, the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”). Certain interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are treated as beneficial ownership of the number of shares of Common Stock

 

 

 

 

 

equivalent to the economic exposure created by the derivative position, to the extent actual shares of the Common Stock are directly or indirectly held by counterparties to the derivatives contracts or their affiliates or associates.

 

No person that, together with all affiliates and associates of such person, is the beneficial owner of Common Stock representing less than 20% of the Common Stock then outstanding, and which is entitled to file, and files, a statement on Schedule 13G (“Schedule 13G”) pursuant to Rule 13d-1(b) of the General Rules and Regulations under the Exchange Act, as in effect at the time of the public announcement of the declaration of the Rights with respect to the Common Stock beneficially owned by such person (a “13G Investor”), shall be deemed to be an “Acquiring Person”; provided, that a person who was a 13G Investor shall no longer be a 13G Investor if it either (i) files a statement on Schedule 13D pursuant to Rule 13d-1(a), 13d-1(e), 13d-1(f) or 13d-1(g) of the General Rules and Regulations under the Exchange Act or (ii) becomes no longer entitled to file a statement on Schedule 13G pursuant to Rule 13d-1(b) (the earlier to occur of (i) and (ii), the “13D Event”), and such person shall be an Acquiring Person if it is the beneficial owner (together with all affiliates and associates) of 18% or more of the Common Stock then outstanding at any point from and after the time of the 13D Event; provided, however, such person shall not be an Acquiring Person if (i) on the first Business Day (as defined in the Rights Agreement) after the 13D Event such person notifies the Company of its intent to reduce its beneficial ownership to below 18% as promptly as practicable and (ii) such person reduces its beneficial ownership (together with all affiliates and associates of such person) to below 18% of the Common Stock then outstanding as promptly as practicable (but in any event not later than 10 days after such 13D Event); provided, further that such person shall become an “Acquiring Person” if after reducing its beneficial ownership to below 18%, it subsequently becomes the beneficial owner of 18% or more of the Common Stock then outstanding or if, prior to reducing its beneficial ownership to below 18%, it increases (or makes any offer or takes any other action that would increase) its beneficial ownership of the then-outstanding Common Stock above the lowest beneficial ownership of such person at any time during such ten-day period.

 

With respect to certificates representing shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for shares of Common Stock registered in the names of the holders thereof, and not by separate Rights Certificates, as described further below. With respect to book entry shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by the balances indicated in the book entry account system of the transfer agent for the Common Stock. Until the earlier of the Distribution Date and the Expiration Date (as defined below), the transfer of any shares of Common Stock outstanding on the Record Date will also constitute the transfer of the Rights associated with such shares of Common Stock. As soon as practicable after the Distribution Date, separate certificates evidencing the Rights (“Rights Certificates”) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such Right Certificates alone will evidence the Rights.

 

The Rights, which are not exercisable until the Distribution Date, will expire prior to the earliest of (i) the close of business on September 22, 2021, unless extended prior to expiration; (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement; (iii) the time at which the Rights are exchanged pursuant to the Rights Agreement; and (iv) the time at which the Rights are terminated upon the occurrence of certain transactions (the earliest of (i), (ii), (iii) and (iv) is referred to as the “Expiration Date”).

 

Each share of Preferred Stock will be entitled, when, as and if declared, to a preferential per share quarterly dividend payment equal to the greater of (i) $1.00 per share or (ii) 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, in each case, paid to holders of Common Stock during such period. Each share of Preferred Stock will entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event of any merger, consolidation or other transaction in which shares of Common Stock are converted or exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the amount received per one share of Common Stock.

 

 

 

 

The Exercise Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock; (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for or purchase Preferred Stock or convertible securities at less than the then-current market price of the Preferred Stock; or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of outstanding Rights and the number of one one-thousandths of a Preferred Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock split, reverse stock split, stock dividends and other similar transactions.

 

In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, each holder of a Right, other than the Rights beneficially owned by the Acquiring Person, affiliates and associates of the Acquiring Person and certain transferees thereof (which will thereupon become null and void), will thereafter have the right to receive upon exercise of a Right that number of shares of Common Stock having a market value of two times the Exercise Price.

 

In the event that, after a person or a group of persons has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction, of 50% or more of the Company’s assets or earning power are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current Exercise Price of the Right, that number of shares of common stock of the acquiring company having a market value at the time of that transaction equal to two times the then-current Exercise Price.

 

With certain exceptions, no adjustment in the Exercise Price will be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price. No fractional shares of Preferred Stock will be issued (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the trading day immediately prior to the date of exercise.

 

At any time after any person or group of persons becomes an Acquiring Person and prior to the acquisition of beneficial ownership by such Acquiring Person of 50% or more of the outstanding shares of Common Stock, the Board, at its option, may exchange each Right (other than Rights owned by such person or group of persons which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock per outstanding Right (subject to adjustment).

 

At any time before the Distribution Date, the Board may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to certain adjustments) (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.

 

Immediately upon the action of the Board electing to redeem or exchange the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price for each Right held.

 

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

 

 

 

 

 

 

Anti-Takeover Effects of Provisions of our Certificate of Incorporation, our Bylaws and Delaware Law

 

Some provisions of Delaware law, and our Certificate of Incorporation and our Bylaws (the “Bylaws”) described below, contain provisions that could make the following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise; or removal of our incumbent officers and directors. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.

 

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

 

 

Delaware Law

 

 

We are not subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that such stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger or consolidation, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s outstanding voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

 

 

	 	
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			the transaction is approved by the Board before the date the interested stockholder attained that status;

			

	 	
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			upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; and

			

 

 

 

 

	 	
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			on or after such time, the business combination is approved by the Board and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

			

 

Certificate of Incorporation and Bylaws

 

Provisions of our Certificate of Incorporation and Bylaws may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock.

 

Among other things, our Certificate of Incorporation and Bylaws:

 

	 	
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			permit the Board to issue up to 15,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;

			

	 	
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			provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office;  

			

	 	
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			provide that our Bylaws may only be amended by the affirmative vote of the majority of the Board or the holders of two-thirds of our then outstanding common stock;

			

	 	
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			provide that special meetings of our stockholders may only be called by the Board, the president or the holders of a majority of our then outstanding common stock;

			

	 	
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			eliminate the personal liability of our directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by the DGCL and indemnify our directors and officers to the fullest extent permitted by the DGCL;

			

	 	
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			provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice; and

			

	 	
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			do not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose.

			

 

Limitation of Liability and Indemnification Matters

 

Our Certificate of Incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:

 

	 	
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			for any breach of the director’s duty of loyalty to the corporation or its stockholders;

			

	 	
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			for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

			

	 	
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			for unlawful payment of dividend or unlawful stock purchase or redemption; or

			

	 	
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			for any transaction from which the director derived an improper personal benefit.

			

 

Our Certificate of Incorporation and Bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. We believe that the limitation of liability provision in our Certificate of Incorporation will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.

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