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): March 31, 2019

 

TRULI TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   000-53641   26-3090646

(State or other Jurisdiction

of Incorporation)

  (Commission File Number)   (IRS Employer
Identification No.)

 

 

344 GROVE ST #2 #4018 JERSEY CITY, NJ

 

 

07302

(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (866) 862-2979

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ S oliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Emerging growth company ☒

 

If an emerging growth company, indicate by checkmark 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.

 

Merger with Recruiter.com

 

On March 31, 2019, Truli Technologies, Inc. (“Truli”) entered into an Agreement and Plan of Merger, dated March 31, 2019 (the “Merger Agreement”), by and among Truli, Truli Acquisition Co., Inc., a Delaware corporation and a wholly-owned subsidiary of Truli (“Merger Sub”) and Recruiter.com, Inc., a Delaware corporation (“Recruiter.com”) and completed the acquisition of Recruiter.com under to the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into Recruiter.com (the “Merger”), with Recruiter.com continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Truli.

 

As a result of the Merger, each share of common stock, par value $0.0001 per share, of Recruiter.com (the “Recruiter.com Shares”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than treasury shares of Recruiter.com or Recruiter.com Shares held directly or indirectly by Truli or the Merger Sub) was converted into validly issued, fully paid and nonassesable shares of newly designated Series E convertible preferred stock, par value $0.0001 per share, of Truli (“Truli Series E Preferred Stock”), with cash in lieu of fractional shares of Series E Preferred Stock otherwise issuable (such shares of Truli Series E Preferred Stock, the “Merger Consideration”). Truli issued to the stockholders of Recruiter.com a total of 775,000 shares of Series E Preferred Stock convertible into 775,000,000 shares of common stock, par value $0.0001 per share (the “Common Stock”), of Truli, pursuant to the Merger Agreement. Prior to the Effective Time, Recruiter.com distributed to its stockholders 125 million shares of Common Stock, par value $0.0001 per share (the “Common Stock”), of Truli, previously acquired by Recruiter.com pursuant to the License Agreement, dated October 30, 2017 (the “License Agreement”) by and among Truli, VocaWorks, Inc., a New Jersey corporation and a wholly-owned subsidiary of Truli (“VocaWorks”) and Recruiter.com.

 

The closing of the Merger was subject to customary closing conditions, including the approval of the Merger by the stockholders of Recruiter.com, and additional closing conditions, including but not limited to, the receipt of the proceeds from the private placement financing, and the execution of the Asset Purchase Agreement (as defined below). The completion of the Merger was not subject to the approval of the stockholders of Truli.

 

The Merger Agreement contains customary representations and warranties of each party for a transaction of this type. The Merger Agreement also contains customary covenants, including, among other things, the covenant requiring Truli to amend the Certificate of Incorporation of Truli to change its corporate name, and other covenants, including but not limited to, effecting as promptly as possible following the completion of the Merger, a reverse stock split of the outstanding shares of Common Stock. Additionally, the Merger Agreement provides for pre-closing covenants of Recruiter.com, including the covenant requiring Recruiter.com to repay or convert all outstanding convertible debt of Recruiter.com, and execution of an amendment to the License Agreement.

 

The offer of the shares of Series E Preferred Stock as the Merger Consideration pursuant to the Merger Agreement, was exempt from registration under the Securities Act of 1933 (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

 

The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Asset Purchase

 

On March 31, 2019, Truli also entered into an Asset Purchase Agreement, dated March 31, 2019 (the “Asset Purchase Agreement”) by and among Truli, Recruiter.com Recruiting Solutions LLC, a Delaware limited liability company and a wholly-owned subsidiary of Truli (“Recruiting Solutions”) and Genesys Talent LLC, a Texas limited liability company (“Genesys”) and completed the acquisition of certain assets and assumed certain liabilities under the Asset Purchase Agreement (the “Asset Purchase”). The acquired assets included certain accounts and notes receivable specified in the Asset Purchase Agreement, sales and client relationships, contracts specified in the Asset Purchase Agreement, intellectual property, partnership and vendor agreements, and the other assets, other than excluded assets, specified in the Asset Purchase Agreement.

 

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Genesys received 200,000 shares of newly designated Series F convertible preferred stock, par value $0.0001 per share, of Truli as consideration under the Asset Purchase Agreement, which shares are convertible into 200,000,000 shares of common stock. The offer of the shares of Series F Preferred Stock as consideration pursuant to the Asset Purchase Agreement was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

 

The closing of the Asset Purchase was subject to customary closing conditions and covenants, including the execution of Assignment and Assumption Agreement, Management Services Agreement, License Agreement and other instruments and documents required by the Asset Purchase Agreement. The Asset Purchase Agreement contains customary representations and warranties of each party for a transaction of this type.

 

The foregoing description of the Asset Purchase Agreement and the Asset Purchase does not purport to be complete and is qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which is filed as Exhibit 2.2 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Financing

 

On March 31, 2019, Truli entered into a Securities Purchase Agreement, dated March 31, 2019 (the “Securities Purchase Agreement”) by and among Truli and the investors listed therein (the “Investors”). Pursuant to the Securities Purchase Agreement Truli sold in a private placement a total of approximately 31,625 units (the “Units”) at a purchase price of $18.1818 per unit, taking into account a 10% discount, each Unit consisting of (i) one share of Series D Preferred Stock, and (ii) a Warrant to purchase 500 shares of Common Stock, subject to adjustment as provided for therein. The Series D Preferred Stock sold in the financing convert into a minimum of 31,625,000 shares of Common Stock. Truli received gross proceeds of $575,000 from the sale of the Units. Two of the three Investors have previously invested in Truli’s Preferred Stock. In addition, a fourth Investor entered into a binding Securities Purchase Agreement to purchase $75,000 of Units with payment expected on or about April 4, 2019. If payment is made, at least an additional 4,125,000 shares of Common Stock will be issuable upon conversion of the Series D Preferred Stock and 2,062,500 shares of Common Stock upon exercise of Warrants. Further, in connection with the closing of the Merger, the former Chief Executive Officer of Recruiter.com agreed to purchase $250,000 of Units by delivering common stock of another company with a $215,000 value and $35,000 in cash. As of the date of this Current Report on Form 8-K, no payment has been made.

 

The Warrants are exercisable for five years from the issuance date at an exercise price of $0.06 per share, subject to adjustment as provided for therein.

 

The offer and sale of the Units pursuant to the Securities Purchase Agreement was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

 

The foregoing description of the terms of the offer and sale of the Units, the Securities Purchase Agreement and the Warrants does not purport to be complete and is qualified in its entirety by reference to the Securities Purchase Agreement, the form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the Warrant, the form of which is filed as Exhibit 4.1 to this Current Report on Form 8-K, in each case incorporated herein by reference.

 

Exchange of Series A, Series A-1, Series C and Series C-1 Convertible Preferred Stock, Convertible Notes and Warrants

 

In connection with, and as a condition precedent to the closing of the Merger, on March 31, 2019, Truli entered into an Exchange Agreement, dated March 31, 2019 (the “Exchange Agreement”) with two investors holding in the aggregate all of the shares of Truli’s Series A, Series A-1, Series C and Series C-1 Convertible Preferred Stock, Convertible Notes and Warrants, outstanding immediately prior to the closing of the Merger, and completed an exchange of such derivative securities for a total of 389,036 shares of Series D Preferred Stock (the “Exchange”), which are convertible into at least 389,035,352 shares of Common Stock.

 

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The closing of the Exchange was subject to customary closing conditions. The Exchange Agreement contains customary representations and warranties and covenants.

 

The Exchange was exempt from registration under the Securities Act pursuant to Section 3(a)(9) of the Securities Act.

 

The foregoing description of the Exchange Agreement and the Exchange does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Amendment to the License Agreement

 

In connection with the closing of the Merger, Truli entered into Amendment No. 1, dated March 31, 2019 (the “Amendment”) to the License Agreement. Pursuant to the Amendment, Recruiter.com agreed to terminate its right of to receive shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) upon achievement of certain milestones specified in the License Agreement.

 

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

To the extent required by Item 2.01, the information contained in Item 1.01 of this Current Report on Form 8-K regarding the Merger and the Asset Purchase is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

To the extent required by Item 3.02, the information contained in Item 1.01 of this Current Report on Form 8-K regarding the offer of shares of Series D Preferred Stock pursuant to the Securities Purchase Agreement, shares of Series E Preferred Stock pursuant to the Merger Agreement, shares of Series F Preferred Stock pursuant to the Asset Purchase Agreement, and the exchange of securities pursuant to the Exchange Agreement, is incorporated herein by reference.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

To the extent required by Item 3.03, the information contained in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c), (d) and (e)

 

In connection with the closing of the Merger, the Board of Directors (the “Board”) of Truli appointed Ashley Saddul as the Chief Technology Officer of Truli, effective upon the closing of the Merger. Mr. Saddul was appointed pursuant to a covenant under the Merger Agreement described in Item 1.01 of this Current Report on Form 8-K. Prior to his appointment, Mr. Saddul, 49, had served as the Chief Technology Officer of Recruiter.com, since August 2010.

 

In connection with the closing of the Asset Purchase, the Board appointed Timothy O’Rourke as a director, effective upon the closing of the Asset Purchase. Mr. O’Rourke was designated by Genesys pursuant to the terms of the Asset Purchase Agreement described in Item 1.01 of this Current Report on Form 8-K. Mr. O’Rourke, 53, has served as the Managing Director of Icon Information Consultants, LP, a provider of human capital solutions, consulting, payroll and professional services, and a shareholder of Genesys, since February 2001.

 

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In connection with the closing of the Merger, Board appointed Evan Sohn as a director and Executive Chairman of Truli. Mr. Sohn, 51, has served as the Vice President of Sales at Veea Inc., a company offering a platform-as-a-service platform for computing, mobile payment, point of sale, and retail solutions, since April 2018. Prior to joining Veea Inc., from September 2015 to April 2018, Mr. Sohn served as the Vice President of Sales at Poynt Inc., a company developing and marketing Poynt, a platform for next generation payments. Prior to that, from April 2012 to September 2015, Mr. Sohn was the Vice President of Sales at VeriFone, Inc., a company designing, marketing, and servicing electronic payment systems. Mr. Sohn is also the co-founder and Vice President of the Sohn Conference Foundation, a non-for-profit dedicated to the treatment and cure of pediatric cancer and related childhood diseases.

 

As previously disclosed, since August 2018 till March 31, 2019, Mr. Sohn also was a special consultant to Truli in connection with the Merger. Mr. Sohn was appointed a consultant to oversee the Merger and interface with the independent directors of Truli because of a conflict of interest due to Mr. Miles Jennings, Truli’s Chief Executive Officer, being a controlling stockholder of Recruiter.com. Mr. Sohn received a grant of 1,000,000 shares of restricted Common Stock in August 2018. He is entitled to receive a total of 2.5% of outstanding Common Stock and options to purchase shares of Common Stock equal to 2.5%, each on a fully diluted basis. The options are five-year options exercisable at $0.044 per share vesting on the 18th month anniversary of the grant date. As Executive Chairman, Mr. Sohn is entitled to receive a fee of $120,000 per annum payable monthly in arrears and reimbursement of properly vouched reasonable business expenses.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

Amended and Restated Terms of Series D, Series E and Series F Preferred Stock

 

As previously disclosed in Current Report on Form 8-K, filed on March 29, 2019, on March 25, 2019, Truli filed the following certificates of designation (each, a “Certificate of Designation”) of three series of preferred stock with the Secretary of State of the State of Delaware (the “Secretary of State”): (i) a Certificate of Designation of Series D Preferred Stock, (ii) a Certificate of Designation of Series E Preferred Stock, and (iii) a Certificate of Designation of Series F Preferred Stock. The Certificates of Designation were effective upon filing with the Secretary of State and designated Series D Preferred Stock in the amount of 500,000 shares authorized for issuance, Series E Preferred Stock in the amount of 775,000 shares authorized for issuance, and Series F Preferred Stock in the amount of 200,000 shares authorized for issuance.

 

On March 29, 2019, Truli filed with the Secretary of State: (i) an Amended and Restated Certificate of Designation of Series D Preferred Stock (the “Amended Series D Certificate of Designation”), (ii) an Amended and Restated Certificate of Designation of Series E Preferred Stock (the “Amended Series E Certificate of Designation”) and (iii) an Amended and Restated Certificate of Designation of Series F Preferred Stock (the “Amended Series F Certificate of Designation” and together with the Amended Series E Certificate of Designation and the Amended Series F Certificate of Designation, the “Amended Certificates of Designation”), which are effective upon filing. The Amended Certificates of Designation establish three levels of liquidation preference, the first liquidation preference being the first $2,000,000 (the “First Liquidation Preference”), the second being $3,000,000 (the “Second Liquidation Preference”), and the remaining liquidation amount being $9,000,000 (the “Remaining Liquidation Amount”), and fix the portion each of the holders of Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock is entitled to receive at each level.

 

In addition, the Amended Series D Certificate of Designation includes an additional requirement to reduce the conversion price by 20% in case of a mandatory conversion of Series D Preferred Stock. Furthermore, the Amended Series E Certificate of Designation and Amended Series E Certificate of Designation eliminate the provisions regarding the rights of holders of Series E Preferred Stock and Series F Preferred Stock upon issuance of other securities by Truli in the future. On March 31, 2019, the Board agreed to amend this provision to give the Investors certain additional rights including eliminating the mandatory conversion requirement and expanding the 20% conversion discount feature. Truli is drafting an amendment to the Series D Preferred Stock Certificate of Designations to make the required change.

 

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Other than the conforming amendments to effect the above changes, the other material terms of Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock remained unchanged and included the following terms:

 

Liquidation Preference : Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock are senior to the Common Stock of Truli for the purposes of liquidation, dissolution or winding up of the business of Truli with the Series D Preferred Stock entitled to the First Liquidation Preference. Upon such liquidation, dissolution or winding up, each holder of Series D Preferred Stock is entitled to receive out of legally available assets of Truli: (i) a pro rata portion of the first $2,000,000 of cash and/or other property received by Truli pursuant to such liquidation, dissolution or winding up; and (ii) after the holders of Series E Preferred Stock and the Series F Preferred Stock have received the Second Liquidation Preference, a pro rata portion of 28.78% of the value of any cash or other property to be distributed to the holders of Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock as payment of the Remaining Liquidation Amount.

 

Each holder of Series E Preferred Stock is entitled to receive: (i) a pro rata portion of 79.48% of the Second Liquidation Preference; and (ii) a pro rata portion of 56.60% of the value of any cash or other property to be distributed to the holders of Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock as payment of the Remaining Liquidation Amount.

 

Each holder of Series E Preferred Stock is entitled to receive: (i) a pro rata portion of 20.52% of the Second Liquidation Preference; and (ii) a pro rata portion of 14.62% of the value of any cash or other property to be distributed to the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock as payment of the Remaining Liquidation Amount.

 

Voting Rights : Holders of Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock are entitled to vote together with the holders of the Common Stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%.

 

The foregoing description of the rights, preferences, privileges and restrictions of the Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Amended Series D Certificate of Designation, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K, the Amended Series E Certificate of Designation, a copy of which is filed as Exhibit 3.2 to this Current Report on Form 8-K, and the Amended Series F Certificate of Designation, a copy of which is filed as Exhibit 3.3 to this Current Report on Form 8-K, in each case incorporated herein by reference.

 

Elimination of Series B Preferred Stock

 

In connection with entering into an amendment to the License Agreement, described in Item 1.01 of this Current Report on Form 8-K, on April 2, 2019, Truli filed with the Secretary of State a Certificate of Elimination effecting the elimination of the Certificate of Designation of Series B Preferred Stock. No shares of the Series B Preferred Stock had been previously issued and remain outstanding. Effective upon the filing of the Certificate of Elimination, all previously-authorized shares of the Series B Preferred Stock resumed the status of undesignated shares of Truli’s preferred stock, par value $0.0001per share.

 

The foregoing description of the elimination of Series B Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Certificate of Elimination, a copy of which is filed as Exhibit 3.4 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure.

 

Incorporated by reference is a press release issued by Truli on April 2, 2019, which is attached hereto as Exhibit 99.1.

 

The information in this Item 7.01 (i) is furnished pursuant to Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section; and (ii) shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

 

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Item 9.01. Financial Statements and Exhibits

 

(a) Financial Statements of Businesses Acquired

 

The financial statements of Frutarom required by this Item 9.01 are not included in this Current Report on Form 8-K. Such financial statements will be filed no later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.

 

(b) Pro Forma Financial Information

 

Pro forma financial information relative to the acquired business is not included in this Current Report on Form 8-K. Such pro forma financial information will be filed no later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.

 

(d) Exhibits

 

Exhibit No.

 

Description of Exhibit

2.1   Merger Agreement and Plan of Merger, dated March 31, 2019, by and among the Truli Technologies, Inc., Truli Acquisition Co., Inc. and Recruiter.com, Inc.*
     
2.2   Asset Purchase Agreement, dated March 31, 2019, by and among Truli Technologies, Inc., Recruiter.com Recruiting Solutions LLC and Genesys Talent LLC.*
     
3.1   Amended and Restated Certificate of Designation of Series D Convertible Preferred Stock.
     
3.2   Amended and Restated Certificate of Designation of Series E Convertible Preferred Stock.
     
3.3   Amended and Restated Certificate of Designation of Series F Convertible Preferred Stock.
     
3.4   Certificate of Elimination of Series B Convertible Preferred Stock.
     
4.1   Form of Warrant issued pursuant to the Securities Purchase Agreement, dated March 31, 2019.
     
10.1   Form of Securities Purchase Agreement, dated March 31, 2019, by and among Truli Technologies, Inc. and the investors listed therein.*
     
10.2   Form of Exchange Agreement, dated March 31, 2019, by and among Truli Technologies, Inc. and the investors listed therein.*
     
10.3   Amendment No. 1 to License Agreement, dated October 30, 2017, by and among Truli Technologies, Inc., VocaWorks, Inc. and Recruiter.com, Inc.
     
99.1   Press Release, dated April 2, 2019.

 

* Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

 

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SIGNATURES

 

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

 

 

Dated: April 4, 2019 TRULI TECHNOLOGIES, INC.
   
  By: /s/ Miles Jennings
    Miles Jennings
    Chief Executive Officer 
(Principal Executive Officer)

 

 

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Exhibit 2.1

 

Execution Version

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of March 31, 2019, by and among Truli Technologies, Inc., a Delaware corporation (“Truli”), Truli Acquisition Co., Inc., a Delaware corporation and wholly-owned subsidiary of Truli (“Merger Sub”), and Recruiter.com, Inc., a Delaware corporation (“Recruiter”), with respect to the following facts:

 

A. The Board of Directors of Recruiter (the “Recruiter Board”) has approved and declared advisable this Agreement, the Merger, and the transactions contemplated herein upon the terms and subject to the conditions set forth, and has determined that the transactions contemplated by this Agreement are fair to, and in the best interests of, its stockholders.

 

B. A Special Committee (the “Truli Committee”) of the Board of Directors of Truli (the “Truli Board”) has approved and declared advisable this Agreement, the Merger, and the transactions contemplated herein upon the terms and subject to the conditions set forth, and has determined that the transactions contemplated by this Agreement are fair to, and in the best interests of, its stockholders.

 

C. The Board of Directors of Merger Sub has approved and declared advisable this Agreement, the Merger, and the transactions contemplated herein upon the terms and subject to the conditions set forth, and has determined that the transactions contemplated by this Agreement are fair to, and in the best interests of, its stockholders.

 

D. The requisite majority of the voting power of Recruiter has approved this Agreement, the Merger, and the transactions contemplated herein upon the terms and subject to the conditions set forth.

 

E. The stockholder of Merger Sub has approved this Agreement, the Merger, and the transactions contemplated herein upon the terms and subject to the conditions set forth.

 

F. For U.S. federal income tax purposes, the parties intend that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

In consideration of the promises contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

Article I
DEFINITION OF TERMS

 

1.1 Certain Definitions. For purposes of this Section 1.1, capitalized words and terms have the following meanings:

 

Action ” means any private or governmental claim, action, suit (whether in law or in equity), or proceeding of any nature pending in any court or arbitration proceeding or pending before any Governmental Authority.

 

 

 

 

Adverse Consequences ” shall mean the actual financial loss suffered by an Indemnified Party (which shall be Truli in the event of breach by Recruiter and the Recruiter Stockholders in the event of a breach by Truli) ( i.e. reduced by any insurance proceeds or other payment or recoupment received, realized or retained by the Indemnified Party as a result of the events giving rise to the Claim net of any expenses related to the receipt of such proceeds, payment or recoupment, including retrospective premium adjustments, if any), but not any reduction in Taxes of the Indemnified Party occasioned by such loss or damage, provided , however , that Adverse Consequences shall not include consequential damages, a multiple of earnings, a decline in value of the Merger Consideration or any other indirect speculative damages, including punitive damages.

 

Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

Agreement ” means this Merger Agreement.

 

Asset Purchase Agreement ” shall mean that certain Asset Purchase Agreement, dated March 31, 2019, by and among Truli, Recruiter.com Recruiting Services, LLC, a Delaware limited liability company and a wholly owned subsidiary of Truli, and Genesys.

 

Balance Sheet ” shall have the meaning contained in Section 3.1(u).

 

Balance Sheet Date ” shall have the meaning contained in Section 3.1(u).

 

Celtic Bank ” means Celtic Bank Corporation.

 

Claim ” means a claim for indemnification asserted by a Party (which shall be Truli in the event of breach by Recruiter and the Recruiter Stockholders in the event of a breach by Truli) against another Party or a third party Claim.

 

Closing ” means the closing of the Merger and the other transactions contemplated hereby.

 

Closing Date ” shall have the meaning contained in Section 2.1(a).

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Consulting Agreement ” shall have the meaning contained in Section 5.5.

 

Contract ” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral, but in each case solely to the extent legally binding.

 

Customizations ” shall have the meaning contained in Section 3.1(m)(9)(B).

 

Deferred Compensation Plan ” shall have the meaning contained in Section 3.1(n)(6).

 

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“DGCL” means the Delaware General Corporation Law.

 

“Digital Dropbox” means the online digital dropbox set up by Recruiter to facilitate the transmission of due diligence, ancillary documents and other documents reasonably requested or being provided pursuant to this Agreement.

 

Disclosure Schedules ” means the Disclosure Schedules delivered with this Agreement.

 

Effective Time ” shall have the meaning contained in Section 2.1(a).

 

EHSR ” shall have the meaning contained in Section 3.1(p)(1).

 

Encumbrance ” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

Exchange Act ” means the Securities Exchange Act of 1934.

 

GAAP ” means generally accepted accounting principles.

 

General Expiration Date ” shall have the meaning contained in Section 5.1(b)(1).

 

Genesys ” shall mean Genesys Talent LLC, a Texas limited liability company.

 

Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Indemnified Party ” shall have the meaning contained in Section 5.2.

 

Indemnifying Party ” shall have the meaning contained in Section 5.2.

 

Interim Balance Sheet ” shall have the meaning contained in Section 3.1(u).

 

Interim Balance Sheet Date ” shall have the meaning contained in Section 3.1(u).

 

Intellectual Property ” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world, including all trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered or unregistered, and all registrations and applications for registration of such trademarks, including intent-to-use applications, all issuances, extensions and renewals of such registrations and applications and the goodwill connected with the use of and symbolized by any of the foregoing; Internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority; original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered or unregistered), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications; confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; and designs and inventions, design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.

 

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“Knowledge” means, with respect to any fact, circumstance, event or other matter in question, the actual knowledge with regard to such fact, circumstance, event or other matter, and such knowledge that could be obtained through reasonable inquiry.

 

Knowledge of Recruiter ” means the Knowledge of Michael Woloshin, Ashley Saddul or Miles Jennings.

 

Knowledge of Truli ” means the Knowledge of Miles Jennings.

 

Law ” or “ Laws ” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Government Authority.

 

Liability ” or “ Liabilities ” means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due.

 

License Agreement ” means that certain License Agreement effective as of October 27, 2017, by and among Recruiter, Truli and VocaWorks.

 

Malicious Code ” shall have the meaning contained in Section 3.1(m)(12)(C).

 

Material Adverse Effect ” means, with respect to any Party, a material adverse effect on (a) the financial condition, results of operations, assets or Liabilities of such Party and its Subsidiaries taken as a whole; provided , however , that, with respect to this clause (a), a Material Adverse Effect shall not be deemed to include effects arising out of, relating to or resulting from (A) changes after the date hereof in applicable GAAP or regulatory accounting requirements, (B) changes after the date hereof in general economic or market conditions (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States) affecting other companies in the industries in which such Party and its Subsidiaries operate affecting the United States, (C) virtual reality industry, (D) changes after the date hereof in the credit markets, any downgrades in the credit markets, or adverse credit events resulting in deterioration in the credit markets generally and including changes to any previously correctly applied asset marks resulting therefrom, (E) the public disclosure of this Agreement or the contemplated transactions or the consummation of the contemplated transactions, or (F) any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism except, with respect to clauses (A), (B), (C), (D) and (F), to the extent that the effects of such change are materially disproportionately adverse to the financial condition, results of operations or business of such Party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such Party and its Subsidiaries operate; or (b) the ability of such Party to timely consummate the Agreement.

 

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Material Supplier ” shall have the meaning contained in Section 3.1(x)(2).

 

Merger ” shall mean the exchange of 100% of the outstanding Recruiter Common Stock for the Merger Consideration pursuant to the terms of this Agreement.

 

Merger Consideration ” shall have the meaning contained in Section 2.3(b).

 

Most Recent Financial Statements ” shall have the meaning contained in Section 3.1(u).

 

Open Source Software ” means any Software or Intellectual Property that is distributed as “free” or “open source” or pursuant to any license identified as an “open source license” by the Open Source Initiative (www.opensource.org/licenses) or other license that substantially conforms to the Open Source Definition (http://opensource.org/osd) including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), GNU Affero General Public License (AGPL), MIT License (MIT), Apache License, Artistic License and BSD Licenses.

 

Ordinary Course of Business ” means pursuant to or consistent with a Person’s usual or customary practices.

 

Party ” or “ Parties ” means Truli and/or Recruiter.

 

Permitted Encumbrances ” shall have the meaning contained in Section 3.1(r).

 

Person ” means any individual, group, organization, corporation, partnership, joint venture, limited liability company, trust or entity of any kind.

 

Recruiter Charter Documents ” shall have the meaning contained in Section 3.1(d).

 

Recruiter Common Stock ” shall mean the common stock, par value of $0.0001 per share, of Recruiter.

 

Recruiter Designees ” shall have the meaning contained in Section 5.6(a)(2).

 

Recruiter Financial Statements ” shall have the meaning contained in Section 3.1(u).

 

Recruiter IP Agreements ” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to Intellectual Property to which Recruiter is a party, beneficiary or otherwise bound.

 

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Recruiter IP Registrations ” means all Intellectual Property of Recruiter that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

 

Recruiter Products ” means all proprietary products and related services of Recruiter that are currently being, or at any time in the past five years have been, offered, licensed, sold, distributed, hosted, maintained, supported or otherwise provided or made available by or on behalf of Recruiter.

 

Recruiter Required Approvals ” shall have the meaning contained in Section 3.1(c).

 

Recruiter Stockholder ” shall mean any holder of Recruiter Common Stock.

 

Representative ” shall mean any respective officers, directors, affiliates, employees, investment bankers, attorneys, accountants or other advisors or representatives of Truli or Recruiter.

 

SBA Loan Agreement ” shall mean that certain loan agreement, dated October 29, 2013, between Celtic Bank as lender and Recruiter.com, LLC as borrower.

 

SEC ” shall mean the Securities and Exchange Commission.

 

SEC Reports ” shall have the meaning contained in Section 4.1(l).

 

Securities Act ” shall mean the Securities Act of 1933.

 

Securities Purchase Agreement ” shall have the meaning contained in Section 5.8.

 

Software ” means any and all computer software and code, including all new versions, updates, revisions, improvements and modifications thereof, whether in source code, object code, or executable code format, including systems software, application software (including mobile apps), firmware, middleware, programming tools, scripts, routines, interfaces, architecture, schematics, records, libraries, and data, databases and data collections, and all related specifications and documentation, including developer notes, comments and annotations, user manuals and training materials relating to any of the foregoing.

 

Subsidiary ” when used with respect to any Person, means any corporation or other organization, whether incorporated or unincorporated, of which (A) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person (through ownership of securities, by contract or otherwise) or (B) such Person or any subsidiary of such Person is a general partner of any general partnership or a manager of any limited liability company.

 

Tax ” or “ Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

 

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Tax Return ” or “ Tax Returns ” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof to be filed on or before the Closing Date.

 

Transaction Documents ” means this Agreement and the Securities Purchase Agreement.

 

Truli Common Stock ” shall mean the common stock, par value of $0.0001 per share, of Truli.

 

Truli Designees ” shall have the meaning contained in Section 5.6(a)(1).

 

Truli Financial Statements ” shall mean the financial statements included in Truli’s SEC Reports.

 

Truli Required Approvals ” shall have the meaning contained in Section 4.1(c).

 

Truli Representative ” shall have the meaning contained in Section 5.2(c).

 

Truli Series E Preferred Stock ” shall mean Series E Convertible Preferred Stock with the rights, preferences, privileges and restrictions as set forth in the Certificate of Designations filed with the Delaware Secretary of State on March 29, 2019 in the form of Exhibit D .

 

WARN Act ” shall have the meaning contained in Section 3.1(y)(3).

 

VocaWorks ” means VocaWorks, Inc., a New Jersey corporation.

 

Article II

THE MERGER

 

2.1 Closing; Effective Time.

 

(a) The closing of the Merger and the other transactions contemplated hereby (the “Closing”) will take place at 10:00 a.m., New York time, on March 31, 2019, unless another time or date is agreed to by the Parties hereto (the “Closing Date”). The Closing shall take place electronically or at such location as the Parties hereto shall mutually agree. If the Closing has not taken place by April 30, 2019, or such later date as the Parties hereto shall mutually agree in writing, this Agreement shall be terminated without liability to either Party in connection with such termination. When used in this Agreement, the term “Effective Time” means the latest date and time as reflected on the Certificate of Merger, as accepted for filing by the Delaware Secretary of State.

 

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(b) At the Closing, Recruiter, Truli and Merger Sub shall cause a Certificate of Merger attached as Exhibit A to be executed and filed with the Delaware Secretary of State to be effective at the Effective Time.

 

(c) The Closing shall occur only if each condition set forth in Article VI herein has either been met or waived by the all the Parties to this Agreement.

 

2.2 Effects of the Merger . The effects of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the foregoing, at the Effective Time, by virtue of the Merger and in accordance with the DGCL:

 

(a) Merger Sub shall cease to exist and Recruiter shall be the surviving entity in the Merger (sometimes referred to herein as the “Surviving Corporation”) and a wholly-owned subsidiary of Truli.

 

(b) All the property, rights, privileges, powers and franchises of Recruiter and Merger Sub shall vest in the Surviving Corporation; and all debts, Liabilities and duties of Recruiter and Merger Sub shall become the debts, Liabilities and duties of the Surviving Corporation.

 

(c) The Certificate of Incorporation of the Surviving Corporation shall be amended and restated to read in its entirety as set forth on Exhibit B .

 

(d) The Bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the Bylaws of Recruiter, except that references to Merger Sub’s name shall be replaced with references to Recruiter’s name, until thereafter amended in accordance with the terms thereof, the Certificate of Incorporation of Recruiter, or as provided by DGCL.

 

2.3 Effect of the Merger on Capital Stock . At the Effective Time, as a result of the Merger and without any action on the part of Truli, Merger Sub, or Recruiter or the holder of any capital stock of Truli, Merger Sub, or the Recruiter:

 

(a) Each share of Recruiter Common Stock that is owned by Truli, Merger Sub, or Recruiter (as treasury stock or otherwise) or any of their respective direct or indirect wholly-owned Subsidiaries as of immediately prior to the Effective Time will automatically be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor.

 

(b) Each share of Recruiter Common Stock issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled and retired in accordance with Section 2.3(a)) will be converted into the right to receive: (i) a number of shares of Truli Series E Preferred Stock convertible into such number of shares of Truli Common Stock as set forth on Schedule 2.3(b) (the “Merger Consideration”); (ii) any cash in lieu of fractional shares of Truli Series E Preferred Stock payable pursuant to Section 2.5; and (iii) any dividends or other distributions to which the holder thereof becomes entitled to upon the surrender of such shares of Recruiter Common Stock in accordance with Section 2.8. The shares of Truli Series E Preferred Stock may not be offered, sold, pledged or otherwise transferred for 12 months from the Closing Date. Truli shall enforce this 12 month holding period and shall not waive it except by operation of law as applied to any stockholder who dies or becomes disabled. In the event that Truly shall issue any preferred stock or Truli Common Stock or any securities that are convertible or exercisable into preferred or common stock before, on or within 24 months from the Effective Date at a price that is lesser than the per share value of the Merger Consideration shares, the Recruiter Stockholders shall receive additional shares so that the Merger Consideration shares shall have the same value as of the Effective Date, calculated by using the closing price of Truli Common Stock as of the trading day immediately prior to the Closing assuming that the Truli Series E has been converted into Truli Common Stock without regard to any beneficial ownership limitations. Provided , however , that if Truli Common Stock is listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 2.3(b) to the extent it provides for the right of the Recruiter Stockholders to receive any additional Merger Consideration shall not apply.

 

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(c) At the Effective Time, all shares of Recruiter Common Stock will no longer be outstanding and all shares of Recruiter Common Stock will be cancelled and retired and will cease to exist, and each holder of: (i) a certificate formerly representing any shares of Recruiter Common Stock (each, a “Certificate”); or (ii) any book-entry shares which immediately prior to the Effective Time represented shares of Recruiter Common Stock (each, a “Book-Entry Share”) will cease to have any rights with respect thereto, except the right to receive (A) the Merger Consideration in accordance with Section 2.8 hereof, (B) any cash in lieu of fractional shares of Truli Series E Preferred Stock payable pursuant to Section 2.5, and (C) any dividends or other distributions to which the holder thereof becomes entitled to upon the surrender of such shares of Recruiter Common Stock in accordance with Section 2.8.

 

(d) Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of Recruiter. From and after the Effective Time, all certificates representing shares of Merger Sub Common Stock shall be deemed for all purposes to represent the number of shares of common stock of the Recruiter into which they were converted in accordance with the immediately preceding sentence.

 

2.4 Capitalization following Merger . Immediately following the Closing of the Merger, the closing of the transactions pursuant to that certain Securities Purchase Agreement between Truli and the other parties thereto, dated as of the date of this Agreement, and the closing of the transactions contemplated by the Asset Purchase Agreement, the capitalization of Truli shall be as set forth on Schedule 2.4 hereto.

 

2.5 Fractional Shares . No fractional shares shall be issued upon the conversion of Recruiter Common Stock pursuant to Section 2.3(b). Notwithstanding any other provision of this Agreement, each holder of shares of Recruiter Common Stock converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Truli Series E Preferred Stock (after taking into account all shares of Recruiter Common Stock exchanged by such holder) shall in lieu thereof, upon surrender of such holder’s Certificates and Book-Entry Shares, receive in cash (rounded to the nearest whole cent), without interest, an amount equal to such fractional amount on an as-converted basis multiplied by the last reported sale price of Truli Common Stock on the OTC Pink market on the last complete trading day prior to the Effective Time.

 

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2.6 Adjustments . In the event of any reclassification, recapitalization, stock split, combination, stock dividend (including any dividend or distribution of securities convertible into Truli Common Stock) or subdivision with respect to Truli Common Stock, any change or conversion of Truli Common Stock into other securities, any other dividend or distribution with respect to Truli Common Stock (or if a record date with respect to any of the foregoing should occur), prior to the Effective Time, appropriate and proportionate adjustments shall be made to the number of shares of Truli Common Stock issued as part of the Merger Consideration following the Effective Time.

 

2.7 Exemption from Registration . The shares of Truli Series E Preferred Stock being issued as the Merger Consideration are being offered in reliance on specific exemptions from the registration requirements of United States federal and state securities Laws.

 

2.8 Procedure for Issuance of Merger Consideration .

 

(a) As of the Effective Time, Truli shall cause V Stock Transfer, LLC to issue to each of the Recruiter Stockholders the number of shares of Truli Series E Preferred Stock set forth in Schedule 2.3(b) as the Merger Consideration. The share certificates for the Truli Series E Preferred Stock issued as the Merger Consideration shall contain the customary restricted securities legend together with a reference to the 12 month holding period referred to in Section 2.3(b).

 

(b) Truli shall pay all charges and expenses in connection with the issuance of the Merger Consideration.

 

Article III
REPRESENTATIONS AND WARRANTIES OF RECRUITER

 

3.1 Representations and Warranties of Recruiter . Recruiter represents and warrants to Truli and Merger Sub that the statements contained in this Section 3.1 are true and correct as of the date hereof and will be true and correct as of the Closing Date, except as modified by the Disclosure Schedules of Recruiter attached to this Agreement, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or to the extent that such qualification is reasonably apparent:

 

(a) Subsidiaries . Each of the Subsidiaries of Recruiter as of the date of this Agreement and its place of organization is set forth on Schedule 3.1(a) . Schedule 3.1(a) sets forth, for each Subsidiary that is not, directly or indirectly, wholly-owned by Recruiter: (i) the number and type of any capital stock of, or other equity or voting interests in, such Subsidiary that is outstanding as of the date hereof; and (ii) the number and type of shares of capital stock of, or other equity or voting interests in, such Subsidiary that, as of the date hereof, are owned, directly or indirectly, by Recruiter. All of the outstanding shares of capital stock of, or other equity or voting interests in, each Subsidiary of Recruiter that is owned directly or indirectly by Recruiter have been validly issued, were issued free of pre-emptive rights, are fully paid and non-assessable, and are free and clear of all liens, including any restriction on the right to vote, sell, or otherwise dispose of such capital stock or other equity or voting interests, except for any liens: (A) imposed by applicable securities Laws; or (B) arising pursuant to the organizational or charter documents of any non-wholly-owned Subsidiary of Recruiter. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interests in, any Person.

 

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(b) Organization and Qualification . Recruiter and each of its Subsidiaries is a corporation, limited liability company, or other legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither Recruiter nor any of its Subsidiaries is in violation or default of any of the provisions of its Certificate of Incorporation, or other organizational or charter documents. Each of Recruiter and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation, limited liability company, or other legal entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a Material Adverse Effect on the legality, validity or enforceability of any Transaction Document, (ii) a Material Adverse Effect on Recruiter, or (iii) a Material Adverse Effect on Recruiter’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c) Authority; Board Approval .

 

(1) Recruiter has all requisite corporate power and authority to enter into and to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by Recruiter of this Agreement and the consummation by Recruiter of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Recruiter’s Board of Directors and Recruiter Stockholders (“Recruiter Required Approvals”) and no other proceedings on the part of Recruiter or Recruiter Stockholders are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the transactions contemplated hereby. The affirmative vote of a majority of the outstanding Recruiter Common Stock is the only vote or consent of the holders of any class or series of Recruiter’s capital stock necessary to approve and adopt this Agreement, approve the Merger, and consummate the Merger and the other transactions contemplated hereby. No other vote of Recruiter Stockholders is necessary in connection with this Agreement or the consummation of any of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Recruiter and constitutes the legal, valid, and binding obligation of Recruiter, enforceable against Recruiter in accordance with its terms.

 

(d) No Conflicts; Consents . Recruiter has not adopted Bylaws. Except as disclosed on Schedule 3.1(d), the execution, delivery and performance by Recruiter of this Agreement, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or result in a violation or breach of, or default under, any provision of the Certificate of Incorporation, or other organizational documents of Recruiter (“Recruiter Charter Documents”); (ii) conflict with or result in a violation or breach of any provision of any Law or order of Governmental Authority applicable to Recruiter; (iii) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which Recruiter is a party or by which Recruiter is bound or to which any of their respective properties and assets are subject (including any material contract) or any permit affecting the properties, assets or business of Recruiter; or (iv) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of Recruiter. No consent, approval, permit, order of Governmental Authority, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Recruiter in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except for the filing of the Certificate of Merger with the Delaware Secretary of State and such filings as may be required under the HSR Act (if any).

 

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(e) Capitalization .

 

(1) The authorized capital stock of Recruiter, as of the date hereof is set forth on Schedule 3.1(e)(1) .

 

(2) Schedule 3.1(e)(2) sets forth, as of the date hereof, the name of each Person that is the registered owner of any Shares and the number of Shares owned by such Person in each class or series.

 

(3) Except as disclosed on Schedule 3.1(e)(3) , no subscription, warrant, option, convertible or exchangeable security, or other right (contingent or otherwise) to purchase or otherwise acquire equity securities of Recruiter is authorized or outstanding, and there is no commitment by Recruiter to issue shares, subscriptions, warrants, options, convertible or exchangeable securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset, to repurchase or redeem any securities of Recruiter or to grant, extend, accelerate the vesting of, change the price of, or otherwise amend any warrant, option, convertible or exchangeable security or other such right. There are no declared or accrued unpaid dividends with respect to any shares of Recruiter capital stock.

 

(f) All issued and outstanding shares of Recruiter capital stock are (i) duly authorized, validly issued, fully paid and non-assessable; (ii) not subject to any preemptive rights created by statute, the Recruiter Charter Documents or any agreement to which Recruiter is a party; and (iii) free of any Encumbrances created by Recruiter in respect thereof. All issued and outstanding shares of Recruiter capital stock were issued in compliance with applicable Law.

 

(g) No outstanding Recruiter capital stock is subject to vesting or forfeiture rights or repurchase by Recruiter. There are no outstanding or authorized stock appreciation, dividend equivalent, phantom stock, profit participation or other similar rights with respect to Recruiter or any of its securities.

 

(h) All distributions, dividends, repurchases and redemptions of the capital stock (or other equity interests) of Recruiter were undertaken in compliance with the Recruiter Charter Documents then in effect, any agreement to which Recruiter then was a party and in compliance with applicable Law.

 

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(i) Certain Fees . No brokerage, finder’s fees, commissions or due diligence fees are or will be payable by Recruiter to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. Truli shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(i) that may be due in connection with the transactions contemplated by this Agreement. Truli agrees to pay any and all legal fees on behalf of Recruiter associated with this Agreement and all related documents necessary to close the transactions contemplated by such agreements, not to exceed $50,000.

 

(j) Litigation . Except as disclosed on Schedule 3.1(j) , there are no actions or proceedings pending or threatened by or against Recruiter involving more than, individually or in the aggregate, $25,000. There is no Action pending or threatened against or affecting Recruiter before or by any Governmental Authority, (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the issuance of the Merger Consideration or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither Recruiter nor any officer or director thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach of fiduciary duty. There has not been, and there is not pending or contemplated, any investigation by the SEC or any other Governmental Authority involving Recruiter or any current or former director or officer of Recruiter.

 

(k) Reserved.

 

(l) Compliance with Laws.

 

(1) Recruiter has complied and is currently in compliance with all applicable federal, state, local, foreign or other laws, rules, regulations, guidelines, orders, injunctions, building and other codes, ordinances, permits, licenses, authorizations, judgments, decrees of federal, state, local, foreign or other authorities, and all orders, writs, decrees and consents of any governmental or political subdivision or agency thereof, or any court or similar tribunal established by any such governmental or political subdivision or agency thereof (collectively, the “Laws”), having jurisdiction over or which affect its business and properties, except for any instance of non-compliance that has not had, and would not reasonably be expected to have, a Material Adverse Effect. Recruiter has all permits, licenses and franchises from governmental agencies required to conduct its businesses as now being conducted, except for those the absence of which has not had, or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Recruiter.

 

(2) Neither Recruiter nor any of its officers, directors, employees or agents has taken any action, directly or indirectly, that would result in a violation by such Persons of the FCPA, including, without limitation, offered, paid, promised to pay or authorized the payment of any money or offer, gift, promise to give, or authorized the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA, and Recruiter has conducted its business in compliance with the FCPA.

 

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(3) Neither Recruiter nor any of its officers, directors, employees or agents has taken any action, directly or indirectly, that would result in a violation by such Persons of other United States Laws, including, without limitation, offered, paid, promised to pay or authorized the payment of any money or offer, gift, promise to give, or authorized the giving of anything of value to (A) any official or any government of the United States or any state or local instrumentality or (B) any corporation, limited liability company or other entity.

 

(m) Intellectual Property.

 

(1) Schedule 3.1(m)(1) lists all (i) Recruiter IP Registrations and (ii) Recruiter Intellectual Property, including Software, that is not registered but that is material to Recruiter’s business or operations. All required filings and fees related to Recruiter IP Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Recruiter IP Registrations are otherwise in good standing. Recruiter has made available to Truli true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Recruiter IP Registrations. There are no actions that must be taken by Recruiter (or any third party on its behalf) within 120 days of the Closing Date, including the payment of any registration, maintenance or renewal fees or the filing of any responses to office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting, preserving or renewing any Recruiter IP Registrations. To the Knowledge of Recruiter, there are no facts or circumstances that would render any Recruiter IP Registrations invalid or unenforceable. To the Knowledge Recruiter, there has been no misrepresentation or failure to disclose, any fact or circumstances in any application for any Recruiter IP Registrations that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any Recruiter IP Registrations. Recruiter has not claimed a particular status, including “small entity status,” in the application for any Recruiter IP Registrations, which claim of status was not at the time made, or which has since become, inaccurate or false or that will no longer be true and accurate as a result of the Closing.

 

(2) Schedule 3.1(m)(2) lists all Recruiter IP Agreements that are material to Recruiter’s business as it presently is being conducted. Recruiter has made available to Truli true and complete copies of all such Recruiter IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Each Recruiter IP Agreement is valid and binding on Recruiter in accordance with its terms and is in full force and effect. Neither Recruiter, nor, to its Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of breach or default of or any intention to terminate, any Recruiter IP Agreement.

 

(3) Except as disclosed on Schedule 3.1(m)(3) , Recruiter is the sole and exclusive legal and beneficial, and with respect to Recruiter’s IP Registrations, record, owner of all right, title and interest in and to Recruiter’s Intellectual Property, or has the valid right to use all other Intellectual Property used in or necessary for the conduct of Recruiter’s current business or operations, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

 

(4) Since its inception, Recruiter has entered into binding, written agreements with every current and former employee and with every current and former independent contractor, whereby such employees and independent contractors (i) assign to Recruiter any ownership interest and right they may have in Recruiter’s Intellectual Property; and (ii) acknowledge Recruiter’s exclusive ownership of Recruiter’s Intellectual Property. Recruiter provided Truli with true and complete copies of all such agreements.

 

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(5) The consummation of the transactions contemplated hereunder will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Recruiter’s right to own, use or hold for use any Intellectual Property as owned, used or held for use in the conduct of Recruiter’s business or operations as currently conducted.

 

(6) Recruiter’s rights in Recruiter Intellectual Property are, and, since its inception, have been, valid, subsisting and enforceable. Recruiter has taken all reasonable steps to maintain its Intellectual Property and to protect and preserve the confidentiality of all confidential information and trade secrets included in its Intellectual Property, including requiring all Persons having access thereto to execute written non-disclosure agreements.

 

(7) The conduct of Recruiter’s business as currently and formerly conducted, and the products, processes and services of Recruiter, have not infringed, misappropriated, diluted or otherwise violated, and do not and will not infringe, dilute, misappropriate or otherwise violate the Intellectual Property or other rights of any Person. No Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Recruiter Intellectual Property.

 

(8) There are no Actions (including any oppositions, interferences or re-examinations) settled, pending or threatened (including in the form of offers to obtain a license or inquiries regarding the need to obtain a license): (i) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by Recruiter; (ii) challenging the validity, enforceability, registrability or ownership of any Recruiter Intellectual Property or Recruiter’s rights with respect to any Recruiter Intellectual Property; or (iii) by Recruiter or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of Recruiter Intellectual Property. Recruiter is not subject to any outstanding or prospective governmental order (including any motion or petition therefor) that does or would restrict or impair the use of any Recruiter Intellectual Property.

 

(9) Recruiter Products; Proprietary Software.

 

(A) Schedule 3.1(m)(9) identifies all Recruiter’s Intellectual Property and all Intellectual Property licensed to Recruiter under a Recruiter IP Agreement and that are (i) used in the development, maintenance, use or support of such Recruiter Product, (ii) incorporated in or distributed or licensed with such Recruiter Product in any manner for use in connection with such Recruiter Product, or (iii) used to deliver, host or otherwise provide services with respect to such Recruiter Product, and in each case (except for non-customized, off-the-shelf Software that is commercially available pursuant to shrink-wrap, click-through or other standard form agreements or with an annual license fee or replacement value of less than $10,000), Recruiter IP Agreement relating to Recruiter’s use of such item.

 

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(B) All Recruiter Products are fully transferable, alienable or licensable by Recruiter without restriction and without payment of any kind to any third party. Recruiter has not transferred ownership of, or granted any exclusive license of (or exclusive right to use), or authorized the retention of any exclusive rights to use or joint ownership of, any Recruiter Product or any related Software or other Intellectual Property to any other Person. Recruiter is not subject to any Recruiter IP Agreement (other than with respect to current customers pursuant to Recruiter’s standard form of customer agreement entered into in the ordinary course of business) that includes any unperformed obligations that require Recruiter to develop any Software or other Intellectual Property, including any enhancements or customizations that are part of or used in connection with Recruiter Products (collectively, “Customizations”), and Recruiter owns and will continue to own all right, title and interest in and to all such Customizations developed by Recruiter.

 

(10) Source Code .

 

(A) Except as disclosed on Schedule 3.1(m)(10) , Recruiter is in actual possession of and has exclusive control over a complete and correct copy of the source code for all Software included in Recruiter Intellectual Property.

 

(B) Except for application programming interfaces and other interface code that is generally available to customers, Recruiter has not disclosed, delivered, licensed or otherwise made available, and does not have a duty or obligation (whether present, contingent or otherwise) to disclose, deliver, license or otherwise make available, any source code for any Recruiter Product to any escrow agent or any other Person, other than an independent contractor or consultant of Recruiter pursuant to a valid and enforceable written agreement prohibiting use or disclosure except in the performance of services for Recruiter. Without limiting the foregoing, neither the execution of this Agreement nor the consummation of any of the transactions contemplated by this Agreement will, or would reasonably be expected to, result in the release from escrow or other delivery to any Person of any source code for any Recruiter Product.

 

(C) To the Knowledge of Recruiter, as of the date hereof, there has been no unauthorized theft, reverse engineering, decompiling, disassembling or other unauthorized disclosure of or access to any source code for any Recruiter Product.

 

(11) Open Source Software .

 

(A) Schedule 3.1(m)(11)(A) sets forth a true and complete list of each item of open source software that is or has been used by or on behalf Recruiter, in the development of or that is incorporated into, combined with, linked with, distributed with, provided to any Person as a service, provided via a network as a service or application, or otherwise made available with, any Recruiter Product, and for each such item of Open Source Software, (i) the applicable Recruiter Product, and (ii) the name and version number of the applicable license agreement.

 

(B) Recruiter has complied in all material respects with all notice, attribution and other requirements of each license applicable to the Open Source Software required to be disclosed in Schedule 3.1(m)(11)(A) .

 

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(C) Recruiter has not used any Open Source Software in a manner that does, will or would reasonably be expected to, require Recruiter or any other Person to (i) disclose or distribute the source code of the Software of any Recruiter Product, (ii) license or otherwise offer or distribute any Recruiter Product on a royalty-free basis, or (iii) grant any patent license, non-assertion covenant or, rights to modify, make derivative works based on, decompile, disassemble or reverse engineer or any other rights to any Recruiter Product or Recruiter Intellectual Property.

 

(12) Conformance with Specifications; Defects; Malicious Code .

 

(A) All Recruiter Products conform in all material respects to all applicable warranties in all Contracts with customers.

 

(B) To the Knowledge of Recruiter, none of the Recruiter Products contain any bug, defect or error that materially adversely affects the functionality or performance of such Recruiter Product against its applicable specifications.

 

(C) To the Knowledge of Recruiter, none of the Recruiter Products, and no other Software used in the provision of any Recruiter Product or otherwise in the operation of its business, contains any “time bomb,” “Trojan horse,” “back door,” “worm,” virus, malware, spyware, or other device or code (“Malicious Code”) designed or intended to, or that could reasonably be expected to, (i) disrupt, disable, harm or otherwise impair the normal and authorized operation of, or provide unauthorized access to, any computer system, hardware, firmware, network or device on which any Recruiter Product or such other Software is installed, stored or used, or (ii) damage, destroy or prevent the access to or use of any data or file without the user’s consent. Recruiter has taken reasonable steps designed to prevent the introduction of Malicious Code into Recruiter Products.

 

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(13) IT Systems .

 

(A) To the Knowledge of Recruiter, Recruiter Internet technology systems are reasonably sufficient for the needs of Recruiter’s business as currently conducted, including as to capacity, scalability, and ability to process current and anticipated peak volumes in a timely manner. Recruiter Internet technology are in sufficiently good working condition to perform all information technology operations and include sufficient licensed capacity (whether in terms of authorized sites, units, users, seats or otherwise) for all Software, in each case as necessary for the conduct of Recruiter’s business as currently conducted.

 

(B) To the Knowledge of Recruiter, in the last three years, there has been no material unauthorized access, use, intrusion or breach of security, or material failure, breakdown, performance reduction or other adverse event affecting any Recruiter Systems, that has resulted in or could reasonably be expected to result in any: (i) substantial disruption of or interruption in or to the use of such Recruiter Systems or the conduct of Recruiter’s business; (ii) material loss, destruction, damage or harm of or to Recruiter or its operations, personnel, property or other assets; or (iii) material liability of any kind to Recruiter. Recruiter has taken reasonable actions, consistent with applicable industry best practices in Recruiter’s industry, to protect the integrity and security of Recruiter Systems and the data and other information stored thereon.

 

(C) Recruiter maintains commercially reasonable back-up and data recovery, disaster recovery and business continuity plans, procedures and facilities, has acted in material compliance therewith, and has tested such plans and procedures on a regular basis, and such plans and procedures have been proven effective in all material respects upon such testing.

 

(14) Recruiter has complied with all Recruiter Privacy Policies and with all applicable Laws and Contracts to which it is a party relating to: (i) the privacy of customers or users of the Recruiter Products, any website, product or service operated by or on behalf of Recruiter; and (ii) the collection, storage, hosting, disclosure, transmission, transfer, disposal, other processing or security of any Customer Data or Personal Information by Recruiter or by third parties having authorized access to the records of Recruiter, with respect to each of (i) and (ii) in all material respects. To the Knowledge of Recruiter, no claims have been asserted or, are threatened against Recruiter alleging a violation of any Person’s privacy, confidentiality or other rights under any Recruiter Privacy Policy, under any Contract, or under any Law relating to any Customer Data or Personal Information. With respect to any Customer Data and Personal Information, Recruiter has taken commercially reasonable measures (including implementing and monitoring compliance with respect to technical and physical security) designed to safeguard such data against loss and against unauthorized access, use, modification, disclosure or other misuse. To the Knowledge of Recruiter, there has been no unauthorized access to or other misuse of any Customer Data and Personal Information. Recruiter has not received any complaint from any Person (including any action letter or other inquiry from any Governmental Authority) regarding Recruiter’s collection, storage, hosting, disclosure, transmission, transfer, disposal, other processing or security of Customer Data or Personal Information. To the Knowledge of Recruiter, there have been no facts or circumstances that would require Recruiter to give notice to any customers, suppliers, consumers or other similarly situated Persons of any actual or perceived data security breaches pursuant to an applicable Law requiring notice of such a breach.

 

(n) Benefit Plans . Except as set forth on Schedule 3.1(n) , Recruiter has not adopted any employee benefit plans.

 

(1) Each such benefit plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in accordance with the terms of such benefit plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all respects with the applicable requirements of ERISA, the Code, and other applicable laws.

 

(2) All required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such benefit plan. The requirements of COBRA have been met with respect to each such benefit plan.

 

(3) All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such benefit plan that is an employee pension benefit plan under ERISA §3(2) and all contributions for any period ending on or before the Closing Date that are not yet due have been made to each such benefit plan or accrued in accordance with the past custom and practice of Recruiter. All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such benefit plan that is an employee welfare benefit plan under ERISA §3(1).

 

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(4) Each such benefit plan that is intended to meet the requirements of a “qualified plan” under Code §401(a) has received a determination from the Internal Revenue Service that such benefit plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of any such benefit plan. All such benefit plans have been timely amended for all such requirements and have been submitted to the Internal Revenue Service for a favorable determination letter within the latest applicable remedial amendment period.

 

(5) There have been no prohibited transactions with respect to any such benefit plan. To the Knowledge of Recruiter, no fiduciary has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such benefit plan. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such benefit plan (other than routine claims for benefits) is pending or, to the Knowledge of Recruiter, threatened.

 

(6) To the Knowledge of Recruiter (i) no employee benefit plan is a nonqualified deferred compensation plan within the meaning of Section 409A(d)(1) of the Code (each such employee benefit plan, a “Deferred Compensation Plan”); (ii) each Deferred Compensation Plan satisfies the requirements to avoid the consequences set forth in Section 409A(a)(1) of the Code; and (iii) Recruiter has not (a) granted to any person an interest in any Deferred Compensation Plan which interest has been or, upon the lapse of a substantial risk of forfeiture with respect to such interest, will be subject to the additional tax (including interest) imposed by Section 409A(a)(1)(B) or (b)(4)(A) of the Code, or (b) granted to any person an interest in any Deferred Compensation Plan which interest has or will be subject to the Tax imposed by Section 409A(a)(1)(B) or (b)(4)(A) of the Code, or (c) modified the terms of any Deferred Compensation Plan in a manner that could cause an interest previously granted under such plan to become subject to the additional tax (including interest) imposed by Section 409A(a)(1)(B) or (b)(4) of the Code.

 

(o) Tax Matters .

 

(1) Recruiter has filed all Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing.

 

(2) Recruiter has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(3) No claim has been made by any taxing authority in any jurisdiction where Recruiter does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

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(4) No deficiency for any material amount of Taxes which has been proposed, asserted, or assessed in writing by any taxing authority against Recruiter remains unpaid.

 

(5) There are no waivers or extensions of any statute of limitations currently in effect with respect to Taxes of Recruiter.

 

(6) Recruiter is not liable for Taxes of any other Person nor is either a party to or bound by any tax sharing agreement, tax indemnity obligation or similar agreement, arrangement or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority).

 

(7) Recruiter has not been a member of an affiliated group filing a consolidated federal Tax Return.

 

(8) No Encumbrances for Taxes exist with respect to any assets or properties of Recruiter, except for Encumbrances for Taxes not yet due.

 

(9) No material Tax Return of Recruiter is under audit or, to the Knowledge of Recruiter, examination by any taxing authority, and no written or unwritten notice of such an audit or examination has been received by Recruiter. Each material deficiency resulting from any audit or examination relating to Taxes by any taxing authority has been paid. No material issues relating to Taxes were raised in writing by the relevant taxing authority during any presently pending audit or examination, and no material issues relating to Taxes were raised in writing by the relevant taxing authority in any completed audit or examination that can reasonably be expected to recur in a later taxable period.

 

(10) Recruiter will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; (ii) installment sale or open transaction disposition made on or prior to the Closing Date; (iii) prepaid amount received on or prior to the Closing Date; or (iv) election under Section 108(i) of the Code.

 

(11) Except as disclosed on Schedule 3.1(o)(11) , Recruiter is not a party to any joint venture, partnership, or other arrangement or contract which could be treated as a partnership for federal income tax purposes.

 

(12) Recruiter is not a party to any agreement, contract, arrangement or plan that would result (taking into account the transactions contemplated by this Agreement), separately or in the aggregate, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code.

 

(13) All material elections with respect to Taxes affecting Recruiter are disclosed or attached to its Tax Returns.

 

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(14) There are no private letter rulings in respect of any tax pending between Recruiter and any taxing authority.

 

(p) Environmental, Health, and Safety Matters .

 

(1) Recruiter has been and is in compliance with all Environmental, Health, and Safety Requirements (the “EHSR”), other than such instances of non-compliance which, individually or in the aggregate, will not have a Material Adverse Effect in respect of Recruiter.

 

(2) Without limiting the generality of the foregoing, Recruiter has obtained and is in compliance with, all permits, licenses and other authorizations that are required pursuant to the EHSR for the occupation of its facilities and the operation of its business.

 

(3) Recruiter has not received any written or oral notice, report or other information regarding any actual or alleged violation of the EHSR, or any Liabilities, including any investigatory, remedial or corrective obligations, relating to any of its facilities arising under the EHSR.

 

(q) Contracts . Schedule 3.1(q) lists the following contracts and other agreements to which Recruiter is a party:

 

(1) any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $25,000 per annum;

 

(2) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year, result in a material loss to Recruiter, or involve consideration in excess of $25,000;

 

(3) any agreement concerning a partnership or joint venture;

 

(4) any material agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $25,000 or under which it has imposed a security interest on any of its assets, tangible or intangible;

 

(5) any agreement concerning confidentiality or noncompetition other than with clients and vendors in the Ordinary Course of Business;

 

(6) other than as set forth in Section 3(y) with respect to its employees, any profit sharing, unit option, unit purchase, unit appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of its current or former officers, directors, and employees;

 

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(7) any collective bargaining agreement;

 

(8) any agreement other than on an employment-at-will basis for the employment of any individual on a full-time, part-time, consulting, or other basis or providing severance benefits;

 

(9) any agreement under which it has advanced or loaned any amount to any of its officers, directors, and employees outside the Ordinary Course of Business as of the Closing;

 

(10) any agreement under which the consequences of a default or termination may have a Material Adverse Effect on Recruiter; or

 

(11) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $25,000.

 

Recruiter has delivered to Truli a correct and complete copy of each written agreement listed in Schedule 3.1(q) . With respect to each such agreement: (i) the agreement is legal, valid, binding, enforceable, and in full force and effect; (ii) Recruiter has not received written notice from the counterparty that it is in breach or default; and (iii) no party has repudiated any provision of the agreement.

 

(r) Title to Assets; Real Property .

 

(1) Recruiter has good and valid (and, in the case of owned Real Property, good and marketable fee simple) title to, or a valid leasehold interest in, all Real Property and personal property and other assets reflected in the Recruiter Financial Statements or acquired after the Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

 

(A) liens for Taxes not yet due and payable;

 

(B) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of Recruiter;

 

(C) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of Recruiter; or

 

(D) other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of Recruiter.

 

(2) Schedule 3.1(r) lists (i) the street address of each parcel of Real Property; (ii) if such property is leased or subleased by Recruiter, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to owned Real Property, Recruiter has delivered or made available to Truli true, complete and correct copies of the deeds and other instruments (as recorded) by which Recruiter acquired such Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of Recruiter and relating to the Real Property. With respect to leased Real Property, Recruiter has delivered or made available to Truli true, complete and correct copies of any leases affecting the Real Property. Recruiter is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of Recruiter’s business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. There are no Actions pending nor, to the Knowledge of Recruiter, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

 

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(3) Condition And Sufficiency of Assets . The assets of Recruiter reflected in the Balance Sheet or acquired after the date thereof (but excluding inventory sold since the date thereof in the ordinary course of business) are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such assets is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost, except for obsolete assets that are not material to the business of Recruiter. The assets of Recruiter owned, leased or licensed by Recruiter comprise all of the assets, properties and rights of every type and description, whether real or personal, tangible or intangible, used in the conduct of the business of Recruiter and are sufficient for the continued conduct of Recruiter’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of Recruiter as currently conducted.

 

(s) Guarantees . Recruiter is not a guarantor or otherwise is liable for any liability or obligation (including indebtedness) of any other Person.

 

(t) Insurance . With respect to each insurance policy of Recruiter which is presently in effect: (A) the policy is legal, valid, binding, enforceable, and in full force and effect; (B) to the Knowledge of Recruiter, neither it nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices); and (C) no party to the policy has repudiated any provision thereof.

 

(u) Financial Statements . Recruiter has delivered to Truli (i) an unaudited balance sheet as of December 31, 2017 and statement of profit and loss for the 2017 fiscal year and (ii) an unaudited balance sheet as of September 30, 2018 and statements of operations and comprehensive loss and cash flows for the nine months ended September 30, 2018 (the “Most Recent Financial Statements”). The above mentioned financial statements shall be referred to collectively as the “Recruiter Financial Statements.” Only the Most Recent Financial Statements have been prepared in accordance with GAAP. The balance sheet of Recruiter as of December 31, 2017 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of Recruiter as of September 30, 2018, is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. The Recruiter Financial Statements have been prepared based on information derived from the books and records of Recruiter and present fairly the financial condition, results of operations, changes in financial position of Recruiter, and stockholders’ equity at the dates and for the periods indicated, do not contain any untrue statements or omit to state any material fact necessary to make the Recruiter Financial Statements not misleading.

 

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(v) Absence of Certain Changes, Events and Conditions . Except as set forth on Schedule 3.1(v) , since the Balance Sheet Date:

 

(1) Recruiter has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than in the Ordinary Course of Business and except for any pre-closing distribution;

 

(2) Recruiter has not entered into any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $25,000 and outside the Ordinary Course of Business;

 

(3) No party (including Recruiter) has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $25,000 to which Recruiter is a party or by which any of them is bound;

 

(4) Recruiter has not imposed or allowed to occur any Encumbrance upon any of its material assets, tangible or intangible other than in the Ordinary Course of Business;

 

(5) Recruiter has not made any capital expenditure (or series of related capital expenditures) involving more than $25,000 and outside the Ordinary Course of Business;

 

(6) Recruiter has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) involving more than $25,000 and outside the Ordinary Course of Business;

 

(7) Except as set forth on Schedule 3.1(v)(7), Recruiter has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $25,000 singly or in the aggregate, or issued, sold, or otherwise disposed of any Common Stock or other securities, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise);

 

(8) Recruiter has not delayed or postponed the payment of accounts payable and other liabilities outside the Ordinary Course of Business;

 

(9) Recruiter has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) both involving more than $25,000 and outside the Ordinary Course of Business;

 

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(10) Recruiter has not transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Intellectual Property other than in the Ordinary Course of Business;

 

(11) There has been no change made or authorized in the Certificate of Incorporation of Recruiter;

 

(12) Recruiter has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its material property other than in the Ordinary Course of Business;

 

(13) Recruiter has not made any loan to, or entered into any other transaction with, any of its officers, directors, or employees outside the Ordinary Course of Business;

 

(14) Recruiter has not entered into or terminated any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement with any significant employees other than in the Ordinary Course of Business; or

 

(15) Recruiter has not committed to any of the foregoing.

 

(w) Undisclosed Liabilities . Except as set forth in the Recruiter Financial Statements or Schedule 3.1(w) , Recruiter has no Liabilities (absolute, accrued, contingent or otherwise) other than (i) Liabilities included in the Most Recent Financial Statements, (ii) Liabilities of a nature not required to be disclosed on a balance sheet or in the notes to financial statements prepared in accordance with GAAP, (iii) normal or recurring Liabilities in the Ordinary Course of Business consistent with past practice which, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect on Recruiter, and (iv) Liabilities under this Agreement. Notwithstanding the preceding, as of the time of Closing, all outstanding debt and payroll obligations of Recruiter shall have been converted to equity or otherwise satisfied in full.

 

(x) Customers and Suppliers.

 

(1) Schedule 3.1(x)(1) sets forth (i) each customer who has paid aggregate consideration to Recruiter for goods or services rendered in an amount greater than or equal to $10,000 for each of the two most recent fiscal years (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods. Except as provided on Schedule 3.1(x)(1) , Recruiter has not received any notice, and to its Knowledge it has no reason to believe, that any of its Material Customers has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce its relationship with Recruiter.

 

(2) Schedule 3.1(x)(2) sets forth (a) each supplier to whom Recruiter has paid consideration for goods or services rendered in an amount greater than or equal to $10,000 for each of the two most recent fiscal years (collectively, the “Material Suppliers”); and (b) the amount of purchases from each Material Supplier during such periods. Recruiter has not received any notice, and has no reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to Recruiter or to otherwise terminate or materially reduce its relationship with Recruiter.

 

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(y) Employees .

 

(1) With respect to the business of Recruiter:

 

(A) there is no collective bargaining agreement or relationship with any labor organization;

 

(B) no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition;

 

(C) to the Knowledge of Recruiter, no union organizing or decertification efforts are underway or threatened and no other question concerning representation exists;

 

(D) no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and none is underway or, to the Knowledge of Recruiter, threatened;

 

(E) there is no workmen’s compensation liability, experience or matter outside the Ordinary Course of Business; and

 

(F) there is no employment-related charge, complaint, grievance, investigation, inquiry or obligation of any kind, pending or threatened in any forum, relating to an alleged violation or breach by Recruiter (or its employees, officers or directors) of any law, regulation or contract.

 

(2) Except as set forth in Schedule 3.1(y)(2) , (A) there are no employment contracts or severance agreements with any employees of Recruiter, and (B) there are no written personnel policies, rules, or procedures applicable to employees of Recruiter. True and complete copies of all such documents have been provided to Truli prior to the date of this Agreement.

 

(3) With respect to this transaction, any notice required under any law or collective bargaining agreement has been given, and all bargaining obligations with any employee representative have been, as of the Closing Date, satisfied. Within the past five most recent fiscal years, Recruiter not has not implemented any layoff of employees that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state, or local law, regulation, or ordinance (collectively, the “WARN Act”), and no such action will be implemented without advance notification to Truli.

 

(4) No employment agreement of Recruiter contains any severance, change of control or similar type of provision which would trigger a payment by Truli following consummation of the transactions contemplated by this Agreement.

 

(z) Notes and Accounts Receivable . All notes and accounts receivable of Recruiter are reflected properly on the books and records of Recruiter, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with its terms at its recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Financial Statements (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Recruiter.

 

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(aa) Books and Records . The minute books and stock record books of Recruiter, all of which have been made available to Truli, are complete and correct in all material respects and have been maintained in electronic form in accordance with sound business practices. The minute books of Recruiter contain accurate records of all meetings, and actions taken by written consent of, the Recruiter Stockholders, the Recruiter Board and any committees of the Recruiter Board, and for at least the past five years no meeting, or action taken by written consent, of any such Recruiter Stockholders, Recruiter Board or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of Recruiter.

 

(bb) Governmental Authorizations . Recruiter has all material authorizations, consents, approvals, franchises, licenses and permits required under applicable Laws for the ownership of Recruiter’s properties and operation of its business as presently operated. No suspension, nonrenewal or cancellation of any of such permits is pending or threatened, and there is no reasonable basis therefor. Recruiter is not in conflict with, or in material default or violation of any such permits.

 

(cc) Disclosure . No statement, representation or warranty by Recruiter in this Agreement, including the Schedules hereto, contains any untrue statement of material fact, or omits to state a material fact, necessary to make such statements, representations and warranties not misleading. There is no fact known to Recruiter which has specific application to Recruiter or, so far as Recruiter can reasonably foresee, materially threatens in the future, the value of the assets, business, prospects, financial condition or results of operations of the business which has not been set forth in this Agreement or the Schedules hereto.

 

(dd) Survival . The foregoing representations and warranties shall survive the Closing Date through the General Expiration Date.

 

Article IV
REPRESENTATIONS AND WARRANTIES OF TRULI AND MERGER SUB

 

4.1 Truli and Merger Sub represent and warrant to Recruiter that the statements contained in this Article IV are true and correct as of the date hereof and will be true and correct as of the Closing Date, except as modified by the Disclosure Schedules of Truli, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or to the extent that such qualification is reasonably apparent:

 

(a) Subsidiaries . All of the direct and indirect Subsidiaries of Truli and Truli’s ownership interests therein are set forth on Schedule 4.1(a) . Truli owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Encumbrances, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

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(b) Organization and Qualification . Truli and each of the Subsidiaries of Truli is an entity duly incorporated or otherwise organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither Truli nor any Subsidiary is in violation nor default of any of the provisions of its respective Certificate or Articles of Incorporation, Bylaws or other organizational or charter documents. Each of Truli and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a Material Adverse Effect on the legality, validity or enforceability of any Transaction Document, (ii) a Material Adverse Effect on Truli and the Subsidiaries taken as a whole, or (iii) a Material Adverse Effect on Truli’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c) Authority; Board Approval . Each of Truli and Merger Sub has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by each of Truli and Merger Sub and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Truli’s Board of Directors, Merger Sub’s Board of Directors, and Merger Sub’s stockholder, and no further action is required by Truli, Merger Sub, either entity’s Board of Directors or either entity’s stockholders in connection herewith or therewith other than in making such filings with the Delaware Secretary of State as are set forth on Schedule 4.1(c) hereto (the “Truli Required Approvals”). This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by each of Truli and Merger Sub and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of Truli and Merger Sub enforceable against Truli and Merger Sub in accordance with its terms.

 

(d) No Conflicts . The execution, delivery and performance by each of Truli and Merger Sub of this Agreement, the issuance of the Merger Consideration and the consummation by it of the transactions contemplated hereby to which it is a party do not and will not: (i) conflict with or violate any provision of Truli’s or any Subsidiary’s Certificate or Articles of Incorporation, Bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Encumbrance upon any of the properties or assets of Truli or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing Truli or Subsidiary debt or otherwise) or other understanding to which Truli or any Subsidiary is a party or by which any property or asset of Truli or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Truli or a Subsidiary is subject (including federal and state securities Laws and regulations), or by which any property or asset of Truli or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

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(e) Filings, Consents and Approvals .

 

(1) Truli is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by Truli of this Agreement, other than (i) the filing of Form D with the SEC and such filings as are required to be made under applicable state securities Laws; and (ii) the filings with the Delaware Secretary of State, the SEC and the Financial Industry Regulatory Authority required to comply with the post-closing covenants under this Agreement.

 

(2) Merger Sub is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by Merger Sub of this Agreement, other than (i) the filing with the Delaware Secretary of State of Certificate of Merger pursuant to this Agreement and (ii) the approval of its stockholder.

 

(f) Issuance of the Shares . The shares of Truli Preferred Stock to be issued to the Recruiter Stockholders as Merger Consideration are duly authorized and, when issued in exchange for the Recruiter Common Stock in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances imposed by Truli.

 

(g) Certain Fees . No brokerage, finder’s fees, commissions or due diligence fees are or will be payable by Truli or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Recruiter Stockholders shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4.1(g) that may be due in connection with the transactions contemplated by this Agreement.

 

(h) Capitalization .

 

(1) The authorized capital stock of Truli and of Merger Sub, as of the date hereof is set forth on Schedule 4.1(h)(1) .

 

(2) Except as disclosed on Schedule 4.1(h)(1) , there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or equity holders agreements, or arrangements or agreements of any kind for the purchase or acquisition from Truli or any Subsidiary or any of its equity interest. Except as disclosed on Schedule 4.1(h)(1) , neither the issuance of the Merger Consideration, nor the consummation of any transactions contemplated hereby will result in a change in the price or number of any equity interests of Truli under anti-dilution or other similar provisions contained in or affecting any such securities.

 

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(3) All issued and outstanding shares of Truli’s Common Stock and Merger Sub’s common stock: (i) have been duly authorized and validly issued and are fully paid and non-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of equity interests.

 

(4) The rights, preferences, privileges and restriction of the shares of each of Truli’s and Merger Sub’s securities are as stated in their certificates of incorporation. The shares of Common Stock to be issued by Truli as Merger Consideration will be issued in compliance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, and will be free of any Encumbrances; provided , however , that such securities may be subject to restrictions on transfer under state and/or federal securities Laws as set forth herein or as otherwise required by such Laws at the time a transfer is proposed.

 

(i) Litigation . There are no Actions pending or, to the Knowledge of Truli, threatened by or against Truli or any of its Subsidiaries involving more than, individually or in the aggregate, $25,000. There is no Action, pending or, to the Knowledge of Truli, threatened against or affecting Truli before or by any Governmental Authority which (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the issuance of the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither Truli nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach of fiduciary duty. There has not been, and to the Knowledge of Truli, there is not pending or contemplated, any investigation by the SEC involving Truli or any current director or officer of Truli.

 

(j) Bad Actors . No “covered person” (as such term is defined in Regulation D) of Truli is subject to any disqualification under Rule 506(d) of Regulation D under the Securities Act.

 

(k) Compliance with Laws.

 

(1) Truli has complied, and is currently in compliance in all material respects with, all Laws having jurisdiction over or which affect its business and properties, except for any instance of non-compliance that has not had, and would not reasonably be expected to have, a Material Adverse Effect. Truli has all permits, licenses and franchises from governmental agencies required to conduct its businesses as now being conducted, except for those the absence of which has not had, or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Truli.

 

(2) Neither Truli, any Subsidiary nor any of its directors, officers, employees or agents has taken any action, directly or indirectly, that would result in a violation by such Persons of the FCPA, including, without limitation, offered, paid, promised to pay or authorized the payment of any money or offer, gift, promise to give, or authorized the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA, and Truli has conducted its business in compliance with the FCPA.

 

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(3) Neither Truli, any Subsidiary nor any of their directors, officers, employees or agents has taken any action, directly or indirectly, that would result in a violation by such persons of other United States Laws, including, without limitation, offered, paid, promised to pay or authorized the payment of any money or offer, gift, promise to give, or authorized the giving of anything of value to (A) any official or any government of the United States or any state or local instrumentality or (B) any corporation, limited liability company or other entity.

 

(l) Intellectual Property.

 

(1) Truli owns or possesses or has the right to use pursuant to a valid and enforceable written license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the business of Truli as presently conducted. Truli has provided to Recruiter a true and complete copy of each such written license, sublicense, agreement or permission.

 

(2) The Intellectual Property does not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Intellectual Property rights of third parties, and Truli has no Knowledge that facts exist which indicate a likelihood of the foregoing. Truli has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or conflict (including any claim that Truli must license or refrain from using any Intellectual Property rights of any third party). To the Knowledge of Truli, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with, any Intellectual Property rights of Truli.

 

(3) Truli has no pending patent applications or applications for registration that it has made with respect to any Intellectual Property. Schedule 4.1 (l) identifies each license, sublicense, agreement, or other permission that Truli has granted to any third party with respect to any of such Intellectual Property (together with any exceptions). Truli has delivered to Recruiter correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date) (“Intellectual Property Agreements”). Schedule 4.1(l) also identifies each registered and unregistered trademark, service mark, trade name, corporate name, URLs or Internet domain name used by Truli in connection with its business and which is not licensed from a third party. With respect to each item of Intellectual Property required to be identified in Schedule 4.1(l) :

 

(A) Truli owns and possesses all right, title, and interest in and to the item, free and clear of any Encumbrance, license, or other restriction or limitation regarding use or disclosure other than as set forth in the applicable Intellectual Property Agreement;

 

(B) The item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;

 

(C) No action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of Truli, is threatened that challenges the legality, validity, enforceability, use, or ownership by Truli; and

 

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(D) Truli has not agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect to the item.

 

(4) Schedule 4.1(l)(4) identifies each item of Intellectual Property that any third party owns and that Truli uses pursuant to license, sublicense, agreement, or permission, excluding off-the-shelf software purchased or licensed by Truli. Truli has delivered to Recruiter correct and complete copies of all such licenses, sublicenses, agreements, and permissions (each as amended to date) (each, a “Licensed Intellectual Property Agreement”). With respect to each Licensed Intellectual Property Agreement:

 

(A) The Licensed Intellectual Property Agreement is legal, valid, binding, enforceable, and in full force and effect;

 

(B) No party to the Licensed Intellectual Property Agreement is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder, which as to any such breach, default or event could have a Material Adverse Effect on Truli;

 

(C) No party to such Licensed Intellectual Property Agreement has repudiated any provision thereof;

 

(D) Except as set forth in such Licensed Intellectual Property Agreement, Truli has not received written or verbal notice or otherwise has Knowledge that the underlying item of Intellectual Property is subject to any outstanding injunction, judgment, order, decree, ruling, or charge; and

 

(E) Except as set forth on Schedule 4.1(l)(4) , Truli has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission.

 

(5) Truli has complied with and is presently in compliance with all foreign, federal, state, local, governmental (including, but not limited to, the Federal Trade Commission and State Attorneys General), administrative, or regulatory laws, regulations, guidelines, and rules applicable to any personal identifiable information.

 

(6) Each Person who participated in the creation, conception, invention or development of the Intellectual Property currently used in the business of Truli (each, a “Developer”) which is not licensed from third parties has executed one or more agreements containing industry standard confidentiality, work for hire and assignment provisions, whereby the Developer has assigned to Truli all copyrights, patent rights, Intellectual Property rights and other rights in the Intellectual Property, including all rights in the Intellectual Property that existed prior to the assignment of rights by such Person to Truli. Truli has provided to Recruiter copies of any such agreements and assignments from each such Developer (collectively, the “Developer Agreements”).

 

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(7) Each Developer has signed a perpetual non-disclosure agreement with Truli. Truli has provided, or will provide prior to Closing, to Recruiter copies of any such non-disclosure agreements from each such Person, if any.

 

(m) SEC Reports; Financial Statements .

 

(1) To its Knowledge since January 1, 2018, Truli has filed or furnished all reports, schedules, forms, statements and other documents required to be filed or furnished by it with or to the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date this representation is made including all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein are referred to as the “SEC Reports”). Truli has made available to Recruiter or its representatives, or filed and made publicly available on EDGAR no less than five days prior to the date this representation is made, true and complete copies of the SEC Reports. Except as set forth on Schedule 4.1(m) , each of the SEC Reports was filed with the SEC within the time frames prescribed by the SEC for the filing of such SEC Reports (including any extensions of such time frames permitted by Rule 12b-25 under the Exchange Act pursuant to timely filed Forms 12b-25) such that each filing was timely filed (or deemed timely filed pursuant to Rule 12b-25 under the Exchange Act) with the SEC. Except as set forth in Schedule 4.1(m) , as of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Reports. Except as set forth in Schedule 4.1(m) , none of the SEC Reports, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Since the filing of the SEC Reports, except as set forth on Schedule 4.1(m) , no event has occurred that would require an amendment or supplement to any of the SEC Reports and as to which such an amendment has not been filed and made publicly available on the SEC’s EDGAR system no less than five days prior to the date this representation is made. Except as set forth on Schedule 4.1(m) , Truli has not received any written comments from the SEC staff that have not been resolved to the satisfaction of the SEC staff. None of Truli’s Subsidiaries is required to file or furnish any forms, reports, or other documents with the SEC.

 

(2) As of their respective dates, the consolidated financial statements of Truli and its Subsidiaries included in the SEC Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, except as reflected on Schedule 4.1(m) . Such financial statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, (ii) in the case of unaudited interim statements, to the extent they may be subject to normal year-end adjustments, may exclude footnotes or may be condensed or summary statements, or (iii) as reflected on Schedule 4.1(m) ) and fairly present in all material respects the financial position of Truli as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments), except as reflected on Schedule 4.1(m). The accounting firm that expressed its opinion with respect to the consolidated financial statements included in Truli’s most recently filed annual report on Form 10-K, and reviewed the consolidated financial statements included in Truli’s most recently filed quarterly report on Form 10-Q, independent of Truli pursuant to the standards set forth in Rule 2-01 of Regulation S-X promulgated by the SEC and as required by the applicable rules and guidance from the Public Company Accounting Oversight Board (United States), and such firm was (or is, as applicable) otherwise qualified to render such opinion under applicable law and the rules and regulations of the SEC. There is no transaction, arrangement or other relationship between Truli and an unconsolidated or other off-balance-sheet entity that is required to be disclosed by Truli in its reports pursuant to the Exchange Act that has not been so disclosed in the SEC Reports prior to the date of this Agreement.

 

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(n) Absence of Certain Changes, Events or Conditions . Except as set forth on Schedule 4.1(n) , since December 31, 2017:

 

(1) Truli has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than in the Ordinary Course of Business and except for any pre-closing distribution;

 

(2) Truli has not entered into any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $25,000 and outside the Ordinary Course of Business;

 

(3) No party (including Truli) has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $25,000 to which Truli is a party or by which any of them is bound;

 

(4) Truli has not imposed or allowed to occur any Encumbrance upon any of its material assets, tangible or intangible other than in the Ordinary Course of Business;

 

(5) Truli has not made any capital expenditure (or series of related capital expenditures) involving more than $25,000 and outside the Ordinary Course of Business;

 

(6) Truli has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) involving more than $25,000 and outside the Ordinary Course of Business;

 

(7) Truli has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $25,000 singly or in the aggregate;

 

(8) Truli has not delayed or postponed the payment of accounts payable and other liabilities outside the Ordinary Course of Business;

 

(9) Truli has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) both involving more than $25,000 and outside the Ordinary Course of Business;

 

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(10) Truli has not transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Intellectual Property other than in the Ordinary Course of Business;

 

(11) There has been no change made or authorized in the Certificate of Incorporation or Bylaws of Truli;

 

(12) Truli has not issued, sold, or otherwise disposed of any Common Stock or other securities, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise);

 

(13) Truli has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its material property other than in the Ordinary Course of Business;

 

(14) Truli has not made any loan to, or entered into any other transaction with, any of its directors, officers, or employees outside the Ordinary Course of Business;

 

(15) Truli has not entered into or terminated any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement with any significant employees other than in the Ordinary Course of Business;

 

(16) Truli has not granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business;

 

(17) Truli has not adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other employee benefit plan) other than in the Ordinary Course of Business;

 

(18) Truli has not made any other material change in employment terms for any of its directors, officers, or employees outside the Ordinary Course of Business;

 

(19) Truli has not made or pledged to make any material charitable or other capital contribution outside the Ordinary Course of Business;

 

(20) there has not been any other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Truli;

 

(21) Truli has not discharged a material liability or security interest outside the Ordinary Course of Business;

 

(22) Truli has not disclosed any confidential information without a non-disclosure agreement;

 

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(23) No customer or supplier has terminated any agreement or given notice that it may or will cease to do any business or do less business with Truli; or

 

(24) Truli has not committed to any of the foregoing.

 

(o) Undisclosed Liabilities . Except as set forth in the Truli Financial Statements or Schedule 4.1(o) , Truli has no Liabilities (absolute, accrued, contingent or otherwise) other than (i) Liabilities of a nature not required to be disclosed on a balance sheet or in the notes to financial statements prepared in accordance with GAAP, (ii) normal or recurring Liabilities in the Ordinary Course of Business consistent with past practice which, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect on Truli, and (iii) Liabilities under this Agreement. In addition, Truli shall have a minimum of $575,000 in the Truli bank account(s) as of the Effective Time.

 

(p) Governmental Authorizations . Truli has all material authorizations, consents, approvals, franchises, licenses and permits required under applicable Laws for the ownership of Truli’s properties and operation of its business as presently operated. No suspension, nonrenewal or cancellation of any of such permits is pending or threatened, and there is no reasonable basis therefor. Truli is not in conflict with, or in material default or violation of any such permits.

 

(q) Disclosure . No statement, representation or warranty by Truli in this Agreement, including the Schedules hereto, contains any untrue statement of material fact, or omits to state a material fact, necessary to make such statements, representations and warranties not misleading. There is no fact known to the Knowledge of Truli which has specific application to Truli or, so far as Truli can reasonably foresee, materially threatens in the future, the value of the assets, business, prospects, financial condition or results of operations of the business which has not been set forth in this Agreement or the Schedules hereto.

 

(r) Survival . The foregoing representations and warranties shall survive the Closing Date through the General Expiration Date.

 

Article V
COVENANTS

 

5.1 Indemnification.

 

(a) Indemnification of Directors and Officers . The Certificate of Incorporation and Bylaws of Truli following the Effective Time will contain provisions with respect to exculpation and indemnification and shall not be amended, repealed or otherwise modified for a period of six years after the Effective Time in any manner that would adversely affect the rights thereunder of individuals who following the Effective Time are directors, officers, employees or agents of Truli unless such modification is required by Law. In addition, from and after the Effective Time, Truli shall, and shall cause its Subsidiaries to, advance expenses (including reasonable legal fees and expenses) incurred in the defense of any claim, action, suit, proceeding or investigation with respect to any matters subject to indemnification pursuant to this Section 5.1 pursuant to the procedures set forth, and to the fullest extent provided in the Certificate of Incorporation and Bylaws in effect immediately prior to the Effective Time or existing indemnification agreements; provided , however , that, prior to any such advance, any Indemnified Party to whom expenses are advanced shall sign a written undertaking to repay such advanced expenses as soon as reasonably practicable if it is ultimately determined that such Indemnified Party is not entitled to indemnification or advancement. Further, from and after the Effective Time, Truli shall not, and shall cause its Subsidiaries not to, settle, compromise or consent to the entry of any judgment in any proceeding or threatened action, suit, proceeding, investigation or claim, with respect to any matter arising out of, relating to, or in connection with any acts or omissions occurring or alleged to have occurred prior to the Effective Time (with respect to which indemnification could be sought by such Indemnified Party under the DGCL, the indemnification provisions in Truli’s Certificate of Incorporation and Bylaws in effect immediately prior to the Effective Time or any indemnification agreement), brought against any Indemnified Party, unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such action, suit, proceeding, investigation or claim or such Indemnified Party otherwise consents in writing and Truli shall, and shall cause its Subsidiaries to, cooperate in the defense of any such matter.

 

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(b) Indemnification for Breach of Agreement .

 

(1) Breach by Recruiter . Subject to Section 5.3, in the event that Recruiter breaches any of its representations, warranties, and covenants contained in this Agreement or in any certificate or affidavit delivered pursuant to this Agreement at or prior to the Closing, and, provided that Truli or Truli Representative makes a written claim for indemnification against Recruiter, prior to the one-year anniversary of the Closing Date (such date, the “General Expiration Date”), Recruiter agrees as a condition of all Recruiter Stockholders receiving delivery of the Merger Consideration to indemnify Truli from and against the entirety of any Adverse Consequences Truli may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, or caused by such breach by Recruiter in accordance with the procedure described in Section 5.2.

 

(2) Breach by Truli . Subject to Section 5.3, in the event Truli breaches any of its representations, warranties, and covenants contained in the Agreement or in any certificate or affidavit delivered by Truli at or prior to the Closing pursuant to this Agreement, and, provided that Recruiter makes a written claim for indemnification against Truli prior to the General Expiration Date, Truli agrees to indemnify the Recruiter Stockholders from and against the entirety of any Adverse Consequences the Recruiter Stockholders may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to or caused by the breach by Truli in accordance with the procedure described in Section 5.2.

 

(c) Truli shall enter into indemnification agreements with each officer and director of Recruiter who upon Closing will become a director and/or an executive officer of Truli in the form annexed as Exhibit C .

 

(d) In the event Truli consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Truli shall assume the obligations set forth in this Section 5.1.

 

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(e) This Section 5.1 is intended for the irrevocable benefit of, and to grant third party rights to, the Indemnified Parties and shall be binding on all successors and assigns of Truli. This Section 5.1 shall not be amended in a manner that is adverse to the Indemnified Parties (including their successors and heirs) or terminated without the consent of each of the Indemnified Parties (including their successors and heirs) affected thereby. Each of the Indemnified Parties shall be entitled to enforce the covenants contained in this Section 5.1. Truli shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified Person in enforcing the indemnity and other obligations provided in this Section 5.1. The provisions of this Section 5.1 shall survive the consummation of the Merger.

 

(f) In order to provide for just and equitable contribution, if a claim for indemnification pursuant to this Section 5.1 is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Parties shall contribute to the losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by Truli on the one hand, and the Recruiter Stockholders on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this Section 5.1(f) is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of Truli on the one hand, and the Recruiter Stockholders on the other hand, in connection with the statements, acts or omissions which resulted in such losses as well as any relevant equitable considerations. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation.

 

5.2 Third Party Claims; Procedure.

 

(a) Promptly (and in any event within five days after the service of any summons or other document) after acquiring knowledge of any third party Claim for which one or more of the Parties (the “Indemnified Party”) may seek indemnification against other Parties (the “Indemnifying Party”) pursuant to this Article V, the Indemnified Party shall give written notice thereof to the Indemnifying Party. Failure to provide notice shall not relieve the Indemnifying Party of its obligations under this Section 5.2, except to the extent that the Indemnifying Party demonstrates actual damage caused by that failure. The Indemnifying Party shall have the right to assume the defense of any Claim with counsel reasonably acceptable to the Indemnified Party upon delivery of notice to that effect to the Indemnified Party. If the Indemnifying Party, after written notice from the Indemnified Party, fails to take timely action to defend the action resulting from the Claim or otherwise respond to the Claim, the Indemnified Party shall have the right to defend the action resulting from the Claim by counsel of its own choosing, but at the cost and expense of the Indemnifying Party. The Indemnified Party shall have the right to settle or compromise any Claim against it, and recover from the Indemnifying Party any amount paid in settlement or compromise thereof, if it has given written notice thereof to the Indemnifying Party and the Indemnifying Party has failed to take timely action to defend the Claim; otherwise, the Indemnified Party shall have no right to settle or compromise any Claim. The Indemnifying Party shall have the right to settle or compromise any claim against the Indemnified Party without the consent of the Indemnified Party provided that the terms of the settlement or compromise provide for the unconditional release of the Indemnified Party and require the payment of monetary damages only.

 

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(b) Upon its receipt of any amount paid by the Indemnifying Party pursuant to this Article V, the Indemnified Party shall deliver to the Indemnifying Party such documents as it may reasonably request assigning to the Indemnifying Party any and all rights, to the extent indemnified, that the Indemnified Party may have against third parties with respect to the Claim for which indemnification is being received.

 

(c) Evan Sohn shall be appointed as representative and attorney-in-fact to act on behalf of Truli (the “Truli Representative”) with respect to any Claim asserted by Truli arising out of or relating to this Agreement and the transactions contemplated thereby and shall be authorized to initiate the Action or proceeding on behalf of Truli alleging a breach of this Agreement and seeking to reduce the Merger Consideration as a result of such breach, subject to Section 5.3, and to take any and all actions and make any decisions required or permitted to be taken by Truli Representative pursuant to this Agreement, including the exercise of the power to give and receive notices and communications; agree to, negotiate, enter into settlements and compromises of, and comply with orders with respect to claims for indemnification pursuant to this Agreement; litigate, arbitrate, resolve, settle or compromise any claim for indemnification pursuant to this Agreement; engage, employ or appoint any agents or representatives (including attorneys, accountants and consultants) to assist Truli Representative in complying with his duties and obligations; and take all actions necessary or appropriate in the good faith judgment of Truli Representative for the accomplishment of the foregoing.

 

5.3 Limitations on Indemnification.

 

(a) Notwithstanding anything to the contrary contained herein, except as provided in this Section 5.3, no Indemnified Party shall be entitled to receive an indemnification payment with respect to any Claim or Claims specified in this Article V unless the Claim, or the aggregate amount of all Claims made by the Indemnified Party hereunder, equals or exceeds $25,000 (in which case all of such Claim or Claims back to the first dollar will be recoverable).

 

(b) Any recovery on the account of any indemnification including any additional shares of Truli Common Stock issued or issuable hereunder shall be applied and allocated ratably to all Recruiter Stockholders based on the proportional Merger Consideration initially issued to the Recruiter Stockholders.

 

(c) The Parties agree that the right of each Indemnified Party to make Claims pursuant to Sections 5.1(a) and 5.1(b) shall survive the Closing until 11:59 p.m. on the date that is one year following the Closing Date (the “General Expiration Date”); provided , however , that if, at any time prior to the General Expiration Date, any Indemnified Party delivers to the Indemnifying Party a written notice asserting in good faith a Claim for recovery under Section 5.1(a) or 5.1(b), then the Claim asserted in such notice shall survive the General Expiration Date until such time as such Claim is fully and finally resolved.

 

(d) The Parties agree that the indemnification right set forth in this Agreement shall be the Parties’ sole and exclusive remedy with respect to the transactions contemplated by this Agreement, except for specific performance or other equitable remedy.

 

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(e) In the event of any reclassification, recapitalization, stock split, stock dividend (including any dividend or distribution of securities convertible into Truli Common Stock) or subdivision with respect to Truli Common Stock, any change or conversion of Truli Common Stock into other securities, any other dividend or distribution with respect to the Truli Common Stock (or if a record date with respect to any of the foregoing should occur), after the date of this Agreement, appropriate and proportionate equitable adjustments shall be made to the number of shares of Truli Common Stock issuable for indemnification purposes pursuant to this Agreement.

 

5.4 Tax Treatment. Each Party shall use its commercially reasonable efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code.

 

5.5 Consulting Agreement. At the Effective Time, Truli shall enter into a consulting agreement with Michael Woloshin, in the form agreed between Truli and such Person on or before the date hereof (the “Consulting Agreement”).

 

5.6 Officers and Directors.

 

(a) Truli shall take such action as may be necessary such that at the Effective Time, (i) the number of directors who may serve on the Truli Board shall be set at seven, and (ii) the following persons shall be appointed as the directors of Truli, each of whom shall serve until their respective successors are duly elected or appointed and qualified subject to compliance with Rule 14f-1 under the Exchange Act:

 

(1) Miles Jennings;

 

(2) Douglas Roth;

 

(3) Wallace Ruiz;

 

(4) Evan Sohn;

 

(5) Two people designated by Recruiter; and

 

(6) One person designated by Genesys pursuant to the Asset Purchase Agreement.

 

(b) Truli shall take such action as may be necessary such that at the Effective Time, (i) Miles Jennings will continue to serve as the Chief Executive Officer of Truli, and (ii) Ashley Saddul shall be appointed as the Chief Technology Officer of Truli to serve until their respective successors are duly appointed and qualified.

 

5.7 Confidentiality. From and after the Closing, the Parties shall, and shall cause their Affiliates to, hold, and shall use their reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning Truli and Recruiter, except to the extent that any Party can show that such information (a) is generally available to and known by the public through no fault of the other Party, any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by any Party, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any Party or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such Party shall promptly notify the other Party in writing and shall disclose only that portion of such information which such Party is advised by its counsel in writing is legally required to be disclosed, provided that such Party shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

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5.8 Capital Raise. At the Effective Time, Truli shall close on that certain Securities Purchase Agreement, dated as of the date of this Agreement, between Truli and the other parties thereto, and shall have received $575,000 in gross proceeds thereunder.

 

5.9 Truli Preferred Stock. Prior to the Closing, the holders of Truli Series A, Series A-1, Series C and Series C-1 preferred stock shall have converted the Series A, Series A-1, Series C and Series C-1 preferred stock into a single series of Truli preferred stock. Truli shall provide Recruiter with a complete, fully diluted capitalization table, that must be prepared on behalf of the board of directors of Truli, and accepted by Recruiter in writing prior to the Effective Date.

 

5.10   Recruiter Debt. Prior to, or simultaneously with, the Closing, Recruiter shall have repaid and/or converted into Recruiter common stock or cancelled all outstanding convertible debt of Recruiter as of the date of this Agreement, as detailed on Schedule 5.10 hereto. Debt accrued in the ordinary course of business being assumed pursuant to this Agreement is included on balance sheets and financial statements in the Digital Dropbox. Following the Effective Time, Recruiter shall have the indebtedness reflected on Schedule 5.10A .

 

5.11   Amendment of Truli Certificate of Incorporation. Truli shall amend its Certificate of Incorporation and effect both a name change of Truli and a reverse stock split of Truli Common Stock at the ratio ranging from one-for-15 to one-for-50 at the discretion of Truli Board as promptly as possible by gaining the necessary corporate and stockholder approval and filing on or before 30 days following the Closing a Schedule 14C with the SEC in accordance with applicable Laws to effect such reverse split on or before August 31, 2019.

 

5.12   Amendment of the License Agreement. Prior to, or simultaneously with, the Closing, Truli and Recruiter shall have executed an Amendment to the License Agreement to terminate Truli’s obligation to make milestone payments to Recruiter pursuant to Sections 4.2 through 4.4 of the License Agreement.

 

Article VI
CLOSING CONDITIONS

 

6.1 Conditions to Recruiter’s Obligations to Close. The obligations of Recruiter under this Agreement are, at the option of Recruiter, subject to the satisfaction of the following conditions on or before the Effective Time:

 

(a) Deliverables of Truli . At or prior to Closing, Truli shall deliver the following to the other Parties to this Agreement:

 

(1) This Agreement, duly executed by Truli and Merger Sub.

 

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(2) The Merger Consideration.

 

(3) A copy of the fully executed Securities Purchase Agreement described in Section 5.8, above, and all ancillary agreements and deliveries required under each such Securities Purchase Agreement.

 

(4) A copy of the Amendment to the License Agreement described in Section 5.12, above, duly executed by Truli and VocaWorks.

 

(5) A Secretary’s Certificate of Truli in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing certifying an attached copy of resolutions of the Truli Board approving the Agreement, Securities Purchase Agreement, and all related transactions and filings, and appointing the persons designated in Section 5.6 above as the officers and directors of Truli.

 

(6) The Consulting Agreement described in Section 5.5, above, duly executed by Truli.

 

(7) An Officer’s Certificate of Truli in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing, certifying the receipt of gross proceeds of at least an aggregate of $575,000 under the Securities Purchase Agreement.

 

(8) A Secretary’s Certificate in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing, certifying an attached copy of resolutions of the Merger Sub Board of Directors approving the Agreement, Securities Purchase Agreement, and all related transactions and filings.

 

(9) A Secretary’s Certificate in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing, certifying an attached copy of resolutions of the stockholder of Merger Sub approving the Agreement and all related transactions and filings.

 

(10) Each Recruiter Stockholder shall have executed and delivered an investment letter in customary form.

 

(11) Written evidence that the closing of the transactions contemplated in the Asset Purchase Agreement shall take place simultaneously with the Closing.

 

(b) Officer’s Certificate in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing, certifying that there has been no Material Adverse Effect with respect to Truli or Merger Sub.

 

(c) Officer’s Certificate in form and substance reasonably satisfactory to Recruiter and its counsel, dated as of the Closing, certifying that the representations and warranties of Truli and Merger Sub are true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and Truli and Merger Sub have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Truli and Merger Sub at or prior to the Closing Date.

 

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(d) A capitalization table, showing Truli Common Stock ownership and the fully diluted ownership and conversion of all outstanding shares of Series A, Series A-1, Series C and Series C-1 preferred stock as of the Effective Date.

 

(e) Truli and Merger Sub shall have obtained all Truli Required Approvals.

 

(f) Truli shall have filed the Certificate of Designations for the Truli Series E Preferred Stock in the form of Exhibit D .

 

(g) Truli shall have filed the Certificate of Elimination for the Truli Series B Preferred Stock in the form of Exhibit E .

 

6.2 Conditions to Truli’s Obligations to Close. The obligations of Truli and Merger Sub under this Agreement are, at the option of Truli and Merger Sub, subject to the satisfaction of the following conditions on or before the Effective Time:

 

(a) Deliverables of Recruiter . At or prior to Closing, Recruiter shall deliver the following to the other Parties to this Agreement:

 

(1) This Agreement, duly executed by Recruiter.

 

(2) Officer’s Certificate in form and substance reasonably satisfactory to Truli and its counsel, dated as of the Closing, certifying that except as otherwise disclosed herein, all Recruiter debt has been resolved in accordance with Section 5.10.

 

(3) A Secretary’s Certificate in form and substance reasonably satisfactory to Truli and its counsel, dated as of the Closing, certifying (i) an attached copy of resolutions of the Recruiter Board approving the Agreement, and all related transactions and filings and, where applicable, nominating the persons designated in Section 5.6 above as officers of Truli, and (ii) an attached copy of resolutions of Recruiter Stockholders approving the Agreement, and all related transactions and filings and, where applicable, nominating the persons designated in Section 5.6 above as directors of Truli.

 

(4) A copy of the Amendment to the License Agreement described in Section 5.12, above, duly executed by Recruiter.

 

(5) Evidence of the filing of the Certificate of Merger with the Delaware Secretary of State merging Merger Sub into Recruiter.

 

(6) An Officer’s Certificate of Recruiter in form and substance reasonably satisfactory to Truli and its counsel, dated as of the Closing, certifying the conversion or elimination of all Recruiter debt.

 

(7) Each Recruiter Stockholder shall have executed and delivered an investment letter in customary form.

 

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(b) Officer’s Certificate in form and substance reasonably satisfactory to Truli and its counsel, dated as of the Closing, certifying that there has been no Material Adverse Effect with respect to Recruiter.

 

(c) Officer’s Certificate in form and substance reasonably satisfactory to Truli and its counsel, dated as of the Closing, certifying that the representations and warranties of Recruiter shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and Recruiter shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by each in this Agreement to be performed, satisfied or complied with by Recruiter and at or prior to the Closing Date.

 

(d) Recruiter shall have obtained all Recruiter Required Approvals.

 

(e) The fair market value of the shares of common stock of Freedom Leaf Inc. (“Freedom Leaf Stock”), beneficially owned by Michael Woloshin, or an affiliated entity, shall be at least $200,000 based on the closing price of Freedom Leaf Stock on OTCQB on the trading day immediately preceding the Closing. As a point of clarification, the Freedom Leaf Stock is being transferred as consideration for an investment through a private placement into the Company and is not a part of the Merger Consideration.

 

Article VII
MISCELLANEOUS

 

7.1 Amendment and Modification. Subject to applicable Law, this Agreement may be amended, modified or supplemented only by written agreement of each Party at any time prior to the Effective Time.

 

7.2 Waiver of Compliance; Consents. Any failure of Truli or Recruiter to comply with any obligation, covenant, agreement or condition herein may be waived only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any Party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 7.2.

 

7.3 Survival; Investigations. The respective representations and warranties of Truli, and Recruiter contained herein or in any certificates or other documents delivered prior to or at the Closing shall survive the Closing Date through the General Expiration Date. The Parties acknowledge that they have had an opportunity to conduct due diligence and investigation in connection with this Agreement and the transactions contemplated thereby, and: (i) in no event shall Recruiter and Woloshin have any liability to Truli with respect to a breach of their respective representations and warranties under this Agreement to the extent that Truli had Knowledge of such breach as of the Closing Date; and (ii) in no event shall Truli have any liability to Recruiter or Recruiter Stockholders with respect to a breach of its representations and warranties under this Agreement to the extent that Recruiter had Knowledge of such breach as of the Closing Date.

 

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7.4 Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted next business day delivery, or by email followed by overnight next business day delivery as follows:

 

  to Truli: Truli Technologies, Inc.
    4 Oakland Street
    Bristol CT 06010
    Attention: Evan Sohn
    Email: _______________
     
  with a copy to: Nason, Yeager, Gerson, Harris & Fumero, P.A.
    3001 PGA Boulevard, Suite 305
    Palm Beach Gardens, Florida 33410
    Attention: Michael D. Harris, Esq.
    Email: ________________________
     
  to Truli Representative: Evan Sohn
    _____________________
    ______________________
    Email: ________________
     
  to Recruiter: _____________________________
    _____________________________
    _____________________________
    Attention: _____________________
    Email: _______________________
     
  with a copy to: Robinson Brog Leinwand Greene
  Genovese & Gluck P.C.
    875 Third Avenue
    New York, New York 10022
    Attention: Stephanie Salvatore, Esq.
    Email: _______________________

 

or to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted to, or from, as the case may be, the date of delivery.

 

7.5 Assignment; Third Party Beneficiaries. Neither this Agreement nor any right, interest or obligation hereunder shall be assigned by any of the Parties hereto without the prior written consent of the other Parties. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or remedies upon any Person other than the Parties hereto.

 

7.6 Governing Law. This Agreement and all Actions arising out of or in connection with this Agreement, including any Actions alleging any Party committed any tort, shall be governed by and construed in accordance with the Laws of the State of New York without regard to the conflicts of law provisions of the State of New York or of any other state.

 

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7.7 Dispute Resolution. Each Party to this Agreement irrevocably agrees that any legal Action or proceeding arising out of or relating to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other party or its successors or assigns may be brought and determined exclusively in the state and federal courts in New York County, New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts in New York County, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such Action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for 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 to limit in any way any right to serve process in any other manner permitted by law. If any Party shall commence an Action or proceeding to enforce any provisions of the Transaction Documents, the prevailing Party in such Action or proceeding shall be reimbursed by the non-prevailing Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or proceeding.

 

7.8 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same document. Signatures by facsimile or other generally accepted electronic means (e.g., portable document format (“PDF”)) shall be deemed original signatures.

 

7.9 Severability. In case any one or more of the provisions contained in this Agreement should be finally determined to be invalid, illegal or unenforceable in any respect against a Party hereto, it shall be adjusted if possible to effect the intent of the Parties. In any event, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability shall only apply as to such Party in the specific jurisdiction where such final determination shall have been made.

 

7.10   Interpretation. The Article and Section headings contained in this Agreement are solely for the purpose of reference and shall not in any way affect the meaning or interpretation of this Agreement. The word “including” shall be deemed to mean “including without limitation.”

 

7.11 Entire Agreement. This Agreement and the Disclosure Schedules embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no representations, promises, warranties, covenants, or undertakings, other than those expressly set forth or referred to herein and therein.

 

7.12 Rules of Construction. Each Party to this Agreement has been represented by counsel during the preparation and execution of this Agreement, and therefore waives any rule of construction that would construe ambiguities against the Party drafting the Agreement.

 

[ Signature Pages Follow ]

 

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of Merger to be signed by their respective duly authorized officers as of the date first above written.

 

  Truli Technologies, Inc.
     
  By: /s/ Evan Sohn
    Name: Evan Sohn
    Title: Consultant

 

  Truli Acquisition Co., Inc.
     
  By: /s/ Miles Jennings
    Name: Miles Jennings
    Title: President

 

  Recruiter.com, Inc.
     
  By: /s/ Michael Woloshin
    Name: Michael Woloshin
    Title: CEO, President

 

[Signature Page to Agreement and Plan of Merger]

 

 

 

 

EXHIBIT LIST

 

Exhibit A – Form of Certificate of Merger;

 

Exhibit B – Form of Amended and Restated Certificate of Incorporation of Surviving Corporation;

 

Exhibit C – Form of Indemnification Agreement;

 

Exhibit D – Certificate of Designations for the Truli Series E Preferred Stock;

 

Exhibit E – Certificate of Elimination for the Truli Series B Preferred Stock.

 

 

 

 

Exhibit A

Form of Certificate of Merger

 

Pursuant to Section 251 of the Delaware General Corporation Law, the undersigned corporation executed the following Certificate of Merger:

 

FIRST : The name of each constituent corporation is Recruiter.com, Inc., a Delaware corporation, and Truli Acquisition Co., Inc., a Delaware corporation.

 

SECOND : The Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations.

 

THIRD : The name of the surviving corporation is Recruiter.com, Inc., a Delaware corporation.

 

FOURTH : The Amended and Restated Certificate of Incorporation of the surviving corporation, as in effect immediately prior to the merger, shall be the Certificate of Incorporation of the surviving corporation.

 

FIFTH : The merger is to become effective at 11:59 p.m. EST on March __, 2019.

 

SIXTH : The Agreement of Merger is on file at 4 Oakland Street Bristol CT 06010, the principal place of business of the surviving corporation.

 

SEVENTH : A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.

 

IN WITNESS WHEREOF , the surviving corporation has caused this certificate to be signed by an authorized officer, the __ of March, 2019.

 

  RECRUITER.COM, INC.
   
  By:
  Name: Michael Woloshin
  Title: CEO, President

 

A-1

 

 

Exhibit B

Form of Amended and Restated Certificate of Incorporation

of Surviving Corporation

 

1. The name of the corporation is Recruiter.com, Inc. (the “Company”).

 

2. The address of its registered office in the State of Delaware, County of New Castle, is 3411 Silverside Road, Tatnall Building #104, Wilmington, DE 19810. The name of its registered agent at such address is Corporate Creations Network Inc.

 

3. The nature of the business or purposes to be conducted or promoted are to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

 

4. The total number of shares of stock of all classes and series the Company shall have authority to issue is 100 shares of common stock, par value of $0.01 per share.

 

5. The powers of the incorporator shall terminate upon the election of the Company’s directors.

 

6. The Company is to have perpetual existence. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, amend, alter or repeal the bylaws of the Company.

 

7. Elections of directors need not be by written ballot unless the bylaws of the Company shall so provide.

 

Meetings of stockholders may be held within or without the State of Delaware as the bylaws may provide. The books of the Company may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the Company.

 

8. The Company reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. Any amendments may be passed by a majority of the outstanding voting power and not by a majority of each class or series of outstanding capital stock.

 

9. No director of this Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Nothing in this paragraph shall serve to eliminate or limit the liability of a director (a) for any breach of the director’s duty of loyalty to this Company or its stockholders, (b) for acts or omissions not in good faith or which involves intentional misconduct or a knowing violation of law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

 

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Any repeal or modification of the foregoing paragraph by the stockholders of the Company shall not adversely affect any right or protection of a director of the Company existing at the time of such repeal or modification.

 

10. (a) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding (except as provided in Section 10 (f)) whether civil, criminal or administrative, (a “Proceeding”), or is contacted by any governmental or regulatory body in connection with any investigation or inquiry (an “Investigation”), by reason of the fact that he or she is or was a director or executive officer (as such term is utilized pursuant to interpretations under Section 16 of the Securities Exchange Act of 1934) of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (an “Indemnitee”), whether the basis of such Proceeding or Investigation is alleged action in an official capacity or in any other capacity as set forth above shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Company the expenses incurred in defending any such Proceeding in advance of its final disposition (an “Advancement of Expenses”); provided , however , that an Advancement of Expenses shall be made only upon delivery to the Company of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (an “Undertaking”).

 

(b) If a claim under paragraph (a) of this Section is not paid in full by the Company within 60 days after a written claim has been received by the Company, except in the case of a claim for an Advancement of Expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In

 

(i) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that, and

 

(ii) any suit by the Company to recover an Advancement of Expenses pursuant to the terms of an Undertaking the Company shall be entitled to recover such expenses upon a final adjudication that,

 

the Indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Company (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Company (including its board of directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right hereunder, or by the Company to recover an Advancement of Expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified or to such Advancement of Expenses under this Section or otherwise shall be on the Company.

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(c) The rights to indemnification and to the Advancement of Expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

 

(d) The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

 

(e) The Company may, to the extent authorized from time to time by the board of directors, grant rights to indemnification and to the Advancement of Expenses, to any employee or agent of the Company to the fullest extent of the provisions of this Section with respect to the indemnification and Advancement of Expenses of directors, and executive officers of the Company.

 

(f) Notwithstanding the indemnification provided for by this Section 10, the Company’s bylaws, or any written agreement, such indemnity shall not include any expenses incurred by such Indemnitees relating to or arising from any Proceeding in which the Company asserts a direct claim against an Indemnitee, or an Indemnitee asserts a direct claim against the Company, whether such claim is termed a complaint, counterclaim, crossclaim, third-party complaint or otherwise.

 

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I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the Delaware General Corporation Law, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this _____ day of ________, 2019.

 

   
  Miles Jennings, CEO

 

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Exhibit C

Form of Indemnification Agreement

 

This Indemnification Agreement (the “Agreement”) is entered into as of _________ ___, 2019 by and between Truli Technologies, Inc., a Delaware corporation (the “Company”), and ______________ (the “Indemnitee”) and replaces any and all Indemnification Agreements previously entered into between the parties. This Agreement shall be considered effective as of __________ ___, 2019.

 

WHEREAS, competent and experienced persons are becoming increasingly reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through liability insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to the corporation;

WHEREAS, the board of directors of the Company (the “Board”) has determined that the inability to attract and retain such persons is detrimental to the best interests of the Company’s shareholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, Section 145 of the Delaware General Corporation Law (the “DGCL”) empowers the Company to indemnify its officers, directors, employees and agents by agreement and to indemnify persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, the Indemnitee is willing to serve as an officer and director of the Company on the condition that he be so indemnified.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Indemnitee do hereby covenant and agree as follows:

 

1. Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

 

(a) “Beneficial Owner” has the meaning given to the term “beneficial owner” in Rule 13d-3 under the Exchange Act, as defined below.

 

(b) “Change of Control” means the occurrence after the date of this Agreement of any of the following events:

 

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the Company's then outstanding voting securities unless the change in relative Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

 

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(ii) the consummation of a reorganization, merger or consolidation, unless immediately following such reorganization, merger or consolidation, all of the Beneficial Owners of the voting securities of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the entity resulting from such transaction;

 

(iii) during any period of two consecutive years, not including any period prior to the execution of this Agreement, individuals who at the beginning of such period constituted the Board (including for this purpose any new directors whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board; or

 

(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets.

 

(c) “Claim” means:

 

(i) any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; or

 

(ii) any inquiry, hearing or investigation that the Indemnitee determines might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism.

 

(d) “Delaware Court” shall have the meaning ascribed to it in Section 9(e) below.

 

(e) “Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by the Indemnitee.

 

(f) “Expenses” means any and all expenses, including attorneys’ and experts’ fees, court costs, transcript costs, travel expenses, duplicating, printing and binding costs, telephone charges, and all other costs and expenses incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 5 only, Expenses incurred by the Indemnitee in connection with the interpretation, enforcement or defense of the Indemnitee's rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by the Indemnitee or the amount of judgments or fines against the Indemnitee. The parties agree that for the purposes of any advancement of Expenses for which the Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit or declaration of the Indemnitee's counsel as being reasonable shall be presumed conclusively to be reasonable.

 

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(g) “Exchange Act” means the Securities Exchange Act of 1934.

 

(h) “Expense Advance” means any payment of Expenses advanced to the Indemnitee by the Company pursuant to Section 4 or Section 5 hereof.

 

(i) “Indemnifiable Event” means any event or occurrence, whether occurring before, on or after the date of this Agreement, related to the fact that the Indemnitee is or was a director, officer, employee or agent of the Company or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise (collectively with the Company, “Enterprise”) or by reason of an action or inaction by the Indemnitee in any such capacity (whether or not serving in such capacity at the time any the Loss is incurred for which indemnification can be provided under this Agreement).

 

(j) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently performs, nor in the past five years has performed, services for either: (i) the Company or the Indemnitee (other than in connection with matters concerning the Indemnitee under this Agreement or of other indemnitees under similar agreements) or (ii) any other party to the Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement.

 

(k) “Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim.

 

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(l) “Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity and includes the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act.

 

(m) “Standard of Conduct Determination” shall have the meaning ascribed to it in Section 9(b) below.

 

2. Agreement to Serve . The Indemnitee agrees to serve as an officer and director of the Company for so long as the Indemnitee is duly elected or appointed or until the Indemnitee tenders his resignation. This Agreement shall not be deemed an employment agreement between the Company (or any of its subsidiaries or Enterprise) and the Indemnitee. This Agreement shall continue in force after the Indemnitee has ceased to serve as an officer or director of the Company or, at the request of the Company, of any of its subsidiaries or Enterprise, as provided in Section 12 hereof.

 

3. Indemnification . Subject to Section 9 and Section 10 of this Agreement, the Company shall indemnify the Indemnitee, to the fullest extent permitted by the laws of the State of Delaware in effect on the date hereof, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Losses if the Indemnitee was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason of or arising in part out of an Indemnifiable Event, including, without limitation, Claims brought by or in the right of the Company, Claims brought by third parties, and Claims in which the Indemnitee is solely a witness.

 

4. Advancement of Expenses . The Indemnitee shall have the right to advancement by the Company, prior to the final disposition of any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any Claim arising out of an Indemnifiable Event. The Indemnitee’s right to such advancement is not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within 20 days after any request by the Indemnitee, the Company shall, in accordance with such request, (a) pay such Expenses on behalf of the Indemnitee, (b) advance to the Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse the Indemnitee for such Expenses. If requested by a law firm or other professional representing the Indemnitee, the Company shall pay such firm(s) a reasonable retainer. In connection with any request for Expense Advances, the Indemnitee shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize the attorney-client privilege. In connection with any request for Expense Advances, the Indemnitee shall execute and deliver to the Company an undertaking (which shall be accepted without reference to the Indemnitee’s ability to repay the Expense Advances) to repay any amounts paid, advanced, or reimbursed by the Company for such Expenses to the extent that it is ultimately determined, following the final disposition of such Claim, that the Indemnitee is not entitled to indemnification hereunder. The Indemnitee's obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.

 

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5. Indemnification for Expenses in Enforcing Rights . To the fullest extent allowable under applicable law, the Company shall also indemnify against, and, if requested by the Indemnitee, shall advance to the Indemnitee subject to and in accordance with Section 4, any Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any action or proceeding by the Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims relating to Indemnifiable Events, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company regardless of whether the Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. However, in the event that the Indemnitee is ultimately determined not to be entitled to such indemnification or insurance recovery, as the case may be, then all amounts advanced under this Section 5 shall be repaid. The Indemnitee shall be required to reimburse the Company in the event that a final judicial determination is made that such action brought by the Indemnitee was frivolous or not made in good faith.

 

6. Partial Indemnity . If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of any Losses in respect of a Claim related to an Indemnifiable Event but not for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

 

7. Notification and Defense of Claims .

 

(a) Notification of Claims . The Indemnitee shall notify the Company in writing as soon as practicable of any Claim which could relate to an Indemnifiable Event or for which the Indemnitee could seek Expense Advances, including a brief description (based upon information then available to the Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by the Indemnitee to timely notify the Company hereunder shall not relieve the Company from any liability hereunder except to the extent that the Company has been damaged by such delay. The Company shall not be liable to indemnify the Indemnitee under this Agreement with respect to any judicial award in a Claim related to an Indemnifiable Event if the Company was not given a reasonable and timely opportunity to participate at its expense in the defense of such action. If at the time of the receipt of such notice, the Company has directors' and officers' liability insurance in effect under which coverage for Claims related to Indemnifiable Events is potentially available, the Company shall give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies.

 

(b) Defense of Claims . The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event at its own expense and, except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of any such Claim, the Company shall not be liable to the Indemnitee under this Agreement or otherwise for any Expenses subsequently directly incurred by the Indemnitee in connection with the Indemnitee’s defense of such Claim other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ its own legal counsel in such Claim, but all Expenses related to such counsel incurred after notice from the Company of its assumption of the defense shall be at the Indemnitee’s own expense; provided , however , that if (i) the Indemnitee’s employment of its own legal counsel has been authorized by the Company, (ii) the Company’s counsel has reasonably determined that there may be a conflict of interest between the Indemnitee and the Company in the defense of such Claim, (iii) after a Change in Control, the Indemnitee’s employment of its own counsel has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Claim, then the Indemnitee shall be entitled to retain its own separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any such Claim) and all Expenses related to such separate counsel shall be borne by the Company.

 

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8. Procedure upon Application for Indemnification . In order to obtain indemnification pursuant to this Agreement, the Indemnitee shall submit to the Company a written request therefor, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification following the final disposition of the Claim, provided that documentation and information need not be so provided to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. Indemnification shall be made insofar as the Company determines the Indemnitee is entitled to indemnification in accordance with Section 9 below.

 

9. Determination of Right to Indemnification .

 

(a) Mandatory Indemnification; Indemnification as a Witness.

 

(i) To the extent that the Indemnitee shall have been successful on the merits or otherwise in defense of any Claim relating to an Indemnifiable Event or any portion thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, the Indemnitee shall be indemnified against all Losses relating to such Claim in accordance with Section 3 to the fullest extent allowable by law, and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

(ii) To the extent that the Indemnitee’s involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve as a witness, and not as a party, the Indemnitee shall be indemnified against all Losses incurred in connection therewith to the fullest extent allowable by law and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

(b) Standard of Conduct . To the extent that the provisions of Section 9(a) are inapplicable to a Claim related to an Indemnifiable Event that shall have been finally disposed of, any determination of whether the Indemnitee has satisfied any applicable standard of conduct under Delaware law that is a legally required condition to indemnification of the Indemnitee hereunder against Losses relating to such Claim and any determination that Expense Advances must be repaid to the Company (a “Standard of Conduct Determination”) shall be made as follows:

 

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(i) if no Change in Control has occurred, (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and

 

(ii) if a Change in Control shall have occurred, (A) if the Indemnitee so requests in writing, by a majority vote of the Disinterested Directors, even if less than a quorum of the Board or (B) otherwise, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.

 

The Company shall indemnify and hold harmless the Indemnitee against and, if requested by the Indemnitee, shall reimburse the Indemnitee for, or advance to the Indemnitee, within 20 days of such request, any and all Expenses incurred by the Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.

 

(c) Making the Standard of Conduct Determination . The Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 9(b) to be made as promptly as practicable. If the person or persons designated to make the Standard of Conduct Determination Section 9(b) shall not have made a determination within 30 days after the later of (A) receipt by the Company of a written request from the Indemnitee for indemnification pursuant to Section 8 (the date of such receipt being the “Notification Date”) and (B) the selection of an Independent Counsel, if such determination is to be made by Independent Counsel, then the Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days if the person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating thereto. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of the Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of any Claim. For avoidance of doubt, this does not affect the Indemnitee’s right to Expense Advances under Section 4.

 

(d) Payment of Indemnification . If, in regard to any Losses:

 

(i) The Indemnitee shall be entitled to indemnification pursuant to Section 9(a);

 

(ii) no Standard Conduct Determination is legally required as a condition to indemnification of the Indemnitee hereunder; or

 

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(iii) the Indemnitee has been determined or deemed pursuant to Section 9(b) or Section 9(c) have satisfied the Standard of Conduct Determination,

 

then the Company shall pay to the Indemnitee, within five days after the later of (A) the Notification Date or (B) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) is satisfied, an amount equal to such Losses.

 

(e) Selection of Independent Counsel for Standard of Conduct Determination . If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(i)(C), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to the Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(ii)(B), the Independent Counsel shall be selected by the Indemnitee, and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, the Indemnitee or the Company, as applicable, may, within five days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “Independent Counsel” in Section 1(i), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit; and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences, the introductory clause of this sentence and numbered clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 9(e) to make the Standard of Conduct Determination shall have been selected within 20 days after the Company gives its initial notice pursuant to the first sentence of this Section 9(e) or the Indemnitee gives its initial notice pursuant to the second sentence of this Section 9(e) as the case may be, either the Company or the Indemnitee may petition the Court of Chancery of the State of Delaware (“Delaware Court”) to resolve any objection which shall have been made by the Company or the Indemnitee to the other's selection of Independent Counsel and/or to appoint as Independent Counsel a person to be selected by the Court or such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 9(b).

 

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(f) Presumptions and Defenses.

 

(i) The Indemnitee's Entitlement to Indemnification . In making any Standard of Conduct Determination, the person or persons making such determination shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the Company shall have the burden of proof to overcome that presumption and establish that the Indemnitee is not so entitled. Any Standard of Conduct Determination that is adverse to the Indemnitee may be challenged by the Indemnitee in the Delaware Court. No determination by the Company (including by its directors or any Independent Counsel) that the Indemnitee has not satisfied any applicable standard of conduct may be used as a defense to any legal proceedings brought by the Indemnitee to secure indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that the Indemnitee has not met any applicable standard of conduct.

 

(ii) Reliance as a Safe Harbor . For purposes of this Agreement, and without creating any presumption as to a lack of good faith if the following circumstances do not exist, the Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company if the Indemnitee's actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to the Indemnitee by the officers or employees of the Company or any of its subsidiaries in the course of their duties, or by committees of the Board or by any other Person (including legal counsel, accountants and financial advisors) as to matters the Indemnitee reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the right to indemnity hereunder.

 

(iii) No Other Presumptions . For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that the Indemnitee did not meet any applicable standard of conduct or have any particular belief, or that indemnification hereunder is otherwise not permitted.

 

(iv) Defense to Indemnification and Burden of Proof . It shall be a defense to any action brought by the Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Losses incurred in defending against a Claim related to an Indemnifiable Event in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any related Standard of Conduct Determination, the burden of proving such a defense or that the Indemnitee did not satisfy the applicable standard of conduct shall be on the Company.

 

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(v) Resolution of Claims . The Company acknowledges that a settlement or other disposition short of final judgment may be successful on the merits or otherwise for purposes of Section 9(a)(i) if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Claim relating to an Indemnifiable Event to which the Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such action, claim or proceeding with our without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise for purposes of Section 9(a)(i). The Company shall have the burden of proof to overcome this presumption.

 

10. Exclusions from Indemnification . Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated to:

 

(a) indemnify or advance funds to the Indemnitee for Expenses or Losses with respect to proceedings initiated by the Indemnitee, including any proceedings against the Company or its directors, officers, employees or other indemnitees and not by way of defense, except:

 

(i) proceedings referenced in Section 5 above (unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous); or

 

(ii) where the Company has joined in or the Board has consented to the initiation of such proceedings.

 

(b) indemnify the Indemnitee if a final decision by a court of competent jurisdiction determines that such indemnification is prohibited by applicable law.

 

(c) indemnify the Indemnitee for the disgorgement of profits arising from the purchase or sale by the Indemnitee of securities of the Company in violation of Section 16(b) of the Exchange Act, or any similar successor statute.

 

(d) indemnify or advance funds to the Indemnitee for the Indemnitee’s reimbursement to the Company of any bonus or other incentive-based or equity-based compensation previously received by the Indemnitee or payment of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase or sale by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act).

 

C- 10

 

 

11. Settlement of Claims . The Company shall not be liable to the Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Claim related to an Indemnifiable Event effected without the Company's prior written consent, which shall not be unreasonably withheld; provided , however , that if a Change in Control has occurred, the Company shall be liable for indemnification of the Indemnitee for amounts paid in settlement if an Independent Counsel has approved the settlement. The Company shall not settle any Claim related to an Indemnifiable Event in any manner that would impose any Losses on the Indemnitee or subject the Indemnitee to any equitable relief without the Indemnitee's prior written consent.

 

12. Duration . All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is an officer or director of the Company (or is serving at the request of the Company as a director, officer, employee, member, trustee or agent of another Enterprise) and shall continue thereafter (i) so long as the Indemnitee may be subject to any possible Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (ii) throughout the pendency of any proceeding (including any rights of appeal thereto) commenced by the Indemnitee to enforce or interpret his or her rights under this Agreement, even if, in either case, he or she may have ceased to serve in such capacity at the time of any such Claim or proceeding.

 

13. Non-Exclusivity . The rights of the Indemnitee hereunder will be in addition to any other rights the Indemnitee may have under the Certificate of Incorporation or Bylaws, the General Corporation Law of the State of Delaware, any other contract or otherwise (collectively, “Other Indemnity Provisions”); provided , however , that (a) to the extent that the Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, the Indemnitee will be deemed to have such greater right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, the Indemnitee will be deemed to have such greater right hereunder.

 

14. Liability Insurance . For the duration of the Indemnitee's service as an officer or director for the Company, and thereafter for so long as the Indemnitee shall be subject to any pending Claim relating to an Indemnifiable Event, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to obtain or continue to maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance.. In all policies of directors’ and officers’ liability insurance maintained by the Company, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if the Indemnitee is a director, or of the Company’s officers, if the Indemnitee is an officer (and not a director) by such policy. Upon request, the Company will provide to the Indemnitee copies of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.

 

15. No Duplication of Payments . The Company shall not be liable under this Agreement to make any payment to the Indemnitee in respect of any Losses to the extent the Indemnitee has otherwise received payment under any insurance policy, the Certificate of Incorporation and Bylaws, Other Indemnity Provisions or otherwise of the amounts otherwise indemnifiable by the Company hereunder.

 

C- 11

 

 

16. Subrogation . In the event of payment to the Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee. The Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

 

17. Amendments . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

 

18. Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and substances satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

19. Severability . The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

20. Notices . All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar overnight next business day delivery, or by email delivery followed by overnight next business day delivery, as follows:

 

C- 12

 

 

  To the Company: Truli Technologies, Inc.
    4 Oakland Street
    Bristol CT 06010
    Attn: Miles Jennings
    Title: Chief Executive Officer
    Email: ____________________

 

  With a Copy to: Nason Yeager Gerson Harris & Fumero, P.A.
    3001 PGA Boulevard, Suite 305
    Palm Beach Gardens, FL 33410
    Attention: Michael D. Harris, Esq.
    Email: ______________________
     
  To the Indemnitee: To the address set forth on the signature page hereto.

 

or to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted from the date of transmission.

 

21. Governing Law and Forum . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts of laws. The Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the state or federal courts located in the State of Delaware and not in any other state or federal court in the United States, (b) consent to submit to the exclusive jurisdiction of the such courts for purposes of any action or proceeding arising out of or in connection with this Agreement.

 

22. Headings . The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.

 

23. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement.

 

[signature page follows]

 

C- 13

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

  Truli Technologies, Inc.
     
  By:                                                     
    Mile Jennings, Chief Executive Officer

 

  THE INDEMNITEE
   
   
     
  Address:                                        
   

 

C- 14

 

 

Exhibit D

Certificate of Designations for the Truli Series E Preferred Stock

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series E Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series E Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series E Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series E Convertible Preferred Stock” (the “ Series E Preferred Stock ”). The authorized number of shares of the Series E Preferred Stock shall be 775,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary, each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of 79.48% of the Second Liquidation Preference; and (b) a pro rata portion of 56.60% of the value of any cash or other property to be distributed to the Holders, the Series D Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

D- 1

 

 

Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

D- 2

 

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series E Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series E Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Reserved .

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

D- 3

 

 

(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series E Preferred Stock.

 

Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series E Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

D- 4

 

 

Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series E Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Closing Date ” shall mean the date of first issuance of the shares of Series E Preferred Stock.

 

(b) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

(c) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(d) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(e) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

D- 5

 

 

(f) “ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(g) “ First Liquidation Preference ” means the first $2,000,000 of cash and/or other property received by the Corporation pursuant to the liquidation, dissolution or winding up of the business of the Corporation, and which is payable to the Series D Stockholders.

 

(h) “ Holder ” or “ Holders ” means a holder of Series E Preferred Stock.

 

(i) “ Merger Agreement ” means that certain Agreement and Plan of Merger dated as of the Closing Date by and among the Corporation and the additional parties thereto.

 

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

 

(k) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(l) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(m) “ Remaining Liquidation Amount ” means $9,000,000.

 

(n) “ Required Holders ” means Holders representing a majority of the outstanding Preferred Stock.

 

(o) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Holders and the Series D Stockholders after the Series F Stockholders have received the First Liquidation Preference.

 

(p) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and certain investors party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

(q) “ Series D Stockholders ” means a Person holding Series D Convertible Preferred Stock of the Corporation.

 

(r) “ Series F Stockholders ” means a Person holding Series F Convertible Preferred Stock of the Corporation.

 

(s) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

D- 6

 

 

(t) “ Transaction Documents ” means this Amended and Restated Certificate of Designation, the Merger Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Merger Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(u) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designation and such breach remains uncured for a period of five (5) consecutive Trading Days (the “ Cure Period ”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

D- 7

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this __ day of March 2019.

 

  By:
  Name: Miles Jennings
  Title: Chief Executive Officer

 

D- 8

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designation, Preferences and Rights of the Series E Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series E Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:

 

 

Aggregate number of Preferred Shares to be converted

 

 

Aggregate Stated Value of such Preferred Shares to be converted:

 

 

Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:

 

 

AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:

 

 

Please confirm the following information:

 

Conversion Price:

 

 

Number of shares of Common Stock to be issued:

 

 

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:  
   
   

 

D- 9

 

 

Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:

 

DTC Participant:

 

 

DTC Number:

 

 

Account Number:

 

 

 

Date: _____________ __,  
   
   
Name of Registered Holder  

 

By:    
  Name:  
  Title:  
   
  Tax ID:____________________________  
  Facsimile:_____________________ _____  
   
E-mail Address:  

 

D- 10

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

 

  TRULI TECHNOLOGIES, INC.
     
  By:
    Name:
    Title:

 

D- 11

 

 

Exhibit E

Certificate of Elimination for the Truli Series B Preferred Stock

 

(Pursuant to Section 151 (g) of the Delaware General Corporation Law)

 

TRULI TECHNOLOGIES, INC. (the “Company”), a corporation organized and existing under the laws of the State of Delaware, certifies as follows:

 

FIRST: By a Certificate of Designations filed with the Secretary of State of the State of Delaware on October 24, 2017 (the “Series B Certificate of Designations”), the Company authorized the issuance of a series of preferred stock consisting of 1,875,000 shares, par value $0.0001 per share, designated as the Series B Convertible Preferred Stock (the “Series B Preferred Stock”), and established the designations and the voting and other powers, preferences and the relative participating, optional or other rights and the qualifications, limitations and restrictions thereof.

 

SECOND: None of the authorized shares of Series B Preferred Stock are outstanding and none will be issued.

 

THIRD: Pursuant to Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”) and the authority vested in the Board of Directors by the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), the Board of Directors adopted the following resolutions approving the elimination of the Series B Preferred Stock, as set forth herein:

 

NOW THEREFORE LET IT BE:

 

RESOLVED, that none of the authorized shares of Series B Preferred Stock are outstanding and none will be issued; it is further

 

RESOLVED, that the Chief Executive Officer of the Company is authorized and directed in accordance with Section 151(g) of DGCL, to file with the Secretary of State of Delaware a certificate of elimination, eliminating from the Certificate of Incorporation of the Company all matters set forth in the Series B Certificate of Designations with respect to the Series B Preferred Stock and to pay any fees related to such filing.

 

FOURTH: Pursuant to the provisions of Section 151(g) of the DGCL, all references to Series B Preferred Stock in the Certificate of Incorporation, are hereby eliminated, and the authorized shares of Series B Preferred Stock are hereby returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series.

 

[Signature Page Follows]

 

E- 1

 

 

IN WITNESS WHEREOF, the Company has caused this Certificate of Elimination to be executed by its duly authorized officer as of this ___ day of March, 2019.

 

 
  By: Miles Jennings, Chief Executive Officer

 

 

 

E-2

 

Exhibit 2.2

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “ Agreement ”), dated as of March 31, 2019, is entered into by and among Truli Technologies, Inc., a Delaware corporation (“ Truli ”), Recruiter.com Recruiting Solutions LLC, a Delaware limited liability company (“ Newco ”), and Genesys Talent LLC, a Texas limited liability company (“ Genesys ”);

 

WHEREAS, Genesys is engaged in operating an online recruitment platform for employers and job seeking candidates providing staffing and talent acquisition solutions (the “ Business ”);

 

WHEREAS, Genesys is also engaged in the business of developing Intellectual Property related to and used by the Business commonly known as Opptly, which business is specifically excluded from the definition of Business as it is being retained by Genesys and licensed to Newco as set forth herein;

 

WHEREAS, Genesys wishes to sell, and Truli wishes to purchase and assume from Genesys, certain specified assets and liabilities, of the Business, subject to the terms and conditions set forth herein;

 

WHEREAS, the Manager of Genesys has (a) determined that this Agreement and the transactions contemplated hereby are in the best interests of Genesys and its Members, and (b) approved and declared advisable this Agreement and the transactions contemplated hereby;

 

WHEREAS, the Members of Genesys have executed a written consent of the Members approving this Agreement and the transactions contemplated hereby;

 

WHEREAS, the board of directors of Truli and the manager of Newco, respectively, have approved this Agreement and the transactions contemplated hereby.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Article I
DEFINITIONS

 

In addition to words and terms defined elsewhere in this Agreement, the following words and terms have the meanings specified or referred to in this Article I:

 

Accounts Receivable ” has the meaning set forth in Section 2.01(a).

 

Action ” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

 

Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

 

 

 

Agreement ” has the meaning set forth in the preamble.

 

Ancillary Documents ” means the Management Services Agreement, the License Agreement, the Lease, and the other agreements, instruments and documents required to be delivered at the Closing.

 

Assigned Contracts ” has the meaning set forth in Section 2.01(c).

 

Assignment and Assumption Agreement ” has the meaning set forth in Section 2.06(a)(vi).

 

Assumed Liabilities ” has the meaning set forth in Section 2.03.

 

Balance Sheet ” has the meaning set forth in Section 3.04.

 

Balance Sheet Date ” has the meaning set forth in Section 3.04.

 

Basket ” has the meaning set forth in Section 8.04(a).

 

Benefit Plan ” means each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, membership or profits interest, change in control, retention, severance, vacation, paid time off, welfare, fringe-benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by Genesys for the benefit of any current or former employee, officer, manager, retiree, independent contractor or consultant of Genesys or any spouse or dependent of such individual, or under which Genesys or any of its ERISA Affiliates has or may have any Liability, or with respect to which Newco or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise.

 

Books and Records ” has the meaning set forth in Section 2.01(m).

 

Business ” has the meaning set forth in the recitals.

 

Business Day ” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.

 

Capitalization Table ” means a table reflecting the issued and outstanding Truli Common Stock, preferred stock, options and warrants of Truli on a fully diluted basis, and each owner thereof, immediately after the Closing Date.

 

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Closing ” has the meaning set forth in Section 2.05.

 

Closing Date ” has the meaning set forth in Section 2.05.

 

COD ” means the Certificate of Designation for the Series F, a copy of which is attached as Exhibit A.

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Competing Business ” has the meaning set forth in Section 5.06(a).

 

Contracts ” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral used in the Business.

 

Control Person ” means any manager of Genesys or any Person or entity who owns or has the power to vote more than 33% of the voting power of Genesys.

 

Current Assets ” means accounts receivable, inventory and prepaid expenses, but excluding (a) the portion of any prepaid expense of which Newco will not receive the benefit following the Closing, (b) deferred Tax assets, and (c) receivables from any of Genesys’s Affiliates, or Genesys’s employees, officers, or members and any of their respective Affiliates, determined in accordance with Genesys’s books consistently applied.

 

Data Protection Programs ” means (a) all Laws, (b) all self-regulatory programs in which Genesys has enrolled, (c) the Payment Card Industry Data Security Standard, and (d) all Privacy Policies, in each case relating to privacy, data protection, and data security.

 

Direct Claim ” has the meaning set forth in Section 8.05(c).

 

Disclosure Schedules ” means the Disclosure Schedules delivered by Genesys and Truli concurrently with the execution and delivery of this Agreement, as they may be amended in accordance with Section 5.09.

 

Dollars ” or “ $ ” means the lawful currency of the United States.

 

EHSR ” shall have the meaning contained in Section 3.19

 

Employees ” has the meaning set forth in Section 3.20(a).

 

Encumbrance ” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

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ERISA Affiliate ” means all employers (whether or not incorporated) that would be treated together with Genesys or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code.

 

Exchange Act ” means the Securities Exchange Act of 1934.

 

Excluded Assets ” has the meaning set forth in Section 2.02.

 

Excluded Contracts ” has the meaning set forth in Section 2.02(a)).

 

Excluded Liabilities ” has the meaning set forth in Section 2.04.

 

FCPA ” has the meaning set forth in Section 3.18(c).

 

Financial Statements ” has the meaning set forth in Section 3.04.

 

Fraud ” means an intentional misrepresentation of material existing fact made with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage.  

 

Fundamental Representations ” has the meaning set forth in Section 8.01.

 

GAAP ” means United States generally accepted accounting principles in effect from time to time.

 

Genesys ” has the meaning set forth in the preamble.

 

Genesys Indemnitees ” has the meaning set forth in Section 8.03.

 

Genesys Intellectual Property ” means all Intellectual Property that is owned or purported to be owned by Genesys, and that is used in or necessary for the conduct of the Business as currently conducted.

 

Genesys IP Agreements ” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating to Intellectual Property to which Genesys is a party, beneficiary or otherwise bound.

 

Genesys IP Registrations ” means all Genesys Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and registered copyrights, issued and reissued patents and pending applications for any of the foregoing.

 

Genesys Membership Units ” means the membership units representing an equity interest in Genesys.

 

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Genesys Organizational Documents” has the meaning set forth in Section 3.03.

 

Genesys Product ” means all proprietary Software products and related services of Genesys that are currently being, or at any time in the past five years have been, offered, licensed, sold, distributed, hosted, maintained, supported or otherwise provided or made available by or on behalf of Genesys.

 

Government Contracts ” has the meaning set forth in Section 3.07(a)(viii).

 

Governmental Authority ” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulatory organization (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

 

Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

Indebtedness ” means, without duplication and with respect to Genesys, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services, (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by Genesys on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g); provided.

 

Indemnified Party ” has the meaning set forth in Section 8.05.

 

Indemnifying Party ” has the meaning set forth in Section 8.05.

 

Insurance Policies ” has the meaning set forth in Section 3.16.

 

“Insurance Premium” has the meaning set forth in Section 5.17.

 

Intellectual Property ” means all intellectual property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); and (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

 

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Investor ” has the meaning set forth in Section 3.25.

 

Knowledge ” means, (a) when used with respect to Genesys, the actual knowledge of Rick Roberts, after due inquiry, and the knowledge that each specified Person would reasonably be expected to obtain in the course of diligently performing his or her duties for Genesys, and (b) when used with respect to Truli or Newco, the actual knowledge of Miles Jennings after due inquiry, and the knowledge that each specified Person would reasonably be expected to obtain in the course of diligently performing his or her duties for Truli.

 

Law ” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

 

Lease ” means the Lease Agreement between Genesys and Newco a copy of which is attached as Exhibit B.

 

Liabilities ” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

License Agreement ” that certain License Agreement by and among Genesys, Truli, and Newco a copy of which is attached as Exhibit C.

 

Losses ” means losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs or expenses, including reasonable attorneys’ and experts’ fees and disbursements.

 

Malicious Code ” has the meaning set forth in Section 3.14(C).

 

Management Services Agreement ” means the Management Services Agreement by and between Icon Information Services, LP and Newco attached as Exhibit D.

 

Material Adverse Effect ” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, prospects, condition (financial or otherwise), or assets of Genesys, Newco, or Truli, as the case may be, or (b) the ability of Genesys, Newco, or Truli to consummate the transactions contemplated hereby on a timely basis; except any event, occurrence, fact, condition or change related to (1) any change in the United States economy or securities or financial markets in general, or any change in general national economic or financial conditions; (2) any change that generally affects the market for the Business in which Genesys operates; (3) the execution, delivery or performance of this Agreement, or the announcement thereof; (4) any changes in Laws, accounting rules or in the authoritative interpretations thereof or in regulatory or interpretative guidance related thereto, or (5) the failure of a Party to meet any of its internal projections, forecasts, or revenue or earnings predictions; provided , that the matters set forth in clauses (1), (2) and (4) above shall not be excluded if they have a disproportionate impact on one Party relative to the other companies in the in which such Party operates.

 

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Material Contracts ” has the meaning set forth in Section 3.07(a).

 

Member ” means any Person who holds an ownership interest in Genesys.

 

Newco ” has the meaning set forth in the preamble.

 

OFAC ” has the meaning set forth in Section 3.18(d).

 

OFAC Prohibited Party ” has the meaning set forth in Section 3.18(d).

 

Operating Agreement ” means the Company Agreement of Genesys.

 

Outside Date ” has the meaning set forth in Section 9.01(d)(ii).

 

Party ” and “ Parties ” means each party to this Agreement or collectively all the parties to this Agreement.

 

Permits ” means all permits, licenses, certifications, accreditations, franchises, approvals, consents, authorizations, registrations, certificates, grants, directives, guidelines, policies, requirements, concessions, variances, exemptions, identification numbers, and similar rights obtained, or required to be obtained, from any Governmental Authority.

 

Permitted Encumbrances ” has the meaning set forth in Section 3.08(a).

 

Person ” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

Personal Information ” means information pertaining to an individual that is regulated by one or more information privacy or security Laws.

 

Personnel ” has the meaning set forth in Section 3.20(a).

 

Privacy Policies ” means all published privacy policies and internal privacy policies and guidelines maintained or published by Genesys.

 

Property Tax Returns ” has the meaning set forth in Section 6.01(a).

 

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Purchase Price ” means an amount of Series F convertible into 200 million shares of Truli’s common stock, subject to adjustment for stock dividends, stock splits, combinations (or reverse splits) or other similar events.

 

Purchase Price Allocation Schedule ” has the meaning set forth in Section 2.08.

 

Purchased Assets ” has the meaning set forth in Section 2.01.

 

Real Property ” means the real property owned, leased or subleased by Genesys, together with all buildings, structures and facilities located thereon.

 

Representative ” means, with respect to any Person, any and all directors, managers, officers, employees, consultants, financial advisors, counsel, accountants, and other agents of such Person.

 

Requisite Genesys Vote ” has the meaning set forth in Section 3.02(b).

 

Restricted Period ” has the meaning set forth in Section 5.06(a).

 

SEC ” means the Securities and Exchange Commission.

 

SEC Reports ” has the meaning set forth in Section 4.07.

 

Securities Act ” has the meaning set forth in Section 3.25(a).

 

Series F ” shall mean Truli’s new Convertible Series F Preferred Stock, issued to Genesys in connection with the sale of the Business.

 

Truli ” has the meaning set forth in the preamble.

 

Truli Balance Sheet ” has the meaning set forth in Section 4.09.

 

Truli Common Stock ” means the common stock, par value $0.0001 per share, of Truli.

 

Truli Indemnitees ” has the meaning set forth in Section 8.02.

 

Software ” means any and all computer software and code, including all new versions, updates, revisions, improvements and modifications thereof, whether in source code, object code, or executable code format, including systems software, application software (including mobile apps), firmware, middleware, programming tools, scripts, routines, interfaces, architecture, schematics, records, libraries, and data, databases and data collections, and all related specifications and documentation, including developer notes, comments and annotations, user manuals and training materials relating to any of the foregoing.

 

Tax Return ” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

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Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties imposed by a Governmental Authority.

 

Third Party Claim ” has the meaning set forth in Section 8.05(a).

 

Transaction Expenses ” means all fees and expenses incurred by Genesys and any Affiliate at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the other transactions contemplated hereby and thereby.

 

Union ” has the meaning set forth in Section 3.20(b).

 

WARN Act ” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

 

Written Consent ” has the meaning set forth in Section 3.02(b).

 

Article II
PURCHASE AND SALE

 

Section 2.01 Purchase and Sale of Assets . Subject to the terms and conditions set forth herein, at the Closing, Genesys shall sell, assign, transfer, convey and deliver to Newco, free and clear of any Encumbrances other than Permitted Encumbrances, all of Genesys’s right, title and interest in, to and under the following related to the Business (collectively, the “ Purchased Assets ”):

 

(a) all accounts or notes receivable held by Genesys of the Business, and any liability, security, claim, remedy or other right directly related to any of the Purchased Assets (“ Accounts Receivable ”), as listed on Schedule 2.01(a) ;

 

(b) all sales and client relationships including customer lists and third-party lists regarding such relationships;

 

(c) all Contracts set forth on Schedule 2.01(c) (the “ Assigned Contracts ”);

 

(d) all Genesys Intellectual Property listed on Schedule 2.01(d) ;

 

(e) all social media accounts;

 

(f) all partnership and vendor agreements as needed to maintain the Business;

 

(g) all training and operating manuals;

 

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(h) all Permits which are held by Genesys and required for the conduct of the Business as currently conducted or for the ownership and use of the Purchased Assets, including, without limitation, those listed on Schedule 3.18(b) , but solely to the extent assignable;

 

(i) all rights to any Actions of any nature available to or being pursued by Genesys to the extent related to the Business, the Purchased Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise, but specifically excluding any Action against Genesys or its Affiliates;

 

(j) all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees relating to any of the Purchased Assets;

 

(k) all of Genesys’s rights under warranties, indemnities and all similar rights against third parties, other than Affiliates, to the extent related to any Purchased Assets;

 

(l) all insurance benefits, including rights and proceeds, arising from or relating to the Business, the Purchased Assets or the Assumed Liabilities, but solely to the extent assignable;

 

(m) originals, or where not available, copies, of all books and records, including, but not limited to, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material (“ Books and Records ”); and

 

(n) all goodwill and the going concern value relating to the Purchased Assets;

 

(o) the computers, telephones, equipment and related hard assets listed on Schedule 2.01(o).

 

Section 2.02 Excluded Assets . Notwithstanding the foregoing, the Purchased Assets shall not include any other assets of Genesys, including, without limitation, the following (collectively, the “ Excluded Assets ”):

 

(a) Contracts, including Genesys IP Agreements, that are not Assigned Contracts (the “ Excluded Contracts ”);

 

(b) organizational documents, Tax Returns, books of account or other records having to do with the organization of Genesys;

 

(c) all Benefit Plans and assets attributable thereto;

 

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(d) the assets and goodwill relating to and associated with Genesys’ Opptly (such businesses, as set forth on Schedule 2.02(d) , the “ Opptly Business ”);

 

(e) all cash owned by Genesys;

 

(f) all accounts receivable not directly related to the Purchased Assets, including without limitation any accounts receivable related to the Opptly Business;

 

(g) the rights to the names “Genesys”, “Genesys Talent” and variations thereof; and

 

(h) the rights which accrue or will accrue to Genesys under this Agreement and the Ancillary Documents.

 

Section 2.03 Assumed Liabilities . Subject to the terms and conditions set forth herein, Truli and Newco shall assume and agree to pay, perform and discharge only the following Liabilities of Genesys (collectively, the “ Assumed Liabilities ”), and no other Liabilities:

 

(a) all Liabilities relating to the Purchased Assets, including, without limitation, the obligation of Genesys to pay a portion of any Accounts Receivable to an employer of record, other service provider, or a candidate, or the obligation to pay a share of revenue from such Account Receivable to a management service provider ;

 

(b) all Liabilities in respect of the Assigned Contracts but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Genesys on or prior to the Closing; and

 

(c) those Liabilities of Genesys set forth on Schedule 2.03(c) .

 

Section 2.04 Excluded Liabilities . Notwithstanding the provisions of Section 2.04 or any other provision in this Agreement to the contrary, Newco shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Genesys or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “ Excluded Liabilities ”). Genesys shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

 

(a) any Transaction Expenses or other Liabilities of Genesys arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the Ancillary Documents and the underlying transactions;

 

(b) any Liabilities relating to or arising out of the Excluded Assets;

 

(c) any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date; and

 

(d) any other liabilities not relating to the Purchased Assets.

 

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Section 2.05 Closing . Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at 1:00 p.m., Eastern standard time, no later than three Business Days after the last of the conditions to Closing set forth in Article VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), by electronic or other exchange of documents, or at such other time or on such other date as Genesys and Truli may mutually agree upon in writing (the day on which the Closing takes place being the “ Closing Date ”).

 

Section 2.06 Closing Deliverables .

 

(a) At or prior to the Closing, Genesys shall deliver to Newco the following:

 

(i) a certificate, dated the Closing Date and signed by a duly authorized officer of Genesys, certifying that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied;

 

(ii) a certificate, dated the Closing Date and signed by a duly authorized officer of Genesys, certifying that (A) attached thereto are true and complete copies of all resolutions and consents set forth in Section 3.02 authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and (B) all such resolutions and consents are in full force and effect and are all the resolutions and consents adopted in connection with the transactions contemplated hereby and thereby;

 

(iii) a certificate, dated the Closing Date and signed by a duly authorized officer of Genesys, certifying the names and signatures of the authorized, managers, or members of Genesys authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder;

 

(iv) a certificate of existence with respect to Genesys from the Secretary of State of Texas;

 

(v) a bill of sale, in customary form satisfactory to the parties hereto, duly executed by Genesys, transferring the tangible personal property included in the Purchased Assets to Newco;

 

(vi) an assignment and assumption agreement, in customary form satisfactory to the parties hereto (the “ Assignment and Assumption Agreement ”), duly executed by Genesys, effecting the assignment to and assumption by Newco of the Assumed Liabilities;

 

(vii) the Ancillary Documents; and

 

(viii) such other documents or instruments as Truli or Newco reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

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(b) At the Closing, Truli and Newco, as applicable, shall deliver to Genesys (and/or to such other Persons as Genesys may direct) the following:

 

(i) a certificate representing the Purchase Price;

 

(ii) a certificate, dated the Closing Date and signed by a duly authorized officer of Truli and Newco, certifying that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied;

 

(iii) a certificate, dated the Closing Date and signed by the Secretary or an Assistant Secretary (or equivalent officer) of Truli and Newco, certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Truli and manager of Newco authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions and written authorizations are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby;

 

(iv) a certificate, dated the Closing Date and signed by the Secretary or an Assistant Secretary (or equivalent officer) of Truli and Newco, certifying the names and signatures of the officers or manager, as applicable, of Truli and Newco authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder;

 

(v) the Assignment and Assumption Agreement, duly executed by Newco;

 

(vi) the Capitalization Table;

 

(vii) the Ancillary Documents; and

 

(viii) such other documents or instruments as Genesys reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

Section 2.07 Purchase Price . The aggregate purchase price for the Purchased Assets shall be the Purchase Price plus the assumption of the Assumed Liabilities.

 

Section 2.08 Allocation of Purchase Price . The Parties agree that the Purchase Price and all other amounts constituting consideration within the meaning of Section 1060 of the Code paid by Newco to Genesys, shall be allocated among the Assets in the manner as set forth on Schedule 2.08 , which has been prepared in a manner consistent with Section 1060 of the Code and the regulations promulgated thereunder (the “ Purchase Price Allocation ”). Genesys and Newco agree to (i) be bound by the Purchase Price Allocation, (ii) act in accordance with the Purchase Price Allocation in the preparation and the filing of all Tax Returns (including, without limitation, filing Form 8594 with their United States federal income Tax Return for the taxable year that includes the Closing Date) and in the course of any Tax audit, Tax review or Tax litigation relating thereto, and (iii) take no position inconsistent with the Purchase Price Allocation for income Tax purposes.

 

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Section 2.09 Third Party Consents . To the extent that Genesys’s rights under any Contract constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Newco without the consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Genesys, at its expense, shall use its commercially reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Newco’s rights under the Purchased Asset in question so that Newco would not in effect acquire the benefit of all such rights, Genesys, to the maximum extent permitted by law and such Purchased Asset, shall act after the Closing as Newco’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and such Purchased Asset, with Newco in any other reasonable arrangement designed to provide such benefits to Newco. Notwithstanding any provision in this Section 2.10 to the contrary, Newco shall not be deemed to have waived its rights under Section 7.02(f) hereof unless and until Newco either provides written waivers thereof or elects to proceed to consummate the transactions contemplated by this Agreement at Closing.

 

Article III

REPRESENTATIONS AND WARRANTIES OF GENESYS

 

Genesys represents and warrants to Newco and Truli that the statements contained in this Article III are true and correct as of the date hereof and will be true and correct on the Closing Date.

 

Section 3.01 Organization and Qualification of Genesys . Genesys is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Texas and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Schedule 3.01 sets forth each jurisdiction in which Genesys is licensed or qualified to do business, and Genesys is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.

 

Section 3.02 Authority; Member Approval

 

(a) Genesys has full power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Genesys of this Agreement and any Ancillary Document to which it is a party and the consummation by Genesys of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Genesys and no other proceedings on the part of Genesys are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the other transactions contemplated hereby. This Agreement has been duly executed and delivered by Genesys, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of Genesys enforceable against Genesys in accordance with its terms. When each Ancillary Document to which Genesys is or will be a party has been duly executed and delivered by Genesys (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Genesys enforceable against it in accordance with its terms.

 

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(b) Genesys, pursuant to written consents of the Members (the “ Written Consent ”) and, as of the date hereof, not subsequently rescinded or modified in any way, has, as of the date hereof, obtained the affirmative vote or consent of the Members required under the Operating Agreement (“ Requisite Genesys Vote ”) approving this Agreement and the transactions contemplated by this Agreement, in accordance with the Texas Business Organizations Code. Genesys has delivered to Newco and Truli a copy of the Written Consent approving this Agreement and the transactions contemplated hereby. Other than the Written Consent, no other consents of the Members are required in order to authorize and approve this Agreement and the transactions contemplated hereby, and no Member has any dissenters’ or appraisal rights with respect to the transactions contemplated by this Agreement.

 

Section 3.03 No Conflicts; Consents . Except as set forth in Schedule 3.03 , the execution, delivery and performance by Genesys of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or result in a violation or breach of, or default under, any provision of the certificate of formation, Operating Agreement, or other organizational documents of Genesys (“ Genesys Organizational Documents ”); (ii) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Genesys, the Business or the Purchased Assets; (iii) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which Genesys is a party or by which Genesys or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (iv) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on the Purchased Assets. Except as set forth in Schedule 3.03 , no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Genesys in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 3.04 Financial Statements . Complete copies of Genesys’s unaudited financial statements consisting of the balance sheet of Genesys at December 31, 2017 and the nine months ended September 30, 2018 and the related statements of income and retained earnings, members’ equity and cash flow for the year and nine months then ended (the “ Financial Statements ”) are set forth on Schedule 3.04. The Financial Statements are based on the books and records of Genesys and, to the Knowledge of Genesys, (a) have been (and will be) prepared in accordance with past practices, applied on a consistent basis throughout the period involved, and (b) fairly present in all material respects the financial position of Genesys as of the respective dates they were prepared and the results of the operations of Genesys for the periods indicated. The balance sheet of Genesys as of September 30, 2018 is referred to herein as the “ Balance Sheet ” and the date thereof as the “ Balance Sheet Date ”.

 

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Section 3.05 Undisclosed Liabilities . Genesys has no Liabilities, except (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount, or (c) those set forth in Schedule 3.05 .

 

Section 3.06 Absence of Certain Changes, Events and Conditions . Except as set forth in Schedule 3.06 , since the Balance Sheet Date, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to Genesys’ Business, any:

 

(a) event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(b) amendment of the certificate of formation, Operating Agreement, or other organizational documents of Genesys;

 

(c) material change in any method of accounting or accounting practice of Genesys, except as required by GAAP or as disclosed in the notes to the Financial Statements;

 

(d) material change in Genesys’s cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

 

(e) entry into any Contract that would constitute a Material Contract except with Truli;

 

(f) transfer, assignment, sale, or other disposition of any of the Purchased Assets shown or reflected in the Balance Sheet or cancellation of any debts, entitlements or claims, or amendment, termination or waiver of any rights constituting Purchased Assets, other than to Truli or an Affiliate thereof;

 

(g) transfer, assignment, or grant of any license or sublicense of any material rights under or with respect to any Genesys Intellectual Property or Genesys IP Agreements;

 

(h) material damage, destruction, or loss of any Purchased Assets (whether or not covered by insurance);

 

(i) capital investment in, or any loan to, any other Person;

 

(j) acceleration, termination, material modification to, or cancellation of any Material Contract or Permit;

 

(k) material capital expenditures which would constitute an Assumed Liability;

 

(l) imposition of any Encumbrance upon any of the Purchased Assets, other than any Permitted Encumbrance;

 

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(m) (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension, or other compensation or benefits in respect of its current or former employees, officers, directors, managers, independent contractors, or consultants, other than as provided for in any written agreements or required by applicable Law or in the ordinary course of business and consistent with past practice, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $10,000 per annum, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, manager, independent contractor, or consultant;

 

(n) hiring or promoting any person as or to (as the case may be) an officer or hiring or promoting any employee below officer except to fill a vacancy in the ordinary course of business;

 

(o) adoption, modification, or termination of any: (i) employment, severance, retention, or other agreement with any current or former employee, officer, director, manager, independent contractor, or consultant, except in the ordinary course of business and consistent with past practice, or (ii) Benefit Plan collective bargaining or other agreement with a union, in each case whether written or oral;

 

(p) loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its members or current or former managers, officers, and employees (other than the payment of compensation to employees in the ordinary course of business and consistent with past practice);

 

(q) abandonment or discontinuance of the Business;

 

(r) adoption of any plan of merger, consolidation, reorganization, liquidation, or dissolution, or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

 

(s) purchase, lease or other acquisition of the right to own, use, or lease any property or assets, except for purchases of inventory or supplies in the ordinary course of business consistent with past practice; or

 

(t) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

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Section 3.07 Material Contracts .

 

(a) Schedule 3.07(a) lists each of the following Contracts of Genesys affecting the Business (x) by which any of the Purchased Assets are bound or affected or (y) to which Genesys is a party or by which it is bound in connection with the Business or the Purchased Assets (such Contracts, together with all Contracts concerning the occupancy, management, or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Schedule 3.08(b) and all Genesys IP Agreements set forth in Schedule 3.10(b) , being “ Material Contracts ”):

 

(i) each Contract of Genesys involving aggregate consideration in excess of $10,000 and which, in each case, cannot be cancelled by Genesys without penalty or without more than 90 days’ notice;

 

(ii) all Contracts that require Genesys to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;

 

(iii) all Contracts that provide for the indemnification by Genesys of any Person or the assumption of any Tax, environmental, or other Liability of any Person;

 

(iv) all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or other equity or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets, or otherwise);

 

(v) all broker, distributor, dealer, agency, sales promotion, market research, marketing consulting, and advertising Contracts to which Genesys is a party;

 

(vi) all employment Contracts and Contracts with independent contractors or consultants (or similar arrangements) to which Genesys is a party and which contain any severance provisions, or are not cancellable without material penalty or without more than 90 days’ notice;

 

(vii) except for Contracts relating to trade receivables, all Contracts relating to Indebtedness (including, without limitation, guarantees) of Genesys;

 

(viii) all Contracts with any Governmental Authority to which Genesys is a party (“ Government Contracts ”);

 

(ix) all Contracts that limit or purport to limit the ability of Genesys to compete in any line of business or with any Person or in any geographic area or during any period of time;

 

(x) any Contracts to which Genesys is a party that provide for any joint venture, partnership, or similar arrangement by Genesys;

 

(xi) all Contracts for the sale of any of the Purchased Assets or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Purchased Assets;

 

(xii) all powers of attorney with respect to the Business or any Purchased Asset;

 

(xiii) all collective bargaining agreements or Contracts with any union to which Genesys is a party; and

 

(xiv) any other Contract that is material to the Purchased Assets or the operation of the Business and not previously disclosed pursuant to this Section 3.07.

 

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(b) Each Material Contract is valid and binding on Genesys in accordance with its terms and is in full force and effect. Except as set forth in Schedule 3.07(b) , none of Genesys or, to Genesys’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Newco. Except as set forth in Schedule 3.07(b) , there are no material disputes pending or, to Genesys’s Knowledge, threatened under any Contract included in the Purchased Assets.

 

Section 3.08 Title to Purchased Assets

 

(a) Genesys has good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “ Permitted Encumbrances ”):

 

(i) liens for Taxes not yet due and payable;

 

(ii) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Business or the Purchased Assets;

 

(iii) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the Business or the Purchased Assets, which do not prohibit or interfere with the current operation of any Real Property and which do not render title to any Real Property unmarketable; or

 

(iv) other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the Business.

 

(b) Schedule 3.08(b) lists the street address of each parcel of Real Property used in or necessary for the conduct of the Business as currently conducted and which is covered by the Lease.

 

Section 3.09 Condition and Sufficiency of Assets . Newco is acquiring the Purchased Assets on an “as-is’ basis but the Material Contracts are enforceable as provided in Section 3.07(b).

 

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Section 3.10 Intellectual Property .

 

(a) Newco is not purchasing any Intellectual Property except as set forth in Schedule 2.01(d) . The License Agreement grants to Newco all rights it needs to conduct the Business as conducted by Genesys prior to Closing.

 

(b) Each Genesys IP Agreement is valid and binding on Genesys in accordance with its terms and is in full force and effect. Neither Genesys nor, to Genesys’s Knowledge, any other party thereto is in breach of or default under (or, to Genesys’s Knowledge, is alleged to be in breach of or default under), or, to Genesys’s Knowledge, has provided or received any notice of breach or default of or any intention to terminate, any Genesys IP Agreement.

 

(c) Except as set forth in Schedule 3.10(c) , Genesys is the sole and exclusive legal and beneficial, and with respect to Genesys IP Registrations, record, owner of all right, title and interest in and to Genesys Intellectual Property, and, to Genesys’s Knowledge, has the valid right to use all other Intellectual Property used in or necessary for the conduct of the Business as currently conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances.

 

(d) The consummation of the transactions contemplated hereunder will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Genesys’s right to own, use or hold for use any Intellectual Property as owned, used or held for use in the conduct of the Business as currently conducted.

 

(e) To Genesys’s Knowledge, Genesys’s rights in Genesys Intellectual Property are valid, subsisting and enforceable.

 

(f) To Genesys’s Knowledge, the conduct of the Business as currently and formerly conducted, and the products, processes and services of Genesys, have not infringed, misappropriated, diluted or otherwise violated the Intellectual Property or other rights of any Person. To Genesys’s Knowledge, no Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Genesys Intellectual Property.

 

(g) There are no Actions (including any oppositions, interferences or re-examinations) settled, pending or, to Genesys’s Knowledge, threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by Genesys in connection with the Business; (ii) challenging the validity, enforceability, registrability or ownership of any Genesys Intellectual Property or Genesys’s rights with respect to any Genesys Intellectual Property; or (iii) by Genesys or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of Genesys Intellectual Property. Genesys is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or would restrict or impair the use of any Genesys Intellectual Property.

 

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Section 3.11 Conformance with Specifications; Defects; Malicious Code.

 

 

(A) All Genesys Products conform in all material respects to all applicable warranties in all Contracts with customers.

 

(B) To the Knowledge of Genesys, none of the Genesys Products contain any bug, defect or error that materially adversely affects the functionality or performance of such Genesys Product against its applicable specifications.

 

(C) To the Knowledge of Genesys, none of the Genesys Products, and no other Software used in the provision of any Genesys Product or otherwise in the operation of its business, contains any “time bomb,” “Trojan horse,” “back door,” “worm,” virus, malware, spyware, or other device or code (“ Malicious Code ”) designed or intended to, or that could reasonably be expected to, (i) disrupt, disable, harm or otherwise impair the normal and authorized operation of, or provide unauthorized access to, any computer system, hardware, firmware, network or device on which any Genesys Product or such other Software is installed, stored or used, or (ii) damage, destroy or prevent the access to or use of any data or file without the user’s consent. Genesys has taken reasonable steps designed to prevent the introduction of Malicious Code into Genesys Products.

 

Section 3.12 IT Systems.

 

(A) To the Knowledge of Genesys, Genesys’s information technology systems are reasonably sufficient for the needs of Genesys’s business as currently conducted, including as to capacity, scalability, and ability to process current and anticipated peak volumes in a timely manner. Genesys’s information technology are in sufficiently good working condition to perform all information technology operations and include sufficient licensed capacity (whether in terms of authorized sites, units, users, seats or otherwise) for all Software, in each case as necessary for the conduct of Genesys’s business as currently conducted.

 

(B) To the Knowledge of Genesys, in the last three years, there has been no material unauthorized access, use, intrusion or breach of security, or material failure, breakdown, performance reduction or other adverse event affecting any Genesys systems, that has resulted in or could reasonably be expected to result in any: (i) substantial disruption of or interruption in or to the use of such Genesys systems or the conduct of Genesys’s business; (ii) material loss, destruction, damage or harm of or to Genesys or its operations, personnel, property or other assets; or (iii) material liability of any kind to Genesys. Genesys has taken reasonable actions, consistent with applicable industry best practices in Genesys’s industry, to protect the integrity and security of Genesys systems and the data and other information stored thereon.

 

(C) Genesys maintains commercially reasonable back-up and data recovery, disaster recovery and business continuity plans, procedures and facilities, has acted in material compliance therewith, and has tested such plans and procedures on a regular basis, and such plans and procedures have been proven effective in all material respects upon such testing.

 

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Section 3.13 Privacy Policies To the Knowledge of Genesys, Genesys has complied with all Genesys privacy policies and with all applicable Laws and Contracts to which it is a party relating to: (i) the privacy of customers or users of the Genesys Products, any website, product or service operated by or on behalf of Genesys; and (ii) the collection, storage, hosting, disclosure, transmission, transfer, disposal, other processing or security of any Customer Data or Personal Information by Genesys or by third parties having authorized access to the records of Genesys, with respect to each of (i) and (ii) in all material respects. To the Knowledge of Genesys, no claims have been asserted or, are threatened against Genesys alleging a violation of any Person’s privacy, confidentiality or other rights under any Genesys Privacy Policy, under any Contract, or under any Law relating to any Customer Data or Personal Information. With respect to any Customer Data and Personal Information, Genesys has taken commercially reasonable measures (including implementing and monitoring compliance with respect to technical and physical security) designed to safeguard such data against loss and against unauthorized access, use, modification, disclosure or other misuse. To the Knowledge of Genesys, there has been no unauthorized access to or other misuse of any Customer Data and Personal Information. Genesys has not received any complaint from any Person (including any action letter or other inquiry from any Governmental Authority) regarding Genesys’s collection, storage, hosting, disclosure, transmission, transfer, disposal, other processing or security of Customer Data or Personal Information. To the Knowledge of Genesys, there have been no facts or circumstances that would require Genesys to give notice to any customers, suppliers, consumers or other similarly situated Persons of any actual or perceived data security breaches pursuant to an applicable Law requiring notice of such a breach.

 

Section 3.14 Accounts Receivable . The Accounts Receivable reflected on the Balance Sheet and the Accounts Receivable arising after the date thereof (a) have arisen from bona fide transactions entered into by Genesys involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; (b) constitute only valid, undisputed claims of Genesys not subject to claims of set-off or other defenses or counterclaims other than normal discounts entered into in the ordinary course of business consistent with past practice; and (c) are collectible in the ordinary course of business. The reserve for bad debts shown on the Balance Sheet or, with respect to accounts receivable arising after the Balance Sheet Date, on the accounting records of Genesys have been determined in accordance with past practices, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.

 

Section 3.15 Data Protection .

 

(a) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, Genesys has adopted, and is, and during the 24 month period prior to the date hereof has been, in compliance with, commercially reasonable policies and procedures that apply to the Business with respect to privacy, data protection, security, and the collection and use of Personal Information gathered or accessed in the course of the operations of the Business.

 

(b) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, during the 24 month period prior to the date hereof, (i) to Genesys’s Knowledge, there has been no loss, damage, or unauthorized access, use, modification, or other misuse of any Personal Information maintained, collected, stored or processed by or on behalf of Genesys, and (ii) no Person has made any claim or commenced any action with respect to loss, damage, or unauthorized access, use, modification, or other misuse of any such Personal Information or otherwise relating to the collection or use of any such Personal Information.

 

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(c) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, Genesys and its Privacy Policies, are, and during the 24 month period prior to the date hereof have been, in compliance with all Data Protection Programs and all contractual commitments that Genesys has entered into with respect to Personal Information. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not violate any Privacy Policy as it currently exists or as it existed at any time during which any Personal Information was collected or obtained by Genesys and (ii) upon the Closing, Newco will own and continue to have the right to use all such Personal Information on identical terms and conditions as Genesys enjoyed immediately prior to the Closing.

 

(d) Except as disclosed on Schedule 3.15 , to its knowledge Genesys, its Affiliates, Employees, contractors, and other related persons have not disclosed any Confidential Information relating to Genesys’s Intellectual Property where the effect of such disclosure would cause a material harm to Genesys’s Intellectual Property.

 

Section 3.16 Insurance . Schedule 3.16 sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary liability, data privacy and cybersecurity, and other casualty and property insurance maintained by Genesys and relating to the Business (including without limitation as they relate to its employees, officers, managers and directors of Genesys), the Purchased Assets and the Assumed Liabilities (collectively, the “ Insurance Policies ”) and true and complete copies of such Insurance Policies have been made available to Newco. Such Insurance Policies are in full force and effect and shall be maintained in full force and effect by Genesys through the Closing Date. Genesys has not received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of Genesys. All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. Except as set forth in Schedule 3.16 , there are no claims related to the Business, Purchased Assets or Assumed Liabilities pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Genesys is not in default under, and has not otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Business and are sufficient for compliance with all applicable Laws and Contracts to which Genesys is a party or by which it is bound.

 

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Section 3.17 Legal Proceedings; Governmental Orders .

 

(a) Except as set forth in Schedule 3.17 , there are no Actions pending or, threatened (i) against or by Genesys relating to or affecting the Business, the Purchased Assets or the Assumed Liabilities; or (ii) against or by Genesys that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

(b) There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards relating to or affecting the Business or the Purchased Assets.

 

Section 3.18 Compliance With Laws; Permits .

 

(a) To Genesys’s Knowledge, Genesys has complied in all material respects, and is now complying in all material respects, with all Laws applicable to it, the Business as currently conducted or the ownership and use of the Purchased Assets, including without limitation Title III of the Americans with Disabilities Act, 42 U.S.C.S. § 12182; 28 C.F.R. § 36.201 including website access.

 

(b) All Permits required for Genesys to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Schedule 3.18(b) lists all current Permits issued to Genesys which are related to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Schedule 3.18(b) .

 

(c) Since January 1, 2017, none of Genesys or any of its managers, or officers, or to the Knowledge of Genesys, any of its other Representatives or any Person performing services for Genesys, has, in connection with or acting on behalf of Genesys, directly or indirectly, (i) used corporate funds for any unlawful contribution, gift, entertainment, or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any official, officer, employee, or representative of any Governmental Authority; or (iii) made any bribe, payoff, rebate, influence payment, kickback, or other unlawful payment. Genesys is, to the extent applicable, in compliance with any applicable Law, whether foreign or domestic, governing corrupt practices, money laundering, anti-bribery, or anticorruption, including the Foreign Corrupt Practices Act of 1977 (the “ FCPA ”). Since January 1, 2017, Genesys has not, in connection with or relating to the Business, Purchased Assets or Assumed Liabilities received any written notice alleging any such violation or made any voluntary or involuntary disclosure to a Governmental Authority, or conducted any internal investigation concerning any actual or alleged violation of the FCPA.

 

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(d) Genesys is in compliance in all material respects with all Laws relating to imports, exports, and economic sanctions, including all Laws administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”). Since January 1, 2017, Genesys has not been a party to any Contract, nor has Genesys been engaged in, any transaction or other business, directly or indirectly, with any Governmental Authority or other Person that appears on any list of OFAC-sanctioned parties (including any Person that appears on OFAC’s Specially Designated Nationals and Blocked Persons List), is owned or controlled by such a Person, or is located or organized in any country or territory that is subject to comprehensive OFAC sanctions (an “ OFAC Prohibited Party ”). Neither Genesys nor any of the managers, or officers of Genesys is an OFAC Prohibited Party or is a target of material sanctions in any other jurisdiction in which Genesys has business operations or arrangements. To the Knowledge of Genesys, no proceeds from the sale of Genesys Membership Units will be provided to or used for the benefit of any OFAC Prohibited Party. For the purposes of the definition of “OFAC Prohibited Party,” the term “control,” when used with respect to any specified Person, means the power to direct or cause the direction of the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have correlative meanings.

 

(e) To Genesys’s Knowledge, Genesys including, without limitation, with respect to the Business, Purchased Assets and Assumed Liabilities has complied, and is now complying, with all applicable Laws relating to immigration.

 

The representations and warranties made in this Section 3.18 do not apply to matters covered by Section 3.19 (Environmental Matters), Section 3.20 (Employment Matters), and Section 3.21 (Taxes).

 

Section 3.19 Environmental Matters .

 

(a) Genesys has been and is in compliance with all Environmental, Health, and Safety Requirements (the “ EHSR ”), other than such instances of non-compliance which, individually or in the aggregate, will not have a Material Adverse Effect in respect of Genesys.

 

(b) Without limiting the generality of the foregoing, Genesys has obtained and is in compliance with, all permits, licenses and other authorizations that are required pursuant to the EHSR for the occupation of its facilities and the operation of its business.

 

(c) Genesys has not received any written or oral notice, report or other information regarding any actual or alleged violation of the EHSR, or any Liabilities, including any investigatory, remedial or corrective obligations, relating to any of its facilities arising under the EHSR.

 

Section 3.20 Employment Matters .

 

(a) With respect to the Business, Schedule 3.20(a) sets forth a list of all persons who are employees (“ Employees ”), independent contractors, or consultants, including without limitation faculty and adjunct faculty members, of Genesys (each, together with the Employees, collectively, “ Personnel ”) as of the date hereof, including any Personnel who are on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full or part time); (iii) hire date; (iv) current annual base compensation rate; (v) commission, bonus, or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof, including without limitation paid time off and severance benefits. Except as set forth in Schedule 3.20(a) , as of the date hereof and the Closing Date, all compensation, including wages, commissions, and bonuses, payable to all Personnel of Genesys for services performed on or prior to the date hereof has been paid in full (or accrued in full on Genesys’s financial statements) and there are no outstanding agreements, understandings, or commitments of Genesys with respect to any compensation, commissions or bonuses.

 

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(b) Genesys is not, and has not been for the past three years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “ Union ”), and there is not, and has not been for the past three years, any Union representing or purporting to represent any employee of Genesys, and no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. To Genesys’s Knowledge, there has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting Genesys or any of its employees. Genesys has no duty to bargain with any Union.

 

(c) To Genesys’s Knowledge: Genesys is and has been in compliance in all material respects with all applicable Laws pertaining to employment and employment practices to the extent they relate to employees or any other Personnel of the Business, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment including sexual harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance; All individuals characterized and treated by Genesys as independent contractors or consultants are properly treated as independent contractors under all applicable Laws; and all employees of Genesys classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified in all material respects. There are no Actions against Genesys pending or threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern, or independent contractor of Genesys, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours or any other employment-related matter arising under applicable Laws.

 

(d) Genesys has complied with the WARN Act, and it has no plans to undertake any action on or before the Closing Date that would trigger the WARN Act.

 

(e) Genesys has never been a party to any Government Contract.

 

Section 3.21 Taxes .

 

(a) All Tax Returns required to be filed on or before the Closing Date by Genesys have been, or will be, timely filed (taking into account all applicable extensions). Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing by Genesys (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

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(b) Genesys has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

 

(c) No written claim has been made by any taxing authority in any jurisdiction where Genesys does not file Tax Returns alleging that Genesys is, or may be, subject to Tax by that jurisdiction and, to Genesys’s Knowledge, no such claim has been threatened.

 

(d) No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Genesys.

 

(e) Schedule 3.21(e) sets forth:

 

(i) those years for which examinations by the taxing authorities have been completed; and

 

(ii) those taxable years for which examinations by taxing authorities are presently being conducted.

 

(f) All deficiencies asserted, or assessments made, against Genesys as a result of any examinations by any taxing authority have been fully paid or otherwise resolved.

 

(g) Genesys is not a party to any Action by any taxing authority. There are no pending or, to the Knowledge of Genesys, threatened Actions by any taxing authority.

 

(h) Genesys has delivered to Newco copies of all federal, state, local and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, Genesys for all Tax periods ending on or after December 31, 2015.

 

(i) There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the Purchased Assets.

 

(j) Genesys is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement, other than commercial Contracts the principal purposes of which are unrelated to Taxes and which are set forth on Schedule 3.21(j) .

 

(k) No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to Genesys.

 

(l) Genesys has no Liability for Taxes of any Person (other than Genesys), as transferee or successor, by contract (other than commercial Contracts the principal purposes of which are unrelated to Taxes) or otherwise;

 

(m) Genesys is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

 

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(n) Genesys is, and has been since the date of its organization, a partnership for U.S. federal income Tax purposes.

 

(o) None of the Purchased Assets is (i) required to be treated as being owned by another Person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code, (ii) subject to Section 168(g)(1)(A) of the Code, (iii) subject to a disqualified leaseback or long-term agreement as defined in Section 467 of the Code, or (iv) tax-exempt use property within the meaning of Section 168(h) of the Code.

 

(p) Schedule 3.21(p) sets forth all foreign jurisdictions in which Genesys is subject to Tax, is engaged in business or has a permanent establishment.

 

Section 3.22 Books and Records . The membership interest record books of Genesys, including, without limitation, as applicable, all of which have been made available to Newco, are complete and correct and have been maintained in accordance with its past business practices. The books of Genesys contain materially accurate and complete records of all meetings, and actions taken by written consent of, the members and manager of Genesys, and, to Genesys’s Knowledge, no meeting, or action taken by written consent, of any such members or manager has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of Genesys.

 

Section 3.23 Related Party Transactions . Except as set forth in Schedule 3.23 and except with respect to its Operating Agreement, no executive officer, or manager of Genesys or any Person owning five percent or more of Genesys Membership Units (or any of such Person’s immediate family members or Affiliates or associates), is a party to any Contract with or binding upon Genesys or any of its assets, rights or properties or has any interest in any property owned by Genesys or has engaged in any transaction with any of the foregoing within the last 18 months.

 

Section 3.24 Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Genesys.

 

Section 3.25 Investment Representations . With respect to Genesys or any designee of Genesys (each, an “ Investor ”) receiving Truli’s Series F hereunder,:

 

(a) Such Investor understands that the shares of Truli’s Series F it is acquiring hereunder are “restricted securities” and have not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”) or any applicable state securities Law and is acquiring the Series F shares as principal for its own account and not with a view to or for distributing or reselling such Series F shares or any part thereof in violation of the Securities Act or any applicable state securities Law, has no present intention of distributing any of such Series F shares in violation of the Securities Act or any applicable state securities Law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Series F shares in violation of the Securities Act or any applicable state securities Law. Each stock certificate representing the Series F shares Common Stock shall bear a restrictive legend evidencing the transfer restrictions set forth herein.

 

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(b) As of the Closing Date each investor will be: (i) an “accredited investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(c) Such Investor, either alone or together with its Representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment in the Series F, and has so evaluated the merits and risks of such investment. Such Investor is able to bear the economic risk of an investment in the Series F and, at the present time, is able to afford a complete loss of such investment.

 

(d) Such Investor is not acquiring the shares of Truli issuable to such Investor hereunder as a result of any advertisement, article, notice, or other communication regarding the stock published in any newspaper, magazine, or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(e) Such Investor has been given the opportunity to ask questions of, and receive answers from, Truli concerning the terms and conditions herein and to obtain such additional information necessary to verify the accuracy of same as the Investor reasonably desires in order to evaluate the acquisition of the Series F. Such Investor acknowledges it does not desire to receive any further information from Truli in order to make its acquisition of the Series F. Such Investor has received no representations or warranties from Truli, its employees, agents, or attorneys in making this investment decision other than as set forth in this Agreement.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF TRULI AND NEWCO

 

Truli and Newco represent and warrant to Genesys that the statements contained in this Article IV are true and correct as of the date hereof and will be true and correct as of the Closing Date.

 

Section 4.01 Organization and Qualification of Truli and Newco . Each of Truli and Newco is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing under the Laws of the State of Delaware and each has full power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Schedule 4.01 sets forth each jurisdiction in which Truli or Newco is licensed or qualified to do business, and Truli and Newco are duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.

 

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Section 4.02 Authority

 

(a) Each of Truli and Newco has full power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each of Truli and Newco of this Agreement and any Ancillary Document to which they are a party and the consummation by each of Truli and Newco of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Truli and Newco and no other proceedings on the part of Truli and Newco are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the other transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Truli and Newco, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of each of Truli and Newco enforceable against Truli and Newco in accordance with its terms. When each Ancillary Document to which Truli or Newco is or will be a party has been duly executed and delivered by Truli or Newco (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Truli and Newco enforceable against it in accordance with its terms.

 

(b) Each of Truli and Newco, pursuant to written consents of the board of directors and, as of the date hereof, not subsequently rescinded or modified in any way, has, as of the date hereof, obtained the affirmative vote or consent of the board of directors approving this Agreement and the transactions contemplated by this Agreement. Each of Truli and Newco has delivered to Genesys a copy of the consent approving this Agreement and the transactions contemplated hereby. Other than the consent of the board of directors, no other consents are required in order to authorize and approve this Agreement and the transactions contemplated hereby, and no shareholder of Truli or Newco has any dissenters’ or appraisal rights with respect to the transactions contemplated by this Agreement.

 

Section 4.03 No Conflicts; Consents . The execution, delivery and performance by Truli and Newco of this Agreement and the Ancillary Documents to which they are a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, bylaws or other organizational documents of Truli or Newco, as applicable; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Truli or Newco; or (c) require the consent, notice or other action by any Person under any Contract to which Truli or Newco is a party. Except as set forth in Schedule 4.03 , no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Truli or Newco in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for the filing of a current report on Form 8-K and a Form D with the SEC and compliance with all applicable state securities Laws.

 

Section 4.04 No Prior Newco Operations . Newco was formed solely for the purpose of purchasing the Purchased Assets hereunder and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby.

 

Section 4.05 Brokers . Except as set forth in Schedule 4.05 , no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Truli or Newco.

 

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Section 4.06 Legal Proceedings; Governmental Orders .

 

(a) Except as set forth in Schedule 4.06 , there are no Actions pending or, threatened (a) against or by Truli or Newco affecting any of their properties or assets; or (b) against or by Truli or Newco that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

(b) There are no material outstanding Governmental Orders and no material unsatisfied judgments, penalties, or awards against Truli or Newco or any of their properties or assets.

 

Section 4.07 SEC Reports . During the last two years, Truli has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act and the rules and regulations promulgated thereunder (the “ SEC Reports ”). Each of the SEC Reports, as of the respective dates thereof (or, if amended or superseded by a filing or submission, as the case may be, prior to the Closing Date, then on the date of such filing or submission, as the case may be) (a) did not contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Report. During the last two years, Truli did not file any registration statements under the Securities Act.

 

Section 4.08 Sarbanes-Oxley . Truli is in material compliance with all requirements of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.

 

Section 4.09 Financial Statements . To the Knowledge of Truli, the consolidated financial statements of Truli included in the SEC Reports (a) complied in all material respects with the applicable accounting rules and regulations of the SEC with respect thereto as were in effect at the time of filing and (b) have been prepared in accordance with GAAP throughout the periods involved and, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, present fairly, in all material respects, the consolidated financial position of Truli as of the dates indicated therein, and the consolidated results of its operations and cash flows for the periods therein specified in accordance with GAAP and Regulation S-X of the SEC, subject, in the case of unaudited financial statements, to normal, immaterial year-end audit adjustments. Truli has no Liabilities except (i) those which are adequately reflected or reserved against in Truli’s most recent balance sheet included in the SEC Reports (the “ Truli Balance Sheet ”), or (ii) those which have been incurred in the ordinary course of business consistent with past practice since the date of the Truli Balance Sheet and which are not, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on Truli.

 

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Section 4.10 Capitalization . The authorized capital stock of Truli consists of 250,000,000 shares of Truli Common Stock, par value $0.0001 per share and 10,000,000 shares of preferred stock par value $0.0001 per share. Except as set forth on Schedule 4.10 , there are no Contracts or other obligations relating to the issued or unissued capital stock of Truli or Newco, or obligating Truli or Newco to issue, grant or sell any shares of capital stock of, or other equity interests in, or securities convertible into equity interests in, Truli or Newco, or that materially affect the rights of the holder of Series F Stock. Each outstanding share of capital stock of Truli or Newco is duly authorized, validly issued, fully paid and nonassessable and each such share owned by Truli or Newco is free and clear of all Encumbrances of any nature whatsoever, other than restrictions under the Securities Act and applicable state securities Laws. None of the outstanding equity securities or other securities of Truli or Newco was issued in violation of the Securities Act, except for any sales or issuances the claim for which has been barred by Section 13 of the Securities Act. Except for the documents listed on Schedule 4.10 , there are no documents or agreements that materially affect the rights of the holders of Series F.

 

Section 4.11 Absence of Certain Changes and Events . Except as disclosed on Schedule 4.11 , since the filing of its Annual Report on Form 10-K for the year ended March 31, 2018, Truli has conducted its business only in the ordinary course of business and there has not been any Material Adverse Effect on Truli, and no event has occurred or circumstance exists that may result in a Material Adverse Effect on Truli, nor has there been:

 

(a) (i) any declaration, accrual, set aside or payment of any dividend or any other distribution in respect of any shares of capital stock of Truli, or (ii) any repurchase, redemption or other acquisition by Truli of any shares of capital stock or other securities;

 

(b) any sale, issuance or grant, or authorization of the issuance of, (i) any capital stock or other security of Truli, (ii) any option, warrant or right to acquire any capital stock or any other security of Truli, or (iii) any instrument convertible into or exchangeable for any capital stock or other security of Truli;

 

(c) any amendment, to the certificate of incorporation or bylaws of Truli, or any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction involving Truli;

 

(d) any change of the methods of accounting or accounting practices of Truli in any material respect; and

 

(e) any agreement or commitment to take any of the actions referred to in clauses (a) through (d) above; provided , that Truli through the Closing Date has outstanding warrants or options or preferred stock that may require Truli to issue shares of Common Stock.

 

Section 4.12 Compliance With Laws; Permits .

 

(a) Truli and Newco have complied, and are now complying, in all material respects with all Laws applicable to each or their business, properties, or assets.

 

(b) Except as disclosed on Schedule 4.12(b) , all Permits required for Truli and Newco to conduct their business have been obtained by them and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse, or limitation of any Permit except as set forth in Schedule 4.12(b) .

 

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(c) Since April 1, 2016, none of Truli or any of its directors or officers, or to the Knowledge of Truli, any of its other Representatives or any Person performing services for Truli, has, in connection with or acting on behalf of Truli, directly or indirectly, (i) used corporate funds for any unlawful contribution, gift, entertainment, or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any official, officer, employee, or representative of any Governmental Authority; or (iii) made any bribe, payoff, rebate, influence payment, kickback, or other unlawful payment. Truli is, to the extent applicable, in material compliance with any applicable Law, whether foreign or domestic, governing corrupt practices, money laundering, anti-bribery, or anticorruption, including the FCPA. Since April 1, 2016, Truli has not, in connection with or relating to the business of Truli, received any written notice alleging any such violation or made any voluntary or involuntary disclosure to a Governmental Authority, or conducted any internal investigation concerning any actual or alleged violation of the FCPA.

 

(d) Truli is in compliance in all material respects with all Laws relating to imports, exports, and economic sanctions, including all Laws administered and enforced by OFAC. Since April 1, 2016, Truli has not been a party to any Contract, nor has Truli been engaged in, any transaction or other business, directly or indirectly, with any OFAC Prohibited Party. Neither Truli nor any of the directors, or officers of Truli is an OFAC Prohibited Party or is a target of material sanctions in any other jurisdiction in which Truli has business operations or arrangements.

 

Section 4.13 Purchase Price . The shares of Truli’s Series F and Common Stock issuable upon conversion of the Series F have been duly authorized, and upon consummation of the transactions contemplated hereby, will be validly issued, fully paid and non-assessable. Subject to compliance with applicable securities laws and certain provisions of this Agreement, Genesys shall be entitled to transfer the Series F at its sole dissection and the Series F shall have no restrictions preventing Genesys from transferring the Series F.

 

Article V

COVENANTS

 

Section 5.01 Conduct of Business Prior to the Closing . From the date hereof until the Closing, except as otherwise provided in this Agreement, required by applicable Law, or consented to in writing by Newco (which consent shall not be unreasonably conditioned, withheld or delayed), Genesys shall (x) conduct the Business in the ordinary course of business consistent with past practice; and (y) use commercially reasonable efforts to maintain and preserve intact its current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of its employees, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Genesys shall:

 

(a) preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets;

 

(b) pay the debts, Taxes and other obligations of the Business when due;

 

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(c) continue to collect Accounts Receivable included in the Current Assets in a manner consistent with past practice;

 

(d) maintain the properties and assets included in the Purchased Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;

 

(e) continue in full force and effect without material modification all Insurance Policies, except as required by applicable Law;

 

(f) defend and protect the properties and assets included in the Purchased Assets from infringement or usurpation;

 

(g) perform all of its obligations under all Assigned Contracts;

 

(h) maintain the Books and Records in accordance with past practice;

 

(i) comply in all material respects with all Laws applicable to the conduct of the Business or the ownership and use of the Purchased Assets; and

 

(j) not take or permit any action which, if taken or permitted prior to the date hereof, would have been required to be listed on Schedule 3.06 .

 

Section 5.02 Access to Information .

 

(a) From the date hereof until the Closing, Genesys shall (a) afford Newco and its Representatives reasonable access to and the right to inspect all of the Real Property, properties, assets, premises, Books and Records, Contracts and other documents and data related to the Business; (b) furnish Newco and its Representatives with such financial, operating and other data and information related to the Business as Newco or any of its Representatives may reasonably request; and (c) instruct the Representatives of Genesys to cooperate with Newco in its investigation of the Business. Any investigation pursuant to this Section 5.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business.

 

Section 5.03 Notice of Certain Events; Delivery of Monthly Financial Report .

 

(a) From the date hereof until the Closing, Genesys shall promptly notify Truli, and Truli shall promptly notify Genesys, in writing of:

 

(i) any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by any Party hereunder not being true and correct, or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 or Section 7.03, as applicable, to be satisfied;

 

(ii) any notice or, to Genesys’s or Truli’s Knowledge, as the case may be, any other communication, from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

 

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(iii) any notice or, to Genesys’s or Truli’s Knowledge, as the case may be, any other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

 

(iv) any Actions (A) commenced against Genesys, Truli or Newco, as applicable, (B) with respect to Genesys and to Genesys’s Knowledge, threatened against, relating to or involving or otherwise affecting Genesys that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.06 or that relates to the consummation of the transactions contemplated by this Agreement, and (C) with respect to Truli and/or Newco and to the Knowledge of Truli, threatened against, relating to or involving or otherwise affecting Truli and/or Newco that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.06 or that relates to the consummation of the transactions contemplated by this Agreement.

 

(b) A Party’s receipt of information pursuant to this Section 5.03 shall not be deemed to amend or supplement the Disclosure Schedules.

 

Section 5.04 Employees and Employee Benefits .

 

(a) No later than 14 days following the Closing Date, Newco may, in Newco’s sole discretion, extend offers of employment or engagement to one or more of the Personnel listed on Schedule 3.20(a) hereto. Such Personnel shall be retained by Newco for the positions and for such period of time after the Closing Date as may be determined in Newco’s sole discretion.

 

(b) Genesys shall be solely responsible for, and Truli and Newco shall have no obligations whatsoever for, any compensation or other amounts payable to any current or former Personnel of the Business, including, without limitation, hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to the service with Genesys at any time on or prior to the Closing Date and Genesys shall pay all such amounts to all entitled persons as and when due.

 

(c) Genesys shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former Personnel of the Business or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. Genesys also shall remain solely responsible for all worker’s compensation claims of any current or former Personnel of the Business which relate to events occurring on or prior to the Closing Date. Genesys shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.

 

(d) Effective as soon as practicable following the Closing Date, Genesys, or any applicable Affiliate, shall effect a transfer of assets and liabilities (including outstanding loans) from the defined contribution retirement plan that it maintains, to the defined contribution retirement plan maintained by Newco, with respect to those eligible Personnel of the Business who become employed by Newco, or an Affiliate of Newco, in connection with the transactions contemplated by this Agreement. Any such transfer shall be in an amount sufficient to satisfy Section 414(l) of the Code. Upon the transfer of assets and liabilities into Newco’s plan, all transferred account balances from Genesys’s plan shall become fully vested.

 

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Section 5.05 Governmental Approvals and Consents .

 

(a) Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

 

(b) Each party hereto shall use reasonable best efforts to give all notices to, and obtain all consents from, all third parties that are described in Schedule 5.05.

 

(c) Without limiting the generality of the parties’ undertakings pursuant to Sections 5.05 (a) and (b) above, each of the Parties hereto shall use all reasonable best efforts to:

 

(i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any Ancillary Document;

 

(ii) avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any Ancillary Document; and

 

(iii) in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any Ancillary Document has been issued, to have such Governmental Order vacated or lifted.

 

(d) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of any party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Genesys and Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other Parties hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each Party shall give notice to the other Parties with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other Parties with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

 

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(e) Notwithstanding the foregoing, nothing in this Section 5.05 shall require, or be construed to require, Truli or Newco or any of their Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Truli, Newco or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Truli or Newco of the transactions contemplated by this Agreement; or (iii) any material modification or waiver of the terms and conditions of this Agreement.

 

Section 5.06 Non-Competition; Non-Solicitation .

 

(a) Except as listed on Schedule 5.06(a) , For a period of three years commencing on the Closing Date (the “ Restricted Period ”), Genesys shall not, and shall not permit any Control Person, directly or indirectly, to (i) own or oper ate, or assist others in operating, an online marketplace connecting independent recruiters with talent seekers (a “ Competing Business ”); (ii) have an interest directly or indirectly in any Person that owns or operates a Competing Business, including as a partner, shareholder, member, employee, principal, agent, trustee, or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the date of this Agreement) between Newco or Truli or suppliers of Newco; provided , that any ownership of Truli Series F or Common Stock shall not be precluded by this Section 5.06.

 

(b) During the Restricted Period, Genesys shall not, and shall not permit any Control Person to, directly or indirectly, hire or solicit any employee or contractor of Truli or Newco, or encourage any such employee or contractor to leave such employment or hire any such employee or contractor who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees or contractors; provided, that nothing in this Section 5.06(b) shall prevent Genesys or any Control Person from hiring (i) after 90 days from the date of termination of engagement, any employee or contractor whose engagement has been terminated by Truli or Newco, or (ii) after 180 days from the date of termination of engagement, any employee or contractor whose engagement has been terminated by the employee or contractor.

 

(c) During the Restricted Period, Genesys shall not directly or indirectly, solicit or entice, or attempt to solicit or entice, any competitors, Newco or Truli for purposes of diverting their business or services from Newco or Truli to a Competing Business.

 

(d) Genesys acknowledges that a breach or threatened breach of this Section 5.06 would give rise to irreparable harm to Truli and Newco, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Genesys or any or their Control Persons of any such obligations, Truli and Newco shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post a bond).

 

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(e) Genesys acknowledges that the restrictions contained in this Section 5.06 are reasonable and necessary to protect the legitimate interests of Truli and Newco and constitute a material inducement to Truli and Newco to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.06 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

(f) Anything in this Section 5.06 to the contrary notwithstanding, the provisions of this Section 5.06 will not apply to (i) Genesys’s ownership of the Series F or Common Stock, (ii) Genesys’ and any Control Person ownership of, and activities on behalf of, any business, including a Competing Business (or any successors thereto), with respect to which Genesys has conducted or has an ownership interest as of the date hereof, (iii) any activity that a Control Person has conducted or has an ownership interest as of the date hereof other than a Competing Business, and (iv) any activity related to the Opptly Business or any activity pursuant to the License Agreement.

 

Section 5.07 Closing Conditions . From the date hereof until the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.

 

Section 5.08 Public Announcements . Unless otherwise required by applicable Law, by Truli in connection with a financing or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby (except that, subsequent to the Closing (i) after giving Genesys prior written notice of such intended disclosure and a reasonable opportunity to review, Truli may disclose the execution of this Agreement and file a copy in any SEC Reports, in a press release announcing the execution of this Agreement, and in connection with an application to be listed on any national securities exchange, and (ii) Truli may discuss the transaction contemplated hereby in a conference call discussing its potential acquisition of the Business and in discussions in meetings with investors, provided such discussions are consistent with the disclosures made under clause (i) above) or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement. Notwithstanding the foregoing and any other agreement between Truli and Genesys, Truli shall have no limitations in providing confidential information to prospective lenders who are subject to customary confidentiality requirements.

 

Section 5.09 Supplemental Disclosures . Genesys or Truli and Newco may supplement or amend, from time to time, their respective Disclosure Schedules (including by adding additional disclosure schedules relating to matters covered in Article III or Article IV, as applicable) to properly reflect matters, if any, arising after the date hereof or, in the case of matters that are based on the Knowledge of Genesys or Truli and/or Newco, matters, if any, of which Genesys or Truli and/or Newco, as applicable, first acquires such Knowledge after the date hereof. The amending party shall reasonably highlight the changes in the Disclosure Schedules comprising supplements or amendments made pursuant to this Section 5.09. In the event that the changes to the Disclosure Schedules resulting from such supplements and amendments give rise to a Material Adverse Effect, then the non-amending party may terminate this Agreement without liability on the part of the non-amending party to any other party hereto. In order to terminate this Agreement pursuant to this Section 5.09, Truli and Newco must give notice of such termination to Genesys within 10 Business Days following receipt from Genesys of such supplemented or amended Disclosure Schedules. In the event that a party terminates this Agreement pursuant to this Section 5.09, such termination shall be such terminating party’s sole remedy hereunder and no party hereto shall have any further liability or obligation to any other party hereto, except in an Action brought or a claim asserted pursuant to Section 8.04(d) or as otherwise provided in this Agreement.

 

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Section 5.10 Investment Letters . Genesys shall cause any designees of Genesys that receive Common Stock issued to Genesys at the Closing or upon conversion of any portion of the Series F to execute and deliver to Truli an investment letter containing representations and warranties that are substantially the same as those set forth in Section 3.25.

 

Section 5.11 Books and Records .

 

(a) In order to facilitate the resolution of any claims made against or incurred by Genesys prior to the Closing, or for any other reasonable purpose, for a period of seven years after the Closing, Newco shall:

 

(i) retain the Books and Records (including Personnel files) relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of Genesys; and

 

(ii) upon reasonable notice, afford Genesys’s Representatives reasonable access (including the right to make, at Genesys’s expense, photocopies), during normal business hours, to such Books and Records.

 

(b) Neither Truli nor Newco shall be obligated to provide Genesys or any other party with access to any Books and Records (including Personnel files) pursuant to this Section 5.11 where such access would violate any Law.

 

Section 5.12 Reserved .

 

Section 5.13 Subsequent Collections . From and after the Closing, if Genesys or any of its Affiliates receives or collects any funds relating to any Accounts Receivable or any other Purchased Asset, Genesys or its Affiliate shall remit such funds to Newco within five Business Days after its receipt thereof. From and after the Closing, if Newco or its Affiliate receives or collects any funds relating to any Excluded Asset, Newco or its Affiliate shall remit any such funds to Genesys or its designee within five Business Days after its receipt thereof.

 

Section 5.14 Tax Certificates . If any taxing authority asserts that Genesys is liable for any Tax, Genesys shall promptly pay any and all such amounts and shall provide evidence to Newco that such liabilities have been paid in full or otherwise satisfied.

 

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Section 5.15 Further Assurances . Following the Closing, each of the Parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the Ancillary Documents.

 

Section 5.16 Material Change in Customers . Genesys covenants that during the 90 days after the Closing Date, there shall not be a Material Reduction, unless such reduction is due to the actions of Newco, Truli or any of their affiliates. For this purpose, the term “Material Reduction” means (i) that more than three of the 11 customers listed on Schedule 5.16 or (ii) any of the 11 customers provides notice of termination as described in this Section 5.16 and the gross revenues of such customer(s) is more than 3/11 of the total of each of the 11 customers, gross revenues for the 12 months ended December 31, 2018, have during such 90 day period provided written notice to Newco of termination of their customer relationships.

 

Section 5.17 Commercial Insurance Premium . Immediately following Closing Genesys shall pay Newco $19,176 to cover Newco’s initial cost of commercial insurance (the “ Insurance Premium ”). Upon Genesys providing Newco with an invoice for the Insurance Premium, Newco shall pay Genesys $19,176 within 15 days of Newco’s receipt of the invoice.

 

Article VI

CERTAIN TAX MATTERS

 

Section 6.01 Certain Tax Matters .

 

(a) Genesys will be responsible for preparing and filing property (whether real or personal) and similar Tax Returns (“ Property Tax Returns ”) with respect to the Purchased Assets for Tax periods ending on or before the Closing Date, and will make all payments required with respect to each such Tax Return. Newco will be responsible for preparing and filing all Property Tax Returns for the Purchased Assets for all periods commencing after the Closing Date and will make all payments required with respect to each such Tax Return. Newco and Genesys shall cooperate, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Agreement and any audit, Action or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon a party’s request) the provision of records and information which are reasonably relevant to any such audit, Action or other proceeding, making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and timely notification of receipt of any notice of an audit or notice of deficiency relating to any Tax or Tax Return with respect to which the non-recipient may have Liability hereunder.

 

(b) Genesys shall pay all sales or use Taxes, recording, registration and conveyance Taxes and fees, and similar transfer Taxes arising from or relating to the transactions contemplated in this Agreement, and Genesys shall file or cause to be filed all necessary Tax Returns and other documentation with respect to such Taxes. For the avoidance of doubt, Genesys shall be solely responsible for any and all income, gross receipts, and similar Taxes of Genesys for all periods (whether before or after the Closing), including all Taxes on any gains recognized by Genesys in connection with the transactions contemplated by this Agreement and the Ancillary Documents, and Genesys shall be solely responsible for preparing and filing all Tax Returns relating thereto. At the reasonable request of Newco, Genesys will certify to Newco that Genesys has paid all such income, gross receipts and similar Taxes and has prepared and filed all such Tax Returns, and shall provide Newco with reasonable evidence of the same.

 

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Article VII

CONDITIONS TO CLOSING

 

Section 7.01 Conditions to Obligations of All Parties . The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

 

(a) This Agreement shall have been duly adopted by the Requisite Genesys Vote as of the date hereof.

 

(b) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

 

Section 7.02 Conditions to Obligations of Truli and Newco . The obligations of Truli and Newco to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Truli’s or Newco’s waiver, at or prior to the Closing, of each of the following conditions:

 

(a) Other than the representations and warranties of Genesys contained in the first sentence of Section 3.01, Section 3.02, Section 3.03, Section 3.24, and Section 3.25, the representations and warranties of Genesys contained in this Agreement and the Ancillary Documents shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Genesys contained in the first sentence of Section 3.01, Section 3.02, Section 3.03, Section 3.24, and Section 3.25 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

 

(b) Genesys shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by it prior to or on the Closing Date; provided , that , with respect to agreements, covenants and conditions that are qualified by materiality, Genesys shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

 

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(c) From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

 

(d) Genesys shall have delivered each of the closing deliverables set forth in Section 2.05(a).

 

(e) The approvals, consents and waivers listed on Schedule 7.02(e) shall have been received, and executed counterparts thereof shall have been delivered to Newco at or prior to the Closing.

 

(f) Genesys shall be entitled to appoint one member to the board of directors of Truli.

 

Section 7.03 Conditions to Obligations of Genesys . The obligations of Genesys to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Genesys’s waiver, at or prior to the Closing, of each of the following conditions:

 

(a) Other than the representations and warranties of Truli and Newco contained in the first sentence of Section 4.01, Section 4.02, Section 4.05, and Section 4.10, the representations and warranties of Truli and Newco contained in this Agreement and the Ancillary Documents shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Truli and Newco contained in the first sentence of Section 4.01, Section 4.02, Section 4.05, and Section 4.10 shall be true and correct in all respects on and as of the Closing Date with the same effect as though made at and as of such date.

 

(b) Truli and Newco shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by them prior to or on the Closing Date; provided , that , with respect to agreements, covenants and conditions that are qualified by materiality, Truli and Newco shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

 

(c) All approvals, consents and waivers that are listed on Schedule 4.03 shall have been received, and executed counterparts thereof shall have been delivered to Genesys at or prior to the Closing.

 

(d) Newco shall have delivered each of the closing deliverables set forth in Section 2.05(b).

 

(e) The Financial Statements of Genesys shall show that Genesys has had a pretax net income of at least $60,000 (calculated in accordance with past practices consistently applied) for a period of 90 days prior to the Closing Date.

 

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Article VIII

INDEMNIFICATION

 

Section 8.01 Survival . Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is 18 months from the Closing Date; provided , that the representations and warranties in (a) Section 3.01, Section 3.02, Section 3.03, Section 3.24, Section 4.01, Section 4.02, Section 4.05, and Section 4.10 (collectively, the “ Fundamental Representations ”) shall survive for a period of three years after the Closing, and (b) Section 3.21 and Section 3.25 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the parties contained herein (other than any covenants or agreements which survive for the period explicitly specified therein or which by their terms are reasonably expected to survive the Closing) shall terminate on the Closing Date and shall thereafter be of no further force and effect. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the Indemnified Party to the Indemnifying Party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

Section 8.02 Indemnification by Genesys . Subject to the other terms and conditions of this Article VIII, Genesys shall indemnify and defend each of Truli and Newco and each of their Affiliates and their respective Representatives (collectively, the “ Truli Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Truli Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of Genesys contained in this Agreement or in any certificate or instrument delivered by or on behalf of Genesys pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Genesys pursuant to this Agreement;

 

(c) any Excluded Asset or any Excluded Liability;

 

(d) any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Genesys or any of its Affiliates (other than the Purchased Assets or Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date;

 

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(e) any Transaction Expenses or Indebtedness of Genesys outstanding as of the Closing to the extent not paid or satisfied by Genesys at or prior to the Closing.

 

Genesys shall not transfer or incur any encumbrance on 50,000 shares of Series F until the one-year anniversary of the Closing Date in order to ensure that Genesys can provide the Indemnification to the Truli Indemnitees.

 

Section 8.03 Indemnification By Truli and Newco . Subject to the other terms and conditions of this Article VIII, Truli and Newco, jointly and severally, shall indemnify and defend Genesys (the “ Genesys Indemnitees ”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, Genesys Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of Truli and Newco contained in this Agreement or in any certificate or instrument delivered by or on behalf of Newco pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Truli or Newco pursuant to this Agreement;

 

(c) any Assumed Liability; or

 

(d) any Third Party Claim based upon, resulting from or arising out of the operation of the Business or the ownership of the Purchased Assets following the Closing Date.

 

Section 8.04 Certain Limitations . The indemnification provided for in Section 8.02 and Section 8.03 shall be subject to the following limitations:

 

(a) Genesys shall not be liable to the Truli Indemnitees for indemnification under Section 8.02(a) until the aggregate amount of all Losses in respect of the Truli Indemnitees are entitled to indemnification under Section 8.02(a) exceeds $30,000 (the “ Basket ”), in which event Genesys shall be required to pay or be liable for all such Losses above the basket.

 

(b) Reserved.

 

(c) Truli and Newco shall not be liable to Genesys Indemnitees for indemnification under Section 8.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) exceeds the Basket, in which event Truli and Newco shall be required to pay or be liable for all such Losses from the first dollar.

 

(d) Notwithstanding the foregoing, the limitations set forth in Section 8.04(a) and Section 8.04(c) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in any Fundamental Representation, or any action based on Fraud.

 

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(e) For purposes of this Article VIII, for purposes of calculating Losses (but not determining whether a breach has occurred), any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

 

(f) Each Indemnified Party must act promptly to avoid or mitigate any Losses which it or any other Indemnified Party may suffer in consequence of any fact, matter or circumstance giving rise to a claim for indemnification under this Agreement or likely to give rise to a claim for indemnification under this Agreement and no Indemnified Party shall be entitled to recover under this Agreement to the extent of any Losses that could have been avoided but for the Indemnified Party’s failure to avoid or mitigate such Losses

 

(g) Notwithstanding anything herein to the contrary, the indemnification obligation of any Party shall not exceed 25% of the dollar value of the Purchase Price as of the Closing Date. If Genesys is the Indemnifying Party, it may meet its obligation by cancellation of the applicable number of Series F shares.

 

Section 8.05 Indemnification Procedures . The party making a claim under this Article VIII is referred to as the “ Indemnified Party ”, and the party against whom such claims are asserted under this Article VIII is referred to as the “ Indemnifying Party ”.

 

(a) Third Party Claims . If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “ Third Party Claim ”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 10 days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is prejudiced. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, such counsel to be reasonably satisfactory to the Indemnified Party, and the Indemnified Party shall cooperate in good faith in such defense. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend or appeal any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided , that if in the reasonable opinion of counsel to the Indemnified Party, there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived; the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Genesys, on the one hand, and Truli and Newco, on the other hand, shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim. In no event shall the Indemnifying Party also be liable for local counsel selected at the request of the Indemnified Party.

 

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(b) Settlement of Third Party Claims . Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a) (including, without limitation, where the Indemnified Party is defending pursuant to Section 8.05(a)), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

 

(c) Direct Claims . Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “ Direct Claim ”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is prejudiced. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to Genesys’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

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Section 8.06 Payments .

 

(a) Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VIII, the Indemnifying Party shall satisfy its obligations within five Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds, subject to Section 8.06(c). The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such five Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to and including the date such payment has been made at a rate per annum equal to the statutory rate in the jurisdiction where the judgment has been entered. Such interest shall be calculated daily on the basis of a 365-day year and the actual number of days elapsed, without compounding.

 

(b) Any amount payable by Genesys to a Truli Indemnitee with respect to a Loss shall be reduced by the amount of any net insurance proceeds (i.e., insurance payments less deductible and premiums, including the amount of any increase in future premiums assessed under such policies of insurance) actually received by the Truli Indemnitee with respect to the Loss, and Truli and Newco agree to use their reasonable best efforts to collect any insurance proceeds to which Truli and/or Newco may be entitled in respect of any Loss.

 

(c) Any Losses payable by Genesys to a Truli Indemnitee pursuant to this Article VIII may be satisfied, at Genesys’s election, in cash, by offset against the principal amount of the Series F held by Genesys, or by surrender of shares of Truli Common Stock (valued at the closing price of the Truli Common Stock as of the close of business on the day prior to the date such Losses are paid). If Genesys transfers any portion of the Series F or shares of Truli Common Stock received hereunder to an Investor, then, at the option of Genesys, Truli and Newco may set off any Losses payable by Genesys hereunder against such Investor’s respective pro rata portion of the Series F or the Truli Common Stock of such Investor to the extent that such Investor still beneficially owns such security(ies). If Genesys fails to pay in cash or elect to set off any Losses payable by Genesys hereunder within 10 days of the final determination of such Losses, then such failure shall be deemed an election to set off any such Losses, and Truli or Newco may set off such Losses against the Series F or the Truli Common Stock as provided hereunder.

 

Section 8.07 Tax Treatment of Indemnification Payments . All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 8.08 Other Rights and Remedies Not Affected . The indemnification rights of the parties under this Article VIII are independent of, and in addition to, such rights and remedies as the parties may have at Law or in equity or otherwise for any fraud, as specified in Section 8.04(d), breach of warranty, or failure to fulfill any covenant, agreement, or obligation hereunder on the part of any party hereto, including the right to seek specific performance, rescission, or restitution, without any requirement to post bond, none of which rights or remedies shall be affected or diminished hereby.

 

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Article IX

TERMINATION

 

Section 9.01 Termination . This Agreement may be terminated at any time prior to the Closing:

 

(a) by the mutual written consent of Genesys and Newco;

 

(b) by Newco by written notice to Genesys if:

 

(i) neither Truli nor Newco is then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in, or failure to perform any representation, warranty, covenant or agreement made by Genesys pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy, or failure has not been cured by Genesys within 10 Business Days of Genesys’s receipt of written notice of such breach from Truli.

 

(c) by Genesys by written notice to Truli and Newco if:

 

(i) Genesys is not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in, or failure to perform any representation, warranty, covenant or agreement made by Truli or Newco pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy, or failure has not been cured by Truli or Newco within 10 Business Days of their receipt of written notice of such breach from Genesys;

 

(d) by Newco or Genesys by written notice to the other if:

 

(i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable; or

 

(ii) the Closing has not occurred by March 31, 2019 (the “ Outside Date ”);

 

Provided , however , that the right to terminate this Agreement pursuant to this Section 9.01(d) shall not be available to any party (or any Affiliate of such party) whose breach of any provision of this Agreement results in or causes the failure of the transactions contemplated hereby to be consummated on or before such time.

 

Section 9.02 Effect of Termination . In the event of the termination of this Agreement in accordance with this Article IX, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

 

(a) as set forth in this Article IX, Section 5.02(b) and Article X hereof; and

 

(b) that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.

 

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Article X
MISCELLANEOUS

 

Section 10.01 Expenses . Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

 

Section 10.02 Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

 

If to Genesys:

Genesys Talent, LLC

100 Waugh Drive, Suite 300

Houston, Texas 77007

Email: _____________________

Attn: Tim O’Rourke, Manager

   

with a copy (which shall not constitute notice) to:

 

 

 

 

 

If to Truli or Newco:

Crady, Jewett, McCulley & Houren LLP

2727 Allen Parkway, Suite 1700

Houston, Texas 77009

E-mail: ______________________

Attention: Peter J. Marmo

 

Truli Technologies, Inc.

344 Grove Street, Suite 2-4018

Jersey City, New Jersey 07302

Email: _____________________

Attention: Miles Jennings

   
with a copy (which shall not constitute notice) to:

Nason, Yeager, Gerson, Harris & Fumero, P.A.

3001 PGA Boulevard, Suite 305

Palm Beach Gardens, Florida 33410

E-mail: _____________________

Attention: Michael Harris, Esq.

 

Section 10.03 Interpretation . For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

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Section 10.04 Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

Section 10.05 Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 10.06 Entire Agreement . This Agreement and the Ancillary Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

 

Section 10.07 Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

 

Section 10.08 No Third-party Beneficiaries . Except as provided in Section 5.07, and Article VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 10.09 Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by Truli, Newco, and Genesys at any time. Any failure of Truli or Newco, on the one hand, or Genesys, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Genesys (with respect to any failure by Truli or Newco) or by Truli or Newco (with respect to any failure by Genesys), respectively, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

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Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .

 

(a) This Agreement and all matters related to the transactions contemplated herein shall be governed by and construed in accordance with the internal laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction).

 

(b) Any legal suit, action, or proceeding arising out of or based upon this Agreement, the Ancillary Documents, or the transactions contemplated hereby or thereby shall be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in New York County, New York and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(c) Each party acknowledges and agrees that any controversy which may arise under this Agreement or the Ancillary Documents is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement, the Ancillary Documents, or the transactions contemplated hereby or thereby. Each party to this Agreement certifies and acknowledges that (A) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (B) such party has considered the implications of this waiver, (C) such party makes this waiver voluntarily, and (D) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 10.10(c).

 

(d) Specific Performance . The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity, without having to plead or prove irreparable harm or lack of adequate remedy at law and without having to post a bond or other security.

 

(e) Attorneys’ Fees. In the event that any party institutes any legal suit, action, or proceeding against the other party(ies) arising out of or relating to this Agreement, the Ancillary Documents or any of the transactions contemplated hereunder, the prevailing party in the suit, action or proceeding shall be entitled to receive, in addition to all other damages to which it may be entitled, the costs incurred by such party in conducting the suit, action, or proceeding, including attorneys’ fees and expenses and court costs.

 

(f) Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

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IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

Genesys Talent LLC   Recruiter.com Recruiting Solutions LLC
     
By: /s/ Rick Roberts   By: /s/ Miles Jennings
Name: Rick Roberts   Name: Miles Jennings
Title: Manager   Title: CEO
     
    Truli Technologies, Inc.,
     
    By: /s/ Miles Jennings
    Name: Miles Jennings
    Title: CEO

 

Signature Page to Asset Purchase Agreement

 

 

 

 

Exhibit A

Certificate of Designation for the Series F

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series F Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series F Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series F Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series F Convertible Preferred Stock” (the “ Series F Preferred Stock ”). The authorized number of shares of the Series F Preferred Stock shall be 200,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary (in each case, the “ Liquidation Date ”), each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of 20.52% of the Second Liquidation Preference; and (b) a pro rata portion of 14.62% of the value of any cash or other property to be distributed to the Holders, the Series D Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

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Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

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(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series F Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series F Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Reserved .

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

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(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series F Preferred Stock.

 

Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series F Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

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Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series F Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Asset Purchase Agreement ” means that certain Asset Purchase Agreement dated as of the Closing Date by and among the Corporation and the additional parties thereto.

 

(b) “ Closing Date ” shall mean the date of first issuance of the shares of Series D Preferred Stock.

 

(c) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

(d) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(e) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(f) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

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(g) “ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(h) “ First Liquidation Preference ” means the first $2,000,000 of cash and/or other property received by the Corporation pursuant to the liquidation, dissolution or winding up of the business of the Corporation, and which is payable to the Series D Stockholders.

 

(i) “ Holder ” or “ Holders ” means a holder of Series F Preferred Stock.

 

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

 

(k) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(l) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(m) “ Remaining Liquidation Amount ” means $9,000,000.

 

(n) “ Required Holders ” means Holders representing a majority of the outstanding Preferred Shares.

 

(o) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Holders and the Series E Stockholders after the Series D Stockholders have received the First Liquidation Preference.

 

(p) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and certain investors party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

(q) “ Series D Stockholders ” means a Person holding Series D Convertible Preferred Stock of the Corporation.

 

(r) “ Series E Stockholders ” means a Person holding Series E Convertible Preferred Stock of the Corporation.

 

(s) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

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(t) “ Transaction Documents ” means this Amended and Restated Certificate of Designation, the Asset Purchase Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Asset Purchase Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(u) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designation and such breach remains uncured for a period of five (5) consecutive Trading Days (the “Cure Period”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By:
  Name: Miles Jennings
  Title: Chief Executive Officer

 

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EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designation, Preferences and Rights of the Series E Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series E Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:

 

 

Aggregate number of Preferred Shares to be converted

 

 

Aggregate Stated Value of such Preferred Shares to be converted:

 

 

Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:

 

 

AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:

 

 

Please confirm the following information:

 

Conversion Price:

 

 

Number of shares of Common Stock to be issued:

 

 

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:  
   
   

 

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Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:

 

DTC Participant:

 

 

DTC Number:

 

 

Account Number:

 

 

 

Date: _____________ __, _____  
   
   
Name of Registered Holder  

 

By:    
  Name:  
  Title:  
     
  Tax ID:_____________________________  
  Facsimile:___________________________  
   
E-mail Address:  

 

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EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRULI TECHNOLOGIES, INC.
     
  By:            
    Name:
    Title:

 

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Exhibit B

The Lease Agreement

 

THIS SUBLEASE AGREEMENT (this “ Sublease ”) is entered into effective as of March 31, 2019 (the “ Effective Date ”) between Icon Information Consultants L.P. , a Texas limited partnership (“ Tenant ”), whose address for purposes of this Sublease is 100 Waugh Drive, Suite 300, Houston, Texas 77007, and Recruiter.com Recruiting Solutions, LLC , a Delaware limited liability company (“ Subtenant ”), whose address for purposes of this Sublease is 344 Grove St., #2 #4018, Jersey City, NJ 07302 with reference to the following:

 

1. LUI2 Houston Waugh, L.P., the predecessor-in-interest to Houston Waugh, LP, a Delaware limited partnership (the “ Landlord ”) and Tenant entered into that certain Office Lease dated October 22, 2010, as amended by that certain First Amendment to Office Lease dated June 28, 2017 (the “ Master Lease ”) originally covering approximately 13,281 rentable square feet on the 3 rd floor (the “ Tenant Premises ”) of 100 Waugh Drive, Houston, Texas 77007 (the “ Building ”), with an expansion of the Premises to include an additional 5,480 rentable square feet on the 3 rd floor on or around September 1, 2017 and an additional 1,494 rentable square feet on the 3 rd floor beginning on or around October 1, 2018.

 

2. Tenant desires to sublease a subsection of the Tenant Premises which has a separate entrance and separate key card access, being approximately 5,480 rentable square feet of the Tenant Premises and shown on Exhibit A attached hereto (the “ Sublease Premises ”), to Subtenant pursuant to the following terms and conditions. The rentable square feet is the square footage which will be used whether or not it is later shown to be different from the actual square footage. The allocable percentage to be used in determining Subtenant’s proportionate share of expenses applicable to the Tenant Premises shall be 27.1% (“Subtenant’s Proportionate Share”) whether or not it is later shown to be different from the actual allocable percent.

 

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

 

(a) Sublease . Tenant hereby sublets to Subtenant and Subtenant hereby subleases from Tenant the Sublease Premises for the balance of the Sublease Term. Subtenant shall also have access to Tenant’s kitchen/break room located in the Tenant Premises during normal business hours, Monday to Friday. Subtenant hereby agrees to comply with all of the terms and provisions of the Master Lease incorporated in Section 12 below insofar as such incorporated provisions do not conflict with the specific provisions of this Sublease. Notwithstanding anything in this Sublease to the contrary, Subtenant’s sole obligation to pay Rent shall be governed by the provisions of this Sublease.

 

(b) Sublease Term. This Sublease will commence on the Effective Date (the “Term Commencement Date” ) and end on November 30, 2022 (the “Term Expiration Date” ).

 

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(c) Rent .

 

i. Effective as of the Effective Date, Subtenant shall pay to Tenant, on or before the first day of each month of the Term, the following amounts as Base Rent for the Sublease Premises:

 

Begin Date   End Date   No. of Months   Annual Base Rent Per Sq. Ft.     Monthly Base Rent  
Term Commencement Date   03/31/2020   12   $ 15.50     $ 7078.33  
04/01/2020   03/31/2021   12   $ 16.00     $ 7306.67  
04/01/2021   11/30/2022   19   $ 16.50     $ 7535  

 

ii. Sublease rent is payable to Tenant at the following address: 100 Waugh Drive, Suite 300, Houston, Texas 77019. If any payment due Tenant is not received by Tenant when due and Subtenant does not cure such failure within three (3) business days after delivery of written notice from Tenant to Subtenant, Subtenant shall be in breach in addition to all other remedies available to it, Tenant can collect a late payment charge of five percent (5%) of such past due amount. Notwithstanding the prior sentence, Tenant shall not be required to provide Subtenant more than two (2) notices of late rent in any twelve (12) month period.

 

iii. Beginning on the Term Commencement Date and continuing each month thereafter, Subtenant shall be responsible for Subtenant’s Proportionate Share of any other fees or expenses applicable to all of Tenant’s Premises that are passed through to Tenant by the Landlord, including those payments for Operating Expenses, as that term is defined the Master Lease (collectively, the “ S ubtenant’s Operating Expenses ”). All Operating Expenses and any other expenses will be trued up annually in accordance with the Master Lease, and Subtenant shall promptly pay any additional amounts owing after such true up

 

iv. Base Rent and Subtenant’s Operating Expenses shall collectively be referred to herein as “Rent.” If the Term Commencement Date is a day other than the first day of a calendar month, the monthly Rent shall be prorated for such initial calendar month.

 

(d) Tenant Representations and Warranties . Tenant hereby warrants and represents to Subtenant that, as of the Effective Date, (a) to its actual knowledge without any duty to investigate, that the Sublease Premises is in compliance with all applicable laws, (b) to its actual knowledge without any duty to investigate, that the Sublease Premises is free from hazardous materials, (c) that Tenant has not received any notice of any violation or non-compliance related to Tenant’s Premises or the Sublease Premises from the Landlord or any governmental authority or agency, (d) to its actual knowledge without any duty to investigate, that neither Tenant or Landlord are in default under the Master Lease and no event has occurred that would constitute a default under the Master Lease, but for the giving of notice or passage of time by Landlord or Tenant, (e) that the Sublease Premises was previously occupied by Genesys Talent, LLC, a Texas limited liability company (the “ Prior Occupant ”) and, to its actual knowledge without any duty to investigate, Subtenant’s use of the Sublease Premises for general office use, which such “general office use” includes the operation of office space for an online staffing business in a fashion similar to Prior Occupant’s use of the Sublease Premises for such online staffing business (collectively, “ Permitted Use ”), will not violate the Master Lease (including, but not limited to, the use restrictions and prohibitions set forth in Section 5(A) of the Master Lease), and (f) subject to Landlord executing the attached joinder and consent, Tenant has obtained all necessary consents or approvals to execute this Sublease and this Sublease does not violate any agreements Tenant has with any other party.

 

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(e) Condition of Sublease Premises . EXCEPT AS SET FORTH IN SECTION 4 ABOVE, SUBTENANT ACCEPTS THE PREMISES ON AN “AS-IS” BASIS AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, BY TENANT REGARDING THE SUBLEASE PREMISES, THE BUILDING OR THE PROJECT. BASED ON SECTION 4 ABOVE AND ITS OWN INVESTIGATION, SUBTENANT HEREBY AGREES THAT THE SUBLEASE PREMISES IS IN GOOD ORDER AND SATISFACTORY CONDITION . EXCEPT IN THE EVENT OF A PROVEN TENANT BREACH OF SECTION 4 ABOVE, SUBTENANT WAIVES (I) ALL CLAIMS DUE TO DEFECTS IN THE SUBLEASE PREMISES; AND (II) ALL EXPRESS AND IMPLIED WARRANTIES OF SUITABILITY, HABITABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE . EXCEPT IN THE EVENT OF A PROVEN TENANT BREACH OF SECTION 4 ABOVE AND EXCEPT AS OTHERWISE PERMITTED UNDER SECTION 23 BELOW, SUBTENANT WAIVES THE RIGHT TO TERMINATE THIS SUBLEASE DUE TO THE CONDITION OF THE SUBLEASE PREMISES.

 

(f) Building Services. Notwithstanding any other provisions in this Sublease, the only services or utilities to which Subtenant is entitled hereunder are those to which Tenant is entitled under the Master Lease; provided, however, Tenant shall use its commercially reasonable efforts to cause Landlord to comply with its utility related obligations under the Master Lease. Except if arising from the gross negligence or willful misconduct of Tenant or its agents, employees or contractors any cessation in the furnishing of any services or utilities shall not render Tenant liable to Subtenant in any respect for damages to either persons or property, nor be construed as an eviction by Tenant, nor work an abatement of rent, nor relieve Subtenant from fulfillment of any covenant or agreement in this Sublease, except Subtenant shall have all of the rights and remedies of Tenant set forth in Section 7.B. of the Master Lease.

 

(g) Tenant Repairs. Except to the extent damage arises from the acts or omissions of Tenant or its employees, agents, or contractors after the date of this Sublease, Tenant shall have no obligation, under the Master Lease or this Sublease, to repair, maintain, refurbish or make replacements for the Sublease Premises, whether or not arising out of fire, other casualty, or in connection with the need for normal maintenance and repair; provided, however, Tenant shall use its commercially reasonable efforts to cause Landlord to comply with its maintenance, repair and replacement obligations under the Master Lease.

 

(h) Subtenant Repairs and Alterations. Subtenant, at its own cost and expense, shall perform such maintenance, repairs and replacements with respect to the Sublease Premises as are required of the Tenant under the Master Lease whether or not caused by any act or omission of Subtenant or Subtenant’s agents, employees, invitees, licensees, or visitors, but excluding maintenance, repairs and replacements necessitated by the acts or omissions of Tenant or its agents, employees or contractors after the date of this Sublease. At the termination of this Sublease, by lapse of time or otherwise, Subtenant shall deliver the Sublease Premises to Tenant in as good condition as existed at the Term Commencement Date of this Sublease, ordinary wear and tear, casualty and condemnation excepted, and Subtenant shall return all keys and key cards providing access to the Building and Sublease Premises.

 

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Subtenant may make alterations to the subleased premises (including, but not limited to, installing locks on interior doors between the Subleased Premises and the remainder of the Tenant Premises), provided that Subtenant complies with any requirements of the Master Lease. Tenant shall use commercially reasonable efforts to cooperate with the Subtenant in connection with facilitating any necessary dialogue with the Landlord related to such alterations.

 

(i) Signage. Tenant shall cooperate with Subtenant, at no cost to Tenant, to cause Landlord to place Subtenant’s name in the directory located in the main lobby of the Building and to provide Subtenant with Building standard suite entry door signage. Any expenses or costs associated with replacement of any such Subtenant signage shall be borne exclusively by Subtenant.

 

(j) Parking . In accordance with Exhibit F of the Master Lease, as modified by the First Amendment to Office Lease, Subtenant shall have the right to use 4 parking permits for use in the parking garage of the Building and 16 unreserved, uncovered parking spaces.

 

(k) Compliance with Lease Terms. Subtenant represents that it has read and is familiar with all of the provisions of the Master Lease, and Subtenant agrees that it shall be obligated to comply with all of the terms, covenants, agreements, conditions and obligations of Tenant under the Master Lease incorporated in Section 12 below insofar as such incorporated provisions do not conflict with the specific provisions of this Sublease. Subtenant shall not, by any act or omission, cause Tenant to be in violation of or in default under the Master Lease. Tenant will not violate the Master Lease provided that Tenant will not be responsible to Subtenant for violations of the Master Lease caused by the acts or omission of Subtenant, its agents, employees, invitees, or contractors.

 

(l) Incorporation of Lease . Insofar as the provisions of the Master Lease do not conflict with specific provisions hereof, and except for Section 1.B, Section 1.C., Section 1.D., Section 1.G., Section 1.H, Section 1.I., Section 2, Section 3, Section 6, Section 31.E., Section 31.F., Section 31.P., Exhibit D, Exhibit E, Rider No. 1, and Rider No. 2 of the Office Lease, and Sections 1-12 of the First Amendment to Office Lease, all provisions of the Master Lease are incorporated by this reference into this Sublease as fully as if completely restated herein. Insofar as the provisions of the Master Lease do not conflict with specific provisions hereof, Subtenant shall be bound by all of the provisions of the Master Lease (except those Sections excluded by the preceding sentence) pertaining to the Sublease Premises and shall perform all of the obligations and responsibilities that Tenant by the Master Lease undertakes toward Landlord pertaining to the Sublease Premises, except for the payment of Rent due under the Master Lease. Therefore, in construing Subtenant’s obligations, wherever in the Master Lease the word “Landlord” or “Lessor” is used, it shall mean Tenant and wherever in the Master Lease the word “Tenant” or “Lessee” is used, it shall mean Subtenant and wherever in the Master Lease the words “Leased Premises” or similar words are used, they shall mean the Sublease Premises. The foregoing notwithstanding, this Sublease does not create any rights in Landlord or any third parties. If the Master Lease terminates, this Sublease shall terminate and the parties shall be relieved of any further liability or obligation under this Sublease, provided however, (a) that if the Master Lease terminates as a result of a default or breach by Subtenant under this Sublease that causes a default or breach under the Master Lease, then Subtenant shall be liable to Tenant for the damage suffered as a result of such termination, or (b) that if the Master Lease terminates as a result of a default or breach by Tenant that is not caused by a default by Subtenant under this Sublease, then Tenant shall be liable to Subtenant for the damage suffered as a result of such termination. Notwithstanding anything in this Sublease to the contrary, nothing in this Sublease will obligate Subtenant to be responsible for any obligations of Tenant related to Tenant’s Premises other than to the extent such obligations pertain to the Sublease Premises.

 

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(m) Condition of Property. Notwithstanding any provision of this Sublease or the Master Lease to the contrary, Tenant shall not be liable to Subtenant or any of its agents, employees, servants, or invitees for any death or injury to any person or persons or for damage to property due to the condition or design or any defect in the Sublease Premises, the Building or any complex of which it is a part, or any part or component thereof (including without limitation any mechanical, electrical, plumbing, heating, air conditioning or other systems or equipment), which may exist or subsequently occur, except to the extent of Tenant’s own gross negligence or willful misconduct. Subtenant, for itself and its agents, employees, servants, and invitees, expressly assumes all risks of damage to persons and property, either proximate or remote, by reason of the present or future condition of the Sublease Premises, the Building or any complex of which it is a part, or any part or component thereof, except to the extent caused by Tenant’s gross negligence or willful misconduct.

 

(n) Acts of Subtenant. Except if arising out of the gross negligence or willful misconduct of the Tenant Parties, Subtenant does hereby assume liability for, and does hereby agree to indemnify, protect, defend, save and hold harmless Tenant, its officers, directors, agents and employees (collectively, “ Tenant Parties ”), from and against any and all liabilities, obligations, claims, actions, demands, fines, suits, judgments, penalties, damages and losses (including all of the costs, fees and expenses connected therewith or incident thereto) for death of or injury to any person whomsoever and for loss of, damage to, or destruction of any property whatsoever (including loss of use thereof) arising out of Subtenant’s use of the Sublease Premises, or any act or omission of Subtenant, its owners, officers, employees, agents or contractors, or Subtenant’s breach of any of its obligations under this Sublease (including, but not limited to, the obligations under the Master Lease imposed on Subtenant by this Sublease). This indemnity is intended to indemnify the Tenant parties against the consequences of their own negligence or fault, even when Tenant PARTIES are jointly, comparatively, contributively, or concurrently negligent with Subtenant, and even though any such claim, cause of action or suit is based upon or alleged to be based upon the strict liability of Tenant PARTIES; however, such indemnity shall not apply to the sole or gross negligence or willful misconduct of Tenant PARTIES.

 

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(o) Except if arising out of the gross negligence or willful misconduct of the Subtenant Parties, Tenant does hereby assume liability for, and does hereby agree to indemnify, protect, defend, save and hold harmless Subtenant, its officers, directors, agents and employees (collectively, “ Subtenant Parties ”), from and against any and all liabilities, obligations, claims, actions, demands, fines, suits, judgments, penalties, damages and losses (including all of the costs, fees and expenses connected therewith or incident thereto) for death of or injury to any person whomsoever and for loss of, damage to, or destruction of any property whatsoever (including loss of use thereof) arising out of Tenant’s use of the Tenant Premises (excluding the Sublease Premises), or any act or omission of Tenant, its owners, officers, employees, agents or contractors, or Tenant’s breach of any of its obligations under this Sublease and the Master Lease. This indemnity is intended to indemnify the SUBTENANT parties against the consequences of their own negligence or fault, even when SUBTenant PARTIES are jointly, comparatively, contributively, or concurrently negligent with tenant, and even though any such claim, cause of action or suit is based upon or alleged to be based upon the strict liability of SUBTenant PARTIES; however, such indemnity shall not apply to the sole or gross negligence or willful misconduct of SUBTenant PARTIES.

 

(p) Limitation of Liability. Each party hereby waives all claims against the other party and its respective officers, directors, agents and employees, for consequential, special or punitive damages allegedly suffered by such party, including lost profits and business interruption.

 

(q) Default by Landlord. Tenant shall use its commercially reasonable efforts to cause Landlord to comply with its obligations under the Master Lease and, if applicable, to seek rental abatements and other remedies from Landlord. Tenant shall not be responsible or liable for any violation or default by Landlord under the Master Lease (regarding utilities, services, repairs or otherwise) or for the acts or omissions of any tenant of the Building, but only for defaults of Tenant hereunder and for the gross negligence or willful misconduct of Tenant.

 

(r) Quiet Enjoyment. Provided Subtenant has performed all of the terms, covenants, agreements, conditions and obligations under this Sublease, Subtenant shall peaceably and quietly hold and enjoy the Sublease Premises against Tenant and all persons claiming under Tenant for the balance of the Sublease Term and Subtenant will have the same rights and benefits to use the Common Areas (as defined in the Master Lease) and other portions of the Building and Property (as defined in the Master Lease) as are afforded to Tenant under the Master Lease.

 

(s) Broker. Tenant and Subtenant, each as to itself, warrant and represents to the other, that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Sublease.

 

(t) Insurance . Subtenant shall procure and maintain during the Term of this Sublease the same insurance for the Sublease Premises as required of Tenant under the Master Lease for the Tenant Premises. Subtenant shall name both Tenant and Landlord under the Master Lease as additional insureds and shall produce such evidence of insurance promptly after request by Tenant or Landlord. Notwithstanding anything in this Sublease to the contrary, each party waives, and shall cause its respective insurance carrier(s) and any other party claiming through or under its respective carrier(s), by way of subrogation or otherwise, to waive any and all rights of recovery, claims, action or causes of actions against the other party for any loss, liability, judgments, costs, expenses (including attorney’s fees) that is covered by insurance or would have been covered by insurance had the insurance required by this Lease been maintained.

 

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(u) Default / Remedies . If Subtenant fails to pay when due any Rent as set forth in Section 3(b) above, then Tenant shall have such rights and remedies available to Tenant at law or in equity and, except as otherwise set forth in this Sublease, shall have all the rights against Subtenant as would be available to Landlord against Tenant under the Master Lease if such breach were by Tenant as the lessee under the Master Lease. If Tenant violates this Sublease, then, except as otherwise set forth in this Sublease, Subtenant shall have all rights and remedies available at law or in equity against Tenant.

 

(v) Entirety of Agreement . This Sublease shall become effective only upon full execution and delivery of this Sublease by Landlord and Tenant. This Sublease contains the parties’ entire agreement regarding the subject matter covered hereby, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Sublease.

 

(w) Attorney’s Fees. If Subtenant defaults in the performance of any of the provisions of this Sublease and Tenant places in the hands of any attorney the enforcement of all or any part of this Sublease, the collection of any rent or other sums due or to become due or recovery of the possession of the Sublease Premises, Subtenant agrees to pay Tenant’s costs of collection, including reasonable attorneys’ fees, whether suit is actually filed or not. If either party seeks to enforce the terms and conditions of this Sublease in a court of law, the non-prevailing party in such action shall be responsible for the costs and expenses incurred in such action by the prevailing party, including, without limitation, reasonable attorney’s fees and court costs.

 

(x) Waiver, Releases and other Pass Through Rights/Benefits. Subtenant shall not have the right to withhold or to offset rent or to terminate this Sublease except as expressly provided herein or available under the Master Lease. Subtenant waives and releases any and all statutory liens and offset rights. Any Rent abatements, reductions, refunds or similar benefits received by Tenant from Landlord shall be proportionately passed through to Subtenant under the Sublease, except to the extent such abatement, reduction, refund or other benefit arises from a circumstance that disproportionately affects Tenant or Subtenant, in which case, such amount or benefit shall be equitably allocated between Tenant and Subtenant taking into consideration the circumstances.

 

(y) Miscellaneous. This Sublease shall not be construed for or against either party hereto.

 

(z) Counterparts . This Sublease may be executed in multiple counterparts, each of which shall be considered an original but which taken together shall constitute one and the same instrument. Each party hereto agrees that a facsimile, electronic or other copy of a signature hereto will be as effective as the original of that signature.

 

(Signature pages to follow)

 

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  TENANT :
   
  ICON INFORMATION CONSULTANTS, L.P. , a Texas limited partnership
     
  By: Icon Technical Consultants, LLC, a Texas limited liability company, its General Partner
     
  By:
  Name: Konrad Novicke
  Title: COO
     
  SUBTENANT:
   
  RECRUITER.COM RECRUITING SOLUTIONS, LLC , a Delaware limited liability company
     
  By:
  Name: Miles Jennings
  Title: CEO

 

B- 8

 

 

 

B- 9

 

 

Exhibit C

License Agreement

 

This License and Services Agreement (this “ Agreement ”), effective as of March 31, 2019 (the “ Effective Date ”), is by and among Genesys Talent, LLC, a Texas limited liability company (“ Genesys ”), Recruiter.com Recruiting Solutions, LLC, a Delaware limited liability company (“ Recruiter ”), and Truli Technologies, Inc., a Delaware corporation (“ Truli ,” together with Recruiter, the “ Company ”). Genesys, Truli, and Recruiter may be referred to herein collectively as the “ Parties ” or individually as a “ Party .”

 

WHEREAS , pursuant to an Asset Purchase Agreement dated as of the Effective Date, the Company agreed to purchase certain assets from Genesys; and

 

WHEREAS , Genesys desires to license to the Company the right to use certain software-as-a-service offerings from Genesys.

 

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

 

1. Definitions .

 

Capitalized terms used herein and not otherwise defined throughout this Agreement shall have the meanings set forth in this Section 1. All other capitalized terms shall have meanings given to them throughout this Agreement.

 

Action ” means any claim, charge, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena, or investigation of any nature, civil, criminal, administrative, regulatory, or other, whether at law, in equity, or otherwise.

 

Additional Services ” has the meaning contained in Section 6.5.

 

Affiliate ” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the direct or indirect power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

 

Agreement ” has the meaning contained in the preamble.

 

Ancillary Agreements ” means the Asset Purchase Agreement and any other agreements in connection with the sale of certain assets by Genesys to the Company.

 

Annual Payments ” has the meaning contained in Exhibit A .

 

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Applicable Data Protection Laws ” means federal, state and international privacy, data protection and information security-related Laws applicable to Personal Information.

 

Asset Purchase Agreement ” means that certain asset purchase agreement entered into on the Effective Date by and among the Parties.

 

Authorized Users ” means all Persons authorized by Truli, Recruiter, or any of its Sublicensees to access and use the Services through the Company’s account all in accordance with the terms and conditions of this Agreement.

 

“Available” means the Services available and operable by Genesys for access and use by the Company, its Sublicensees and the Authorized Users in material conformity with the Specifications and Documentation. “Availability” has a correlative meaning.

 

Availability Requirement ” has the meaning contained in Exhibit B .

 

Avature ” has the meaning set forth on Exhibit A .

 

Avature Services ” has the meaning set forth on Exhibit A .

 

Avature Service Level Credits ” has the meaning set forth on Exhibit B .

 

Bankruptcy Triggering Event ” has the meaning contained in Section 10.3(b)(i).

 

Business Day ” means a day other than a Saturday, Sunday, or other day on which commercial banks in New York, NY are authorized or required by Law to be closed for business.

 

Change of Control ” means: (i) any Person unaffiliated with an entity acquires more than fifty percent (50%) control, directly or indirectly, over the voting securities of said entity; (ii) an entity merges, consolidates or reorganizes with an unrelated Person, unless the equity owners of said entity immediately prior to such transaction would own at least a majority of the voting power of the surviving entity immediately following such transaction; (iii) the sale, lease, license or disposition of all or substantially all of the assets of an entity; (iv) the liquidation or dissolution of an entity; or (v) a change in a majority of the manages or members of an entity by Persons not affiliated with said entity as of the Effective Date.

 

Code ” has the meaning contained in Section 10.3(b)(i).

 

Company ” has the meaning contained in the preamble.

 

Company Data ” means any and all information, data, materials, works, expressions, or other content, including any that are (a) uploaded, submitted, posted, transferred, transmitted, or otherwise provided or made available by or on behalf of the Company, its Sublicensees or any Authorized User for Processing by or through the Services, or (b) collected, downloaded, or otherwise received by the Company or the Services for the Company, its Sublicensees or any Authorized User pursuant to this Agreement or at the written request or instruction of the Company, its Sublicensees or any Authorized User. All output, copies, reproductions, improvements, modifications, adaptations, translations, and other derivative works of, based on, derived from, or otherwise using any Company Data are themselves also Company Data. For the avoidance of doubt, Company Data includes all User Data and Personal Information, but does not include any Genesys Materials.

 

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Company Indemnitee ” has the meaning contained in Section 9.1(a).

 

Company Marks ” has the meaning contained in Section 7.3.

 

Company Systems ” means the internal systems of the Company and its Sublicensees that are used in the operation of their respective businesses, including computer hardware systems, software, embedded systems, infrastructure and all related databases, equipment and components.

 

Confidential Information ” has the meaning contained in Section 11.

 

Continuity Period ” has the meaning contained in Section 10.5(b).

 

Direct Claim ” has the meaning contained in Section 9.3(c).

 

Direct Claim Notice ” has the meaning contained in Section 9.3(c).

 

Documentation ” means any written description of the Services, including but not limited to the specifications (if applicable) setting out the description of its functionality and/or performance, user manuals, systems manuals, operating manuals, programming manuals, training manuals and video files, the Help and News content of the Services, and set up configuration guides, including any amendments and modifications thereto.

 

Effective Date ” has the meaning contained in the preamble.

 

Epidemic Failure ” means the Services are Available less than (i) 80% of the time during any given 30-day period during the Term, or (ii) 85% of the time during any given 90-day period during the Term.

 

Exclusive License ” refers to the exclusive license granted to the Company as provided for in Section 2 of this Agreement.

 

Exclusivity Period ” has the meaning contained in Section 2.1.

 

Exceptions ” has the meaning contained in Exhibit B .

 

Excused Downtime ” has the meaning contained in Exhibit B .

 

Force Majeure ” means any event beyond the reasonable control of the applicable Party relating to strikes, labor disputes, freight embargoes, interruption or failure in the Internet, telephone or other telecommunications service or related equipment, material interruption in the mail service or other means of communication, a Party sustaining a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious act, whether or not such loss shall have been insured, acts of God, outbreak or material escalation of hostilities or civil disturbances including terrorist acts, national emergency or war (whether or not declared), or other calamity or crises including a terrorist act or acts affecting the United States, future laws, rules, regulations or acts of any government (including any orders, rules or regulations issued by any official or agency of such government).

 

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Genesys ” has the meaning contained in the preamble.

 

Genesys Indemnitee ” has the meaning contained in Section 9.1(b).

 

Genesys Instance ” has the meaning contained in Exhibit A .

 

Genesys Materials ” means the Services, Specifications, Documentation, and Genesys Systems and any and all other information, documents, data, know-how, methods, processes, hardware, software, and other technologies and inventions, including any deliverables, technical or functional descriptions, requirements, plans, or reports, that are provided or used by Genesys in connection with the Services or otherwise comprise or relate to the Services or Genesys Systems.

 

Genesys Personnel ” means all employees and agents of Genesys involved in the performance of Services.

 

Genesys Service Manager ” has the meaning contain in Section 2.6(a).

 

Genesys Systems ” has the meaning contained in Section 5.4.

 

Genesys Talent Technology ” has the meaning contained in Exhibit A .

 

Indemnitee ” has the meaning contained in Section 9.1(b).

 

Indemnifying Party ” shall mean the Party(ies) obligated to provide indemnification under Section 9.

 

Intellectual Property Rights ” means any and all registered and unregistered rights granted, applied for, or otherwise now or hereafter in existence under or related to any patent, copyright, trademark, trade secret, database protection, or other intellectual property rights laws, and all similar or equivalent rights or forms of protection, in any part of the world.

 

Initial Term ” means the period from the Effective Date until May 31, 2021.

 

Key Personnel ” means any Genesys Personnel identified as key personnel in this Agreement.

 

Law ” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, or other requirement of any federal, state, local, or foreign government or political subdivision thereof, or any arbitrator, court, or tribunal of competent jurisdiction.

 

License Fee ” means the Annual Payment and Monthly Payments.

 

Losses ” means any and all losses, damages, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees and the costs of enforcing any right to indemnification hereunder and the cost of pursuing any insurance.

 

C- 4

 

 

Match List Services ” has the meaning set forth on Exhibit A .

 

Match List Service Level Credits ” has the meaning set forth on Exhibit E .

 

Material Adverse Effect ” means any event, occurrence, fact, condition or change that is materially adverse to (a) the business, results of operations, prospects, condition (financial or otherwise), or assets of the Company or Genesys as the case may be, or (b) the ability of the Company or Genesys to consummate the transactions contemplated hereby on a timely basis; except for any event, occurrence, fact, condition or change related to (1) any change in the United States economy or securities or financial markets in general, or any change in general national economic or financial conditions; or (2) any change that generally affects the recruiting and job placement industry; provided, that the matters set forth in clauses (1) and (2) above shall not be excluded if they have a disproportionate impact on any Party relative to the other companies in the online recruitment business in which such Party operates.

 

Monthly Payments ” has the meaning contained in Exhibit A .

 

MSA ” has the meaning contained in Exhibit A .

 

Notice ” has the meaning contained in Section 14.4.

 

Open Source Software ” means any software component that is subject to any open source copyright license agreement, including software available under the GNU Affero General Public License (AGPL), GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), Apache License, BSD licenses, or any other license that is approved by the Open Source Initiative.

 

Party ” and “ Parties ” have the meaning in the preamble.

 

Permitted Uses ” means any use of the Services by the Company, its Sublicensees or any Authorized User for any lawful purposes and which such use is in accordance with the terms and conditions of this Agreement or the Ancillary Agreements.

 

Person ” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association, or other entity.

 

Personal Information ” means any personally identifiable information, including information that the Company, its Sublicensees or Authorized Users provide, or for which the Company, its Sublicensees or Authorized Users provide access to Genesys, or information which Genesys creates or obtains that: (i) directly or indirectly identifies an individual (including, for example, names, signatures, addresses, telephone numbers, email addresses, and other unique identifiers); (ii) can be used to authenticate an individual (including employee identification numbers, government-issued identification numbers, passwords or PINs, user identification and account access credentials or passwords, financial account numbers, credit report information, student information, biometric, answers to security questions, and other personal identifiers); or (iii) is defined as such or protected under Applicable Data Protection Laws, including information considered as sensitive personal data or employee personal data. For the avoidance of doubt, Personal Information does not include aggregate, anonymized data derived from an identified or identifiable individual.

 

C- 5

 

 

Policy ” or “ Policies ” has the meaning contained in Section 13.1.

 

Pre-Bankruptcy Period ” has the meaning contained in Section 10.3(b)(ii).

 

Process ” means to perform any operation or set of operations on any data, information, material, work, expression, or other content, including to (a) collect, receive, input, upload, download, record, reproduce, store, organize, combine, log, catalog, cross-reference, manage, maintain, copy, adapt, alter, translate, or make other improvements or derivative works, (b) process, retrieve, output, consult, use, disseminate, transmit, submit, post, transfer, disclose, or otherwise provide or make available, or (c) block, erase, or destroy. “ Processing ” and “ Processed ” have correlative meanings.

 

Qualifying Firm Offer ” has the meaning contained in Section 9.3(b).

 

Renewal Term ” has the meaning contained in Section 10.2.

 

Representatives ” means, with respect to a Party, that Party’s and its Affiliates’ respective employees, officers, directors, managers, agents, independent contractors, sublicensees and legal and financial advisors.

 

Scheduled Downtime ” has the meaning contained in Exhibit B .

 

Service Error ” means any failure of any Avature Service or any Match List Services to be Available or otherwise perform in accordance with this Agreement and the Specifications.

 

Service Level Credits ” has the meaning contained in Exhibit E .

 

Service Level Failure ” means a failure to perform the Support Services in compliance with the Support Service Level Requirements.

 

Services ” has the meaning contain in Section 2.1.

 

Specifications ” means the specifications for the Match List Services set forth in Exhibit A and, to the extent consistent with and not limiting of the foregoing, the Documentation.

 

Services ” has the meaning contained in Section 2.1(a).

 

Severity Level ” has the meaning contained in Exhibit C .

 

Sublicensee ” or “ Sublicensees ” means (i) the Company, (ii) any other Affiliate of the Company, or (iii) any third party to which the Company or any such other Affiliate is authorized to sublicense any Services hereunder.

 

Support Request ” has the meaning contained in Exhibit C .

 

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Support Service Level Requirements ” has the meaning contained in Exhibit C .

 

Support Services ” has the meaning contained in Section 4.

 

Term ” has the meaning provided by Section 10.2.

 

Third Party Claim ” has the meaning contained in Section 9.3(a).

 

Third Party Claim Notice ” has the meaning contained in Section 9.3(a).

 

Truli ” has the meaning contained in the preamble.

 

User Data ” means any and all information reflecting the access or use of the Services by or on behalf of the Company or any of its Sublicensees or any Authorized User, including any profile, visit, session, impression, click through, or click stream-data, and any statistical or other analysis, information, or data based on or derived from any of the foregoing from Authorized Users.

 

2. Services .

 

2.1 Description of Services . Throughout the Term and at all times in connection with its actual or required performance under this Agreement, Genesys shall, in accordance with the terms and conditions of this Agreement, provide to the Company and its Authorized Users the right to use the Match List Services and the Avature Services, in each case for the Company’s business purposes (collectively, the “ Services ”); provided, however , that the use of the Avature Services shall be exclusive to the Company (the “ Exclusive License ”) during the Term of this Agreement (the “ Exclusivity Period ”). The Services shall include the following:

 

(a) 24/7 access and use, in accordance with Section 2.2 of this Agreement, to the Avature Services as the same may be modified and improved from time to time by Genesys and/or the Company; and

 

(b) service maintenance and the support services as set forth in Section 4 and in accordance with Exhibit A (and defined below as Support Services).

 

2.2 Access and Use . Genesys hereby grants to the Company, exercisable by and through itself and its Sublicensees and Authorized Users, a limited use, world-wide, non-transferable (except to a successor in interest in the event of Company’s Change of Control), royalty free right to:

 

(a) access and use the Services, including in operation with other software, hardware, systems, networks, and services, for the Permitted Uses;

 

(b) generate, print, copy, upload, download, store, and otherwise Process all audio, visual, digital, and other output, displays, and content as may result from any access to or use of the Services;

 

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(c) access and use the Services for all such non-production uses and applications as may be necessary or useful for the effective use of the Services; and

 

(d) perform, display, execute, reproduce, and modify (including to create improvements and derivative works of), and distribute and otherwise make available to Authorized Users, any Genesys Materials solely to the extent necessary to access or use the Services in accordance with the terms and conditions of this Agreement.

 

Notwithstanding anything to the contrary in this Agreement, (i) the Company shall have the right to sublicense the Services to its Affiliates without being required to obtain the consent of Genesys prior thereto, and (ii) nothing contained in this Agreement shall preclude Recruiter or Truli from selling all or substantially all of its assets or selling (or allowing to be sold) all of its capital stock whether in a merger or otherwise.

 

2.3 Documentation License . Genesys hereby grants to the Company a limited use, world-wide, non-transferable (except to a successor in interest in the event of Company’s Change of Control), royalty free right to prepare, reproduce, print, download, and use as many copies of the Documentation as may be necessary or useful for the sole purpose of instructing Authorized Users on how to use the Services.

 

2.4 Exclusivity . During the Exclusivity Period, Genesys shall not, directly or indirectly, sell, offer, license or otherwise grant rights to the Avature Services described in the Exclusive License to any other Person; provided however , that nothing shall preclude Genesys from licensing the Avature Services on a non-exclusive basis to a Person outside of the business of online recruiting.

 

2.5 Compliance with Laws/Subcontracting . Each Party represents and warrants that it has complied, and shall comply in all material respects with all applicable Laws as they concern this Agreement, the performance by such Party of its obligations hereunder and the subject matter hereof, including all applicable domestic and international anti-corruption Laws (including the U.S. Foreign Corrupt Practices Act and international treaties and conventions such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the UN Convention Against Corruption), data privacy protection, trade and export compliance laws and regulations, including by securing and maintaining all required and appropriate permits, licenses, and other documentation and clearances necessary for performance under this Agreement and provision of the Services.

 

2.6 Genesys Personnel . Genesys shall:

 

(a) subject to the prior written approval of the Company, appoint: (i) a Genesys employee to serve as Genesys’s primary contact with respect to the Services, who will have the authority to act on behalf of Genesys in matters pertaining to the receipt and processing of Support Requests and the Support Services (the “ Genesys Service Manager ”); and (ii) other Key Personnel, who will be suitably skilled, experienced, and qualified to perform the Services;

 

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(b) maintain the same Genesys Service Manager and other Key Personnel throughout the Term and such additional period, if any, as Genesys is required to perform the Services, except for changes in such personnel due to: (i) the Company’s written request pursuant to Section 2.6(c); or (ii) the death, disability, resignation, replacement, or termination of such personnel (including any of the persons referred to specifically in Section 2.6(a) and (b)) or other circumstances outside Genesys’s reasonable control; and

 

(c) upon the reasonable written request of the Company, use commercially reasonable efforts to replace any Genesys Personnel.

 

2.7 Management and Payment of Genesys Personnel . Genesys is responsible for the payment of any and all amounts due to Genesys Personnel, including all fees, expenses, and compensation to, by, or on behalf of any Genesys Personnel and, if applicable, the withholding of income taxes and payment and withholding of social security and other payroll taxes, unemployment insurance, workers’ compensation insurance payments, and disability benefits. Genesys shall take reasonable measures, including engaging a third party to conduct background checks, to ensure that no Person who has been convicted of a felony or any misdemeanor involving, in any way, theft, fraud, bribery, or the violation of any securities law provides any Services or has access to any Personal Information or other Confidential Information of the Company, its Sublicensees or any Authorized Users. Genesys shall be responsible for ensuring the completion of all background checks necessary to comply with the foregoing.

 

2.8 Time of the Essence . Each Party acknowledges and agrees that time is of the essence with respect to each Party’s obligations under this Agreement and that except as otherwise permitted under this Agreement or by applicable Law, each Party shall ensure prompt and timely performance of all such obligations, including all timetables and other requirements of this Agreement.

 

2.9 Service Levels and Credits . Genesys shall make the Avature Services available in accordance with the service levels set forth on Exhibit C and will comply in all respects with the obligations of performance criteria set forth on Exhibit C including the remedies for failure to meet such service levels and performance criteria. Genesys shall make the Match List Services available in accordance with the service levels set forth on Exhibit E and will comply in all respects with the obligations of performance criteria set forth on Exhibit E including the remedies for failure to meet such service levels and performance criteria.

 

2.10 Use Restrictions . The Company shall not and shall cause its Sublicensees and Authorized Users not to: (a) rent, lease, lend, sell, distribute, publish, transfer, or otherwise make any Genesys Materials or other Genesys Confidential Information available to any third party, except as expressly permitted by this Agreement or the Ancillary Agreements; or (b) use or authorize the use of the Services or Documentation in any manner or for any purpose that is unlawful under applicable Law.

 

2.11 Performance Standards . Genesys will perform all Services in a professional, timely and workmanlike manner in accordance with generally recognized industry standards and practices for similar services and to the reasonable satisfaction of the Company, using Genesys Personnel with the requisite skill, experience, and qualifications, and shall devote adequate resources to meet its obligations under this Agreement.

 

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2.12 Ownership of the Services . During the Term, Genesys will retain ownership and applicable licenses of all software underlying the Services and will not transfer such ownership or applicable license rights to any third party without the prior written consent of the Company, except as may otherwise be permitted by this Agreement.

 

2.13 MSA Assurances . For the avoidance of doubt, the Avature Services provided for on Exhibit A are software services that Genesys is permitted, as a customer, under that certain MSA by and between Genesys and Avature to provide to Company. Within 15 days of the Effective Date of this Agreement, Genesys and its Affiliates shall use reasonable commercial efforts to obtain written acknowledgment from Avature in connection with Genesys’ ability to provide the Avature Services to Company for the Initial Term.

 

3. Company Obligations .

 

3.1 Personnel . The Company shall designate one of its employees to serve as its primary contact with respect to this Agreement and to act as its Representative with respect to matters pertaining to this Agreement, with such designation to remain in force unless and until a successor Representative is appointed, in the Company’s sole discretion.

 

3.2 Prohibited Acts . Subject to the terms of this Agreement, including the Company’s rights in connection with a bankruptcy of Genesys, neither Genesys, on the one hand, or the Company, on the other hand, shall use the Confidential Information of the other Party outside of the scope of this Agreement with the intent to harm such other Party.

 

4. Support and Maintenance . Genesys shall provide maintenance and support services (collectively, “ Support Services ”) for the Services in accordance with the provisions of this Section 4 and Exhibit A . The Support Services are included in the Services, and Genesys shall not assess any royalties, fees, costs, or charges for such Support Services.

 

4.1 Support Service Responsibilities . Genesys shall:

 

(a) correct all Service Errors in accordance with the Support Service Level Requirements, including by providing defect repair, programming corrections, and remedial programming, as more particularly set forth on Exhibit C ;

 

(b) provide telephone support during the hours of 8 a.m. to 5 p.m. Central Standard time on Business Days in a reasonable manner sufficient to meet the requirements set forth in this Agreement, including Exhibit C ; and

 

(c) respond to and resolve Support Requests as set forth in Exhibit C .

 

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4.2 Service Monitoring and Management . Genesys shall continuously monitor and manage the Services to ensure that the Availability meets the Availability Requirement. In the event of a Force Majeure event which affects Genesys’s ability to comply with this Section 4.2, Genesys shall be excused during the duration of the Force Majeure event and thereafter for as long as it takes using commercially reasonable efforts to comply; provided, that Genesys shall (a) to the extent reasonably possible, give the Company prompt written Notice of any event or circumstance that is reasonably likely to result in a Force Majeure event, and the anticipated duration thereof; and (b) use all diligent efforts to end the Force Majeure event, ensure that the effects of any Force Majeure event are minimized and resume full performance under this Agreement as soon as reasonably possible following such Force Majeure event. Notwithstanding anything to the contrary contained herein, if such Force Majeure event is not reasonably expected to cease within a reasonable amount of time, the Company shall have the right to terminate this Agreement without any requirement to make the payments described in Section 10.4 (other than to the extent already due and payable at the time of such termination).

 

4.3 Service Maintenance . Genesys shall continuously maintain the Avature Services in accordance with Exhibit C , and the Match List Services in accordance with Exhibit E .

 

5. Security .

 

5.1 Protection of Data and Confidential Information of the Parties . At all times in connection with its actual or required performance of the Services hereunder, Genesys shall make the Services available in accordance with the data security and back-up requirements set out on Exhibit D .

 

5.2 Permitted Use of Personal Information . The Company shall not cause or permit any Personal Information to be Processed in any manner or for any purpose other than the performance of the Services in compliance with all applicable Laws, including Data Protection Laws. Without limiting any other requirements imposed by this Agreement or any Applicable Data Protection Law, the Company represents, warrants and covenants that Genesys will (i) only provide, disclose and/or transfer Personal Information to the Company so long as Genesys has previously obtained all appropriate and applicable consents to treat or use such Personal Information as required by the Company for purposes of this Agreement, and (ii) ensure that such consents are accurate and in compliance with all requirements of all Applicable Data Protection Laws. Genesys shall have and make available terms and conditions and/or privacy policies consistent with the applicable provisions in this Agreement, including all Applicable Data Protection Laws.

 

5.3 Unauthorized Access . Genesys shall not access, and shall not permit any access to, the Company Systems, in whole or in part, whether through Genesys Systems or otherwise, without the Company’s express prior written authorization. Such authorization may be revoked by the Company in writing at any time in its sole discretion; provided, however, that any such revocation that results in or otherwise causes Genesys to be unable to provide the Services as provided for in this Agreement shall not be deemed a breach of this Agreement by Genesys. Any access to the Company Systems shall be solely in accordance with the terms and conditions, and in no event exceed the scope of, the Company’s authorization pursuant to this Section 5.3. All the Company-authorized connectivity or attempted connectivity to the Company Systems shall only be through the Company’s security gateways and firewalls and in compliance with the Company’s policies as the same may be supplemented or amended by the Company and provided to Genesys from time to time.

 

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5.4 Genesys Systems . Genesys shall be solely responsible for the information technology infrastructure, including all computers, software, databases, electronic systems (including database management systems), and networks used by or for Genesys to access the Company Systems or otherwise in connection with the Services (“ Genesys Systems ”) and shall prevent unauthorized access to the Company Systems through the Genesys Systems.

 

5.5 Material Breach of Security Provisions . Any material failure of the Services to meet the requirements of this Agreement with respect to the security of any Company Data or other Confidential Information of the Company, including any related backup, disaster recovery, or other policies, practices, or procedures, is a material breach of this Agreement for which the Company, at its option, shall have the right to terminate this Agreement in accordance with the terms of this Agreement, and Genesys shall promptly refund to the Company any License Fee prepaid by the Company prorated to the date of such termination.

 

5.6 Redundancy, Data Backup, and Disaster Recovery . Genesys shall, in accordance with the provisions of this Section 5, maintain or cause to be maintained disaster avoidance procedures reasonably designed to safeguard the Company Data and the Company’s other Confidential Information, Genesys’s Processing capability, and the availability of the Services, in each case at all times in connection with its actual or required performance of the Services hereunder.

 

6. License Fee .

 

6.1 Monthly License Fee . In consideration of the Exclusive License and non-exclusive license rights and in consideration of the agreements made by Genesys herein and the Avature Services to be provided by Genesys hereby, the Company will pay to Genesys the Monthly Payments, as described on Exhibit A , subject to the terms of this Agreement. Subject to the terms of this Agreement, the first Monthly Payment will be due and owing to Genesys on the 90 th calendar day following the Effective Date of this Agreement and each subsequent Monthly Payment thereafter will become due and owing to Genesys every 30 days thereafter following receipt of an invoice from Genesys to the Company.

 

6.2 Annual License Fee . In consideration of the agreements made by Genesys herein and the Services to be provided by Genesys hereby, the Company will pay to Genesys the Annual Payments, as described on Exhibit A , subject to the terms of this Agreement. Subject to the terms of this Agreement, Genesys shall bill the Annual Payments in equal monthly installments, and the first monthly installment will be due and owing to Genesys no later than the 30 th calendar day following the Effective Date and each subsequent monthly installment thereafter will become due and owing to Genesys every 30 days thereafter following receipt of an invoice from Genesys to the Company.

 

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6.3 Responsibility for Costs . Genesys shall be responsible for all costs and expenses incurred in or incidental to the performance of Services, including all costs of any materials supplied by Genesys, all fees, fines, licenses, bonds, or taxes required of or imposed against Genesys, and all other of Genesys’s costs of doing business.

 

6.4 Taxes . All Fees stated or referred to in this Agreement are exclusive of taxes. Company is responsible for paying all taxes associated with its purchases hereunder, excluding taxes based on Genesys’s net income, on the capital, assets or equity of Genesys, or Genesys’s payroll. Company is liable for paying all applicable federal, state and local sales, foreign withholding, value added, sale, use or other taxes (if applicable) relating to Company’s receipt or use of the Services under this Agreement. If Genesys has the legal obligation to collect taxes, the appropriate amount shall be invoiced to and paid by the Company, unless Company provides Genesys with a valid tax exemption certificate authorized by the appropriate taxing authority. If Genesys does not charge the taxes as a result of an exemption certificate provided by Company and the tax authorities subsequently determined that Genesys should have charged such taxes, Company shall pay such taxes as required by the authorities. In such a case, Company shall also bear all interest, levies and penalties assessed. To the extent Genesys determines that tax was due but unpaid, and Company has already self-assessed such tax, Company’s obligation to Genesys is limited to the excess of the tax due over the self-assessed tax already remitted. Nothing herein shall prohibit Company from challenging tax assessments at its own cost. If Company is legally entitled to an exemption from any sales, use or similar transaction tax, Company is responsible for providing Genesys with legally-sufficient tax exemption certificates for each taxing jurisdictions. Genesys will apply the tax exemption certificates to charges occurring after the date Genesys received the tax exemption certificates. In connection with this Section 6.4, Genesys hereby represents and warrants that any and all taxes that are invoiced by Genesys to Company are accurate and complete; provided, however, that in the event the taxes invoiced by Genesys to Company are incorrect or inaccurate, for any reason, Genesys agrees to indemnify, defend and hold harmless Company for such taxes, including all expenses, costs and/or penalties, if any, related to such taxes.

 

6.5 Most Favored Terms/Pricing . As of the Effective Date of this Agreement, the Annual Payments payable by Company for the Match List Services are no higher than the fees paid by any other customer of Genesys for the same or similar services. Genesys shall not increase the Annual Payments for the same or substantially similar volume of Match List Services by more than five percent (5%) for each one (1) year period during the Term. Furthermore, if any Person is being offered the same or substantially similar services or terms, which terms shall include, without limitation, those related to Service Level Credits (the “ Additional Services ”), by Genesys, and such Additional Services are not currently being provided to Company as part of the Services, Genesys shall immediately begin providing those Additional Services and terms to the Company which shall be incorporated and made a part of the Services at no additional charge to the Company. For the avoidance of doubt, if Company exceeds the nine recruiter licenses provided for on Exhibit A , Genesys may increase the Annual Payment consistent with the terms provided for herein.

 

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6.6 Audits of Genesys . During the Term and for four years after the termination of this Agreement, Genesys shall: (a) maintain complete and accurate books and records regarding its business operations relevant to the calculation of Service Level Credits, and any other information relevant to Genesys’s compliance with this Agreement including all fees paid by the Company hereunder to Genesys; and (b) upon the Company’s written request, make such books and records, and appropriate personnel, available during normal business hours for inspection and audit by the Company or its Representatives, provided that the Company shall: (i) provide Genesys with at least three days’ prior written Notice of any audit; and (ii) conduct or cause to be conducted such audit in a manner designed to minimize disruption of Genesys’s normal business operations. The Company will pay the out-of-pocket cost of such audits unless an audit reveals an overbilling or over-reporting of 5% or more, in which case Genesys shall reimburse the Company for the cost of the audit. Genesys shall immediately upon written notice from the Company pay the Company the amount of any overpayment revealed by the audit and the Company shall immediately upon written notice from Genesys pay Genesys the amount of any underpayments revealed by the audit.

 

6.7 Availability and Support Service Level Credits . The Parties acknowledge and agree that the Service Level Credits assessed pursuant to Exhibit B and Exhibit E respectively: (a) are a reasonable estimate of the diminished value of the Services that may arise from the corresponding Service Error or Service Level Failure, which would be impossible or very difficult to accurately estimate as of the Effective Date; and (b) are not intended as, and should not be deemed to be, a penalty or forfeiture.

 

6.8 Right of Set-Off . Each Party reserves the right to withhold and set off, at any time, any amount then due and owing to it by the other Party(ies), against any amount payable by a Party to the other Party under this Agreement or otherwise, including any Losses to which any Party or any Indemnified Party (as defined herein) that is an Affiliate of such Party may be entitled (a) under any indemnification provision of this Agreement, or (b) otherwise as a result of any breach by any Party of this Agreement.

 

6.9 Support Not to Be Withheld or Delayed . Genesys shall not withhold or delay any Services or Support Services or fail to perform any other Services or obligations hereunder by reason of: (a) the Company’s good faith withholding of any payment or amount in accordance with this Section 6; or (b) any good faith dispute between the Parties, including any payment or other dispute arising under or concerning this Agreement or any other agreement between or among the Parties. Subject to Genesys’s compliance with the foregoing, the Company shall not withhold or fail to make any payment to Genesys as the result of a dispute under this Agreement other than any payment relating to the subject matter of such dispute.

 

6.10 All Fees Stated . Except as expressly provided for in this Section 6, the Company has no obligation or liability to pay or reimburse Genesys for any fees, charges, or other amounts for the Services to be provided under this Agreement.

 

6.11 Payment Does Not Imply Acceptance . The making of any payment or payments by the Company, or the receipt thereof by Genesys, will in no way affect the responsibility of Genesys to perform the Services in accordance with this Agreement, and will not imply the Company’s acceptance of any Services or the waiver of any warranties or requirements of this Agreement, including any right to Service Level Credits.

 

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7. Intellectual Property Rights .

 

7.1 Ownership of the Company Data . The Company may, but is not required to, provide the Company Data to Genesys in connection with this Agreement. As between the Company and Genesys, the Company is and will remain the sole and exclusive owner of all right, title, and interest in and to all the Company Data, including all Intellectual Property Rights relating thereto, subject only to the limited license granted in Section 7.2.

 

7.2 Limited License to Use the Company Data . Subject to the terms and conditions of this Agreement, the Company hereby grants Genesys a limited, royalty-free, non-exclusive, non-transferable, and non-sublicensable license to: (i) Process the Company Data strictly as instructed by the Company or an Authorized User and solely as necessary to provide the Services for the Company and its Sublicensees’ benefit as provided in this Agreement for so long as the Company, its Sublicenees or any Authorized User uploads or stores such Company Data for Processing by or on behalf of Genesys on the Genesys Systems; and (ii) improve the performance of the Services and the software underlying the provision of the Services; provided, however, that in no event shall Genesys be permitted to use the Company Data as such relates to User Data and Personal Information.

 

7.3 Limited License to Use the Company Marks . Subject to the terms and conditions of this Agreement, the Company hereby grants to Genesys a non-exclusive, non-sublicensable, non-transferable, revocable and limited license to use the Company name and logo (the “ Company Marks ”) solely (i) in connection with the performance of the Services for the Company under this Agreement through the Services; and (ii) in accordance with the trademark guidelines provided by the Company as the same may be modified from time to time. All uses of the Company Marks must be approved in advance by the Company provided, however, that an approved use of the Company Marks may be used again without the need for additional approvals for each such use. All goodwill associated with the use by Genesys of the Company Marks shall inure to the benefit of the Company and Genesys shall not engage in any activity to challenge the Company’s ownership of the Company Marks or that would tarnish or diminish the value of the Company Marks.

 

7.4 Ownership of Genesys Materials . As between the Company and Genesys, Genesys is and will remain the sole and exclusive owner of all right, title, and interest in and to the Genesys Materials, including all Intellectual Property Rights relating thereto, subject only to the authorization and license granted to the Company in Section 2 of this Agreement. Except as otherwise permitted by this Agreement, Company shall not attempt, or directly or indirectly allow any Authorized User of the Services under this Agreement, or any third party to attempt to copy, modify, duplicate, create derivative works from, frame, mirror, republish, reverse compile, disassemble, reverse engineer, download transmit, or distribute all or any portion of the Services and/or the software underlying the provision of the Services in any form or media or by any means.

 

7.5 No Implied Rights . Except for the limited licenses expressly provided: (a) in Section 7.2 and Section 7.3 of this Agreement, nothing contained in this Agreement shall be construed as granting Genesys or any third party any right, title, or interest in or to any the Company Data, the Company Marks or any other Intellectual Property Rights of the Company; or (b) in Section 2 of this Agreement, nothing contained in this Agreement shall be construed as granting the Company or any third party any right, title, or interest in or to any Genesys Materials, in each case (clause (a) and (b)) whether by implication, estoppel, or otherwise.

 

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8. Representations and Warranties .

 

8.1 Mutual Representations and Warranties . Each Party represents and warrants to the other Parties that:

 

(a) Such Party is duly formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation. Such Party is qualified to do business and is in good standing in each jurisdiction in which the ownership, operation or leasing of its assets applicable to the transactions contemplated by this Agreement or the operation of its business makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Material Adverse Effect.

 

(b) Such Party has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Party of this Agreement, the performance by such Party of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of such Party. This Agreement has been duly executed and delivered by such Party, and (assuming due authorization, execution and delivery by other Parties) this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms.

 

(c) The execution, delivery and performance by such Party of this Agreement, the compliance with the terms hereof, and the consummation of the transactions contemplated hereby, do not and will not: (a) result in a violation or breach of any provision of the organizational documents of such Party; (b) result in a violation or breach of any material contract by which such Party is bound; (c) result in a material violation or breach of any provision of any Law applicable to such Party; or (d) require the consent of, notice to, or other action by any Person, conflict with, result in a violation or breach of, constitute a default under or result in the acceleration of any obligation or loss of any benefits under, any contract, license or permit; or (e) result in the creation or imposition of any lien, encumbrance or other security interest on any of the assets of such Party applicable to the transactions contemplated by this Agreement. No consent, approval, permit, order, declaration or filing with, or notice to, any governmental authority is required by or with respect to such Party in connection with the execution and delivery by such Party of this Agreement, the compliance with the terms hereof and the consummation of the transactions contemplated hereby.

 

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8.2 Additional Genesys Warranties . Genesys represents and warrants to the Company that:

 

(a) Genesys has, and throughout the Term and any additional periods during which Genesys does or is required to perform the Services will have, the unconditional and irrevocable right, power, and authority, including all material permits and licenses required, to provide the Services, grant and perform all material rights and licenses granted or required to be granted by it under this Agreement, and to perform all of its material obligations hereunder, which rights and obligations shall include, without limitation, Genesys’ license of the Avature Services pursuant to the terms of that certain MSA;

 

(b) neither Genesys’s grant of the rights or licenses hereunder nor its performance of any Services or other obligations under this Agreement, including any third party licenses hereunder or otherwise for the Services, which shall include, without limitation, the third party license between Genesys and Avature as provided for under that certain MSA, does or at any time will: (i) conflict with or violate, in any material respect, any applicable Law, including any Applicable Data Protection Laws; (ii) require the material consent, approval, or authorization of any governmental or regulatory authority or other third party; or (iii) require the provision of any payment or other consideration by the Company or any Authorized User to any third party, and Genesys shall promptly notify the Company in writing if it becomes aware of any change in any applicable Law that would preclude Genesys’s performance of its material obligations hereunder;

 

(c) the Services, Documentation, and all other Services and materials provided by Genesys under this Agreement, including without limitation the rights set forth under Section 2 of this Agreement, will not infringe, misappropriate, or otherwise violate any Intellectual Property Right or other right of any third party;

 

(d) there is no settled, pending, or, to Geneys’s knowledge as of the Effective Date, threatened Action, and it has not received any written, oral, or other notice of any Action (including in the form of any offer to obtain a license): (i) alleging that any access to or use of the Services does or would infringe, misappropriate, or otherwise violate any Intellectual Property Right of any third party; (ii) challenging Genesys’s ownership of, or right to use or license, any software or other materials used or required to be used in connection with the performance, accessing or use of the Services, or alleging any adverse right, title, or interest with respect thereto; or (iii) that, if decided unfavorably to Genesys, would reasonably be expected to have an actual or potential adverse effect on its ability to perform the Services or its other obligations under this Agreement, and it has no knowledge of any factual, legal, or other reasonable basis for any such litigation, claim, or proceeding;

 

(e) in all material respects the Services will conform to and perform in accordance with the Specifications and all requirements of this Agreement, including the Availability and Availability Requirement provisions set forth in Exhibit B ;

 

(f) the Genesys Systems and Services, are, and Genesys will exercise commercially reasonable efforts to ensure that they will remain, free of any: (a) virus, Trojan horse, worm, backdoor, or other software or hardware devices the effect of which is to permit unauthorized access to, or to disable, erase, or otherwise harm, any computer, systems or software; or (b) time bomb, drop dead device, or other software or hardware device designed to disable a computer program automatically with the passage of time or under the positive control of any Person, or otherwise deprive the Company or Authorized Users of their lawful right to use the Services or Genesys Systems;

 

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(g) the software components underlying the Services are, and at all times during the Term will remain, exclusively owned and licensed, as applicable, by Genesys and no third party components have been or will be incorporated therein other than third party off the shelf software or Open Source Software that is not prohibited by the next sentence. Without limiting the foregoing, the Services do not and will not contain any Open Source Software or other software which would require as a condition of use, modification and/or distribution that other software incorporated into, derived from or distributed with such third party software be (a) distributed in source code form; (b) be licensed for the purpose of making derivative works therefrom; or (c) be redistributed at no charge;

 

(h) Genesys shall be compliant with GDPR prior to (and at all times during) engaging in any transactions involving personal information of European Union residents; and

 

(i) Genesys owns, leases or licenses, free and clear of lien, encumbrance or security interest, assets that are sufficient for the performance of the Services and the continued operation of the Services.

 

9. Indemnification .

 

9.1 General Indemnification .

 

(a) Genesys shall indemnify, defend, and hold harmless Company and each of its respective Affiliates, and officers, directors, employees, agents, contractors, successors, and assigns (each of the foregoing Persons, a “ Company Indemnitee ”) from and against any and all (i) Losses incurred by the Company Indemnitee resulting from any breach by Genesys of a representation, warranty, covenant, or obligation under Section 2.5, Section 3.2, Article 5, Section 8.1, Section 8.2(a)-(d) and (f)-(i) of this Agreement, or (ii) Action by a third party that arises out of or results from, or is alleged to arise out of or result from the Genesys’ breach of any representation, warranty, covenant, or obligation under this Agreement, including any Action brought by or on behalf of Avature or any of its Affiliates against a Company Indemnitee.

 

(b) Company, shall indemnify, defend, and hold harmless Genesys and each of its respective Affiliates, and officers, directors, employees, agents, contractors, successors, and assigns (each of the foregoing Persons, a “ Genesys Indemnitee ,” together with a Company Indemnitee, an “ Indemnitee ”) from and against any and all Losses incurred by the Genesys Indemnitee resulting from any breach by the Company of a representation, warranty, covenant, or obligation under Section 2.5, Section 3.2, Article 5, and Section 8.1 of this Agreement, or (ii) Action by a third party that arises out of or results from, or is alleged to arise out of or result from the Company’s breach of any representation, warranty, covenant, or obligation under this Agreement.

 

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9.2 Liability for Failure to Provide Services . If the actual Availability of the Services is less than the Availability Requirement for any Peak or Off-peak Availability Period, such failure shall constitute a Service Error for which Genesys shall issue to Company the corresponding Service Level Credits as set forth on Exhibit B and Exhibit E of this Agreement; provided, however , that if an Epidemic Failure occurs, Company shall have the right to terminate this Agreement, and immediately upon such termination by the Company, Genesys shall pay to the Company the amount of all unused Monthly Payments paid by the Company to Genesys prior to the date of such termination. Except as specifically provided herein, Genesys’s liability for the failure to provide the Services in accordance with the terms of this Agreement shall be limited to the Service Level Credits.

 

9.3 Indemnification Procedure .

 

(a) If any Indemnitee receives notice of the assertion or commencement of any Action made or brought by any person or entity who is not a Party or an Affiliate or a Representative of a Party (a “ Third Party Claim ”) against such Indemnitee with respect to which the other Party may be obligated to provide indemnification under this Agreement, the Indemnitee shall give the other Party written notice thereof (a “ Third Party Claim Notice ”) within five Business Days of receiving notice of such Third Party Claim. The failure to give such written notice timely shall not relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is actually prejudiced by reason of such failure. Such Third Party Claim Notice shall describe the Third Party Claim in reasonable detail, shall include all material information and evidence in the Indemnitee’s possession or control, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or is reasonably expected to be sustained by the Indemnitee. Subject to the terms of this Section 9, the Indemnifying Party shall have the right to participate in or, by giving written notice to the Indemnitee within thirty (30) days of receipt of the Third Party Claim Notice, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel (only one law firm), and the Indemnitee shall cooperate in good faith in such defense; provided that by assuming the defense of any such Third Party Claim, the Indemnifying Party shall thereby conclusively acknowledge for all purposes of this Agreement its obligation to indemnify the Indemnitee in respect of such matter pursuant to this Section 9; and provided further, that the Indemnitee shall in any event be entitled to take such actions as are reasonably necessary to avoid prejudicing the Indemnitee’s rights with respect to such Third Party Claim while it awaits notice from the Indemnifying Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to this Section 9, it shall have the right, at its own expense, to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnitee. The Indemnitee shall have the right, at its own cost and expense, to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. If the Indemnifying Party elects not to compromise or defend such Third Party Claim or fails to timely notify the Indemnitee within such 30 day period in writing of its election to defend as provided in this Agreement, the Indemnitee may, subject to this Section 9, pay, compromise and defend such Third Party Claim and seek indemnification for any and all Losses arising out of or resulting from such Third Party Claim. The Indemnifying Party and the Indemnitee shall cooperate with each other in all reasonable respects in connection with the compromise or defense of any Third Party Claim. Notwithstanding anything set forth in this Agreement to the contrary, the Indemnifying Party shall not have the right to elect to assume the defense of a Third Party Claim if such Third Party Claim (i) relates to or arises in connection with any criminal Action, (ii) seeks any injunctive relief to which the Indemnitee may be subject, or (iii) shall have been brought or asserted against the Indemnifying Party and there are one or more material factual or legal defenses available to the Indemnitee that are in conflict with those available to the Indemnifying Party and the Indemnifying Party is unwilling to raise such defenses.

 

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(b) Notwithstanding any other provision of this Agreement, no Party shall settle any Third Party Claim without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, conditioned or delayed), except as provided in this Section 9.3. If a firm offer is made to settle a Third Party Claim that an Indemnifying Party controls (i) without resulting in liability or the creation of a financial or other obligation on the part of the Indemnitee or any of its Affiliates, and (ii) which provides, in form reasonably acceptable to the Indemnitee, for the unconditional release of each Indemnitee and its Affiliates from all liabilities and obligations in connection with such Third Party Claim (a “ Qualifying Firm Offer ”) and the Indemnifying Party desires to accept and agree to such Qualifying Firm Offer, the Indemnifying Party shall give written notice to that effect to the Indemnitee. If the Indemnitee notifies the Indemnifying Party of its rejection of such Qualifying Firm Offer within 10 days after its receipt of such notice, the Indemnitee shall contest or defend such Third Party Claim and in such event, the maximum indemnification obligation of the Indemnifying Party as to such Third Party Claim shall not exceed the liability set forth in such Qualifying Firm Offer. If the Indemnitee fails to notify the Indemnifying Party of its consent to or rejection of such Qualifying Firm Offer, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such Qualifying Firm Offer to settle such Third Party Claim. If the Indemnifying Party is prohibited from assuming or elects not to assume the defense of such Third Party Claim pursuant to Section 9.3(a) or the Indemnitee rejects a Qualifying Firm Offer pursuant to this Section 9.3(b), the Indemnitee shall not agree to any settlement that does not unconditionally release the Indemnifying Party in form reasonably acceptable to the Indemnifying Party without the prior written consent of the Indemnifying Party, not to be unreasonably withheld, conditioned or delayed.

 

(c) Any claim by a Party as an Indemnitee on account of a Loss which does not result from a Third Party Claim (a “ Direct Claim ”) shall be asserted by the Indemnitee giving the Indemnifying Party prompt written notice thereof (a “ Direct Claim Notice ”). The failure to give such prompt written notice shall not relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party is actually prejudiced by reason of such failure. Such Direct Claim Notice shall describe the Direct Claim in reasonable detail, shall include all material information and evidence in the Indemnitee’s possession or control, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or is reasonably expected to be sustained by the Indemnitee. The Indemnifying Party shall have 30 days after its receipt of such Direct Claim Notice to respond in writing to such Direct Claim. During such 30 day period, the Indemnitee shall allow the Indemnifying Party and its professional advisors and Representatives to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnitee shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnitee’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors or Representatives may reasonably request. If the Indemnifying Party does not respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnitee shall have the right to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Agreement.

 

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9.4 Equitable Remedies . If any Party breaches or violates any provision of this Agreement relating to confidentiality or the performance of Services, Genesys, on the one hand, or the Company, on the other hand, shall, in addition to any damages to which it is entitled, be entitled to immediate injunctive relief against the other Party restraining such breach. In the event Genesys fails to satisfactorily perform any of the Services on a timely basis and no Force Majeure event has occurred and is continuing, the Company shall have the right, without prejudice to any other rights or remedies it may have under this Agreement to take one or more of the following steps:

 

(a) Suspend Genesys’s right and obligation to complete its performance of the Services until such time as Genesys is able to demonstrate to the Company’s reasonable satisfaction that it can satisfactorily meet its obligations under this Agreement;

 

(b) Provide and/or engage a replacement provider to provide any or all of the delayed or unsatisfactory Services;

 

(c) Assign one or more of its Representatives to supervise and work with Genesys to correct and mitigate the effects of Genesys’s breach; and

 

(d) Withhold payment of any amounts otherwise due to Genesys in a sufficient amount to set off against any damages caused to the Company as a consequence of Genesys’s failure as provided for in this Section 9.4.

 

9.5 Cumulative Rights . Except where an exclusive remedy is expressly provided for in this Agreement, all rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either Party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at Law, in equity, by statute, in any other agreement between the Parties, or otherwise.

 

9.6 Limitation on Damages .

 

( a ) Except as otherwise provided in Section 9.7, in no event shall either party’s liability under this Agreement, whether arising under or related to breach of contract, tort (including negligence), strict liability, or any other legal or equitable theory, exceed the total amounts PAYABLE under this agreement.

 

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(b) EXCEPT AS OTHERWISE PROVDED IN SECTION 9.7, IN NO EVENT SHALL EITHER PARTY (INCLUDING ITS AFFILIATES) BE LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF INCOME, DATA, PROFTIS, RECENTS OR BUSINESS INTERRUPTION, OR COST OF SUBSTITUTE SERVICES, OR OTHER ECONOMIC LOSS, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND WHETHER ANY CLAIM FOR RECOVERY IS BASED ON THEORIES OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE.

 

9.7 Exceptions to Limitation on Damages . The exclusions and limitations on damages in Section 9.7 above shall not apply to: (a) Losses arising out of or relating to Genesys’ unauthorized suspension, termination, or disabling of the Services in breach of this Agreement; (b) Losses arising out of or relating to a Party’s willful misconduct or intentional wrongful acts; (c) Losses for death, bodily injury, or damage to real or tangible personal property arising out of or relating to a Party’s negligent or more culpable acts or omissions; (d) Losses arising out of a Party’s infringement of another Person’s intellectual property rights; (e) Losses arising out of a Party’s violation of its or the Company’s data privacy protocols and procedures, the data privacy/breach obligations under this Agreement or under applicable Law; (f) Losses arising out of a Party’s fraud or fraudulent acts; or (g) Losses arising out of a Party’s improper disclosure of Confidential Information.

 

10. Term and Termination .

 

10.1 Initial Term . The initial term of this Agreement shall commence on the Effective Date, and unless terminated earlier pursuant to any of the Agreement’s express provisions, will continue in full force and effect through the Initial Term.

 

10.2 Renewal . Upon the expiration of the Initial Term, this Agreement will automatically renew for successive one year terms unless earlier terminated pursuant to this Agreement’s express provisions or any Party providing the other Party to this Agreement written Notice of non-renewal at least 30 days prior to the expiration of the then-current term (each, a “ Renewal Term ” and, collectively, together with the Initial Term, the “ Term ”). Furthermore, Genesys hereby represents and warrants that it shall use reasonable commercial efforts to obtain written acknowledgment from Avature in connection with Genesys’ ability to provide the Avature Services to Company for each Renewal Term.

 

10.3 Termination for Cause . In addition to any right of termination set forth elsewhere in this Agreement:

 

(a) in the event that a Party has breached a material provision of this Agreement, the other Party may terminate by written Notice of termination to the breaching Party effective as of the date specified in such Notice the nature of such breach; provided that such breach (A) cannot be cured; or (B) being capable of cure, remains uncured 30 days after the breaching Party receives written Notice thereof; and

 

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(b) the Company may terminate this Agreement, effective immediately, by written Notice to Genesys, if Genesys: (A) is dissolved or liquidated or takes any corporate action for such purpose; (B) is generally unable to pay, or fails to pay, its debts as they become due; (C) files or has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law and such proceeding has not been dismissed within 30 days of its filing; (D) makes or seeks to make a general assignment for the benefit of its creditors; or (E) applies for or has appointed a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business and such proceeding has not been dismissed within 30 days of its filing.

 

(i) Effect of Genesys Bankruptcy . All rights and licenses granted by Genesys under this Agreement are and shall be deemed to be rights and licenses to “intellectual property,” and the subject matter of this Agreement, including the Services, is and shall be deemed to be “embodiment[s]” of “intellectual property” for purposes of and as such terms are used in and interpreted under section 365(n) of the United States Bankruptcy Code (the “ Code ”) (11 U.S.C. § 365(n)). The Company shall have the right to exercise all rights and elections under the Code and all other applicable bankruptcy, insolvency, and similar laws with respect to this Agreement and the subject matter hereof and thereof. Without limiting the generality of the foregoing, if Genesys, or its respective estate becomes subject to any bankruptcy or similar proceeding which has not been dismissed within 30 days of its filing unless extended by agreement or bankruptcy court order, subject to the Company’s rights of election, all rights and licenses granted to the Company under this Agreement will continue subject to the respective terms and conditions hereof and thereof, and will not be affected, even by Genesys’s rejection of this Agreement (a “ Bankruptcy Triggering Event ”).

 

(ii) Notice of Voluntary Filing . Genesys shall not file a voluntary petition in bankruptcy or insolvency proceeding under any applicable insolvency laws unless it has first given the Company a minimum of 30 calendar days’ written Notice (such period, the “ Pre-Bankruptcy Period ”).

 

(c) The Company, in its sole discretion, may terminate this Agreement upon any default by Genesys which has been declared by a lender under any loan agreement, promissory note or similar instrument with any lender and has not been cured, to the extent permitted, in such agreement, note or instrument.

 

(d) Upon Genesys:

 

(i) triggering a Bankruptcy Triggering Event;

 

(ii) terminating its ongoing business operations or transferring all or substantially all of its assets to a third party;

 

C- 23

 

 

(iii) terminating the Services or Support Services or ceasing to materially perform the Services or Support Services for a continuing period of 10 or more Business Days, except pursuant to the expiration or termination of this Agreement in accordance with its terms; or

 

(iv) incapability, failure, or demonstrated unwillingness to perform fully any of the material Services on a timely basis; then

 

Genesys shall immediately provide the Company with full use and access to the source code and API for the Services until the later to occur of: (i) the termination of this Agreement, or (ii) Genesys no longer being subject to any condition in Section 10.3(d).

 

10.4 Termination for Convenience . At any time without cause and without causing any breach or incurring any additional obligation, liability, or penalty, the Company may terminate this Agreement by providing at least 30 days’ prior written notice to Genesys. For the avoidance of doubt, if the Company terminates this Agreement pursuant to the foregoing provisions following the date upon which all Monthly Payments and Annual Payments have been paid, no amount shall be due by the Company in connection with any such termination.

 

10.5 Effect of Termination; Data Retention . Unless otherwise expressly provided in this Agreement:

 

(a) upon and after the termination or expiration of this Agreement for any or no reason:

 

(i) subject to the continuing rights, licenses, and obligations of either Party under this Agreement, including this Section 10.5, all authorizations and licenses granted hereunder will immediately terminate and the respective Parties shall cease all activities concerning, including in the case of the Company, its Sublicensees and Authorized Users, all use of, the expired or terminated Services and related Genesys Materials, and promptly return or destroy all such Genesys Materials including all Company Confidential Information to Genesys in accordance with same procedures as set forth in Section 10.5(a)(iv) and (v); and, in the case of Genesys, the Company Data and the Company Marks;

 

(ii) The Company shall pay to Genesys, subject to the Company’s right of set-off all undisputed charges and amounts due and payable to Genesys, if any, for Services actually performed;

 

(iii) Genesys shall repay, on a pro rata basis, all fees, expenses and other amounts paid in advance for any Services that Genesys has not performed as of the effective date of such expiration or termination;

 

(iv) Genesys shall, at the Company’s option and upon its written request: (A) promptly return or destroy and erase from all systems it directly or indirectly uses or controls all originals and copies of all documents, materials, and other embodiments and expressions in any form or medium that contain, reflect, incorporate, or are based on any Confidential Information owned by the Company, and (B) provide a written statement to the Company certifying that it has complied with the requirements of this Section; and

 

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(v) Genesys shall deliver to the Company F.O.B. shipping point all (A) documents, work product, and other materials, whether or not complete, prepared by or on behalf of Genesys in the course of performing the Services, and (B) Company-owned property, equipment and other materials in its possession or control in accordance with instructions provided by the Company for such return upon termination.

 

(b) Upon termination of this Agreement for any reason Genesys shall provide the Company with a period of 90 days of access to and use of the Services to permit the Company to transition the Company’s use of the Services to another service (the “ Continuity Period ”). Except insofar as is required for Genesys to provide the Services during the Continuity Period to the Company, upon the commencement of the Continuity Period, Genesys shall immediately return all the Company Data to the Company and, except as otherwise covered in this Agreement, permit the Company reasonable access to the Genesys Systems in order to remove any Company Data from the Genesys Systems.

 

10.6 Termination; Repayment of Monthly and Annual Payments . Notwithstanding anything contained herein to the contrary, the Company shall have the right to terminate this Agreement at any time following an Epidemic Failure and shall be entitled to the re-payment of all unused Monthly Payments as provided in Section 9.2 of this Agreement.

 

10.7 Survival . The provisions set forth in the following Sections, and any other right or obligation of the Parties in this Agreement that, by its nature, should survive termination or expiration of this Agreement, will survive any expiration or termination of this Agreement: Sections 1, 8, 9, 10, 11, 12 and 15.

 

11. Confidentiality . Subject to the terms hereof and the license, all non-public, confidential or proprietary information of each Party hereto (“ Confidential Information ”), including, but not limited to, specifications, samples, patterns, designs, plans, drawings, documents, data, including but not limited to sales and volume data, business operations, pricing, discounts, or rebates disclosed by one Party to the other in connection with the transactions contemplated by this Agreement, whether disclosed orally or disclosed or accessed in written, electronic, or other form or media, and whether or not marked, designated, or otherwise identified as “confidential,” shall not be disclosed or copied unless authorized by the disclosing Party in writing. Confidential Information does not include any information that: (a) is or becomes generally available to the public other than as a result of a breach of this Agreement; (b) is obtained on a non-confidential basis from a third-party that was not legally or contractually restricted from disclosing such information; (c) was in the receiving Party’s possession prior to disclosure hereunder; or (d) was or is independently developed without use of or reference to any Confidential Information. Subject to the terms of the license and this Agreement, upon any Party’s request, each other Party shall promptly return or destroy all documents and other materials received from the other Party hereunder except as may otherwise be required by Law or, in the case of the Company or Genesys, by internal document retention policies. If the receiving Party is legally required to disclose any Confidential Information of the disclosing Party in connection with any legal or regulatory proceeding, to the extent permitted by Law, the receiving Party will notify the disclosing Party within a reasonable time after receiving the legal subpoena or court order to allow the disclosing Party a reasonable opportunity to seek appropriate protective measures or other remedies prior to disclosure and/or waive compliance with the terms of this Agreement. If these protective measures or other remedies are not obtained, or the disclosing Party waives compliance with the terms of this Agreement, the receiving Party may disclose only that portion of the Confidential Information that it is, according to the opinion of counsel, legally required to disclose and will exercise commercially reasonable efforts to obtain assurance that confidential treatment will be accorded to that Confidential Information. Each Party acknowledges that breach by it of this Section 11 will cause irreparable injury to the other Party, which injury will be inadequately compensable in damages. Accordingly, each Party is entitled to the remedies of injunction, specific performance and other equitable relief in respect of any actual breach or threatened breach of the terms of this Section 11 in addition to any other legal remedies which may be available, without the necessity of proving actual damages, in any court of competent jurisdiction.

 

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12. [ Intentionally deleted ]

 

13. Insurance .

 

13.1 Genesys shall obtain within thirty 30 days following the Effective Date, and from and after such date shall maintain and keep in place throughout the Term and during any other period in which it performs Services, at its sole cost and expense, the following insurance policies and with the following minimum coverage amounts, unless lower amounts are approved in writing by the Company (or such other insurance policies which are equivalent to the foregoing and are pre-approved by the Company in writing), each of which policies shall apply to Genesys’s performance of the Services and its other obligations hereunder: (i) statutory worker’s compensation insurance with such per person and per accident minimum limits as required by all applicable Laws in all required jurisdictions in connection with this Agreement; (ii) employer’s liability insurance in a minimum amount of $1,000,000 per occurrence; (iii) commercial general liability insurance, in a minimum amount of $1,000,000 per occurrence and $2,000,000 in the annual aggregate; (iv) umbrella/excess liability insurance in a minimum amount of $3,000,000 per occurrence; (v) cyber-liability insurance in a minimum amount of $2,000,000 and covering, without limitation, acts, errors or omissions in the performance of Services, infringement of intellectual property (except patent and trade secret) and network security and privacy risks such as unauthorized access, failure of security, breach of privacy perils, wrongful disclosure, collection, or other negligence in the handling of confidential information, privacy perils, related regulatory defense and penalties, and data breach expenses (i.e., consumer notification, computer forensic investigations, public relations and crisis management firm fees, and remediation services); and (vi) any other insurance required by any governmental, quasi-governmental or regulatory agency or body in connection with the Services being provided hereunder (each a “ Policy ,” and collectively, the “ Policies ”).

 

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13.2 The Company shall be an additional insured on a primary and non-contributory basis under each such Policy, other than the Policy for worker’s compensation insurance. Any and all deductibles applicable in the event of a claim (i) will not limit or apply to Genesys’s liability to the Company, (ii) shall be the sole responsibility of Genesys, and (iii) Genesys shall pay such deductibles in full as and when due. Self-insured retention policies, or any insurance arrangement that may prevent the Company’s access to insurance coverage as a result of the failure by Genesys to meet required self-insured retention thresholds, will not be deemed to meet the insurance requirements set forth herein. Except for any professional liability/errors and omissions/cyber security policies, each Policy shall be “occurrence-based” and provide coverage for any acts, omissions, or events that give rise to claims, regardless of when the claim is brought, and occurred at any time while such policy was in effect. Genesys shall provide a waiver of subrogation in favor of the Company under the network/cyber/e-commerce and employers’ liability policies. All Policies shall be issued by insurance companies that (x) have been rated “A-”, or better, by A.M. Best, or the local equivalent, and (y) are authorized to do business under the Laws of the jurisdictions where the Services under this Agreement will be performed. Genesys acknowledges and agrees that the procurement and maintenance of such insurance coverage shall not limit or affect any liability that Genesys may have by virtue of this Agreement or otherwise. Additionally, (a) the commercial general liability Policy must include a cross-liability endorsement; (b) Genesys shall give the Company 30 days’ minimum prior notice of cancellation of any policies required hereby; (c) Genesys shall furnish certificates of insurance and applicable endorsements evidencing the Policies and coverages required hereby promptly following Genesys obtaining each Policy and subsequently at any time and from time to time at the Company’s request; and (d) Genesys understands and agrees that (i) the Company has no obligation to procure or otherwise maintain any insurance covering Genesys or the Services, and (ii) any limitations of liability in this Agreement do not apply to any incidents or claims that should be covered by the insurance policies required to be in place per this Section 13. For clarity, the Company shall be entitled to recover up to the liability limits, and in accordance with the terms, of any insurance policy required to be in place per this Section 13, regardless of (x) whether the Policies were actually placed in accordance herewith, and (y) any liability limits listed elsewhere in this Agreement. To the extent applicable Laws require the Parties to expressly agree or elect to be governed by the terms of this Section 13 (instead of the otherwise applicable default rules or regulations of such applicable Laws), the Parties hereby expressly so agree and elect.

 

14. Miscellaneous .

 

14.1 Further Assurances . Upon a Party’s reasonable request, the other Party shall, at the requesting Party’s sole cost and expense, execute and deliver all such documents and instruments, and take all such further actions, as may be necessary to give full effect to this Agreement and the Ancillary Agreements.

 

14.2 Relationship of the Parties . The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture, or other form of joint enterprise, employment, or fiduciary relationship between the parties, and neither Genesys, on the one hand, nor the Company, on the other hand, shall have authority to contract for or bind the other Party(ies) in any manner whatsoever.

 

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14.3 Public Announcements . No Party shall issue or release any announcement, statement, press release, or other publicity or marketing materials relating to this Agreement or, unless expressly permitted under this Agreement or to the extent required to comply with applicable Law or the rules of any stock exchange on which a Party’s securities are listed or traded (it being understood and agreed that each Party shall provide the other Parties with copies of such announcements in advance of such issuance), otherwise use the other Party’s trademarks, service marks, trade names, logos, domain names, or other indicia of source, affiliation, or sponsorship, in each case, without the prior written consent of the other Party.

 

14.4 Notices . All notices, requests, consents, claims, demands, waivers, and other communications under this Agreement (each, a “ Notice” ) must be in writing and addressed to the other Party at its address set forth below (or to such other address that the receiving Party may designate from time to time in accordance with this Section 14.4). Notices must be delivered by personal delivery, nationally recognized overnight courier, or email. Except as otherwise provided in this Agreement, a Notice is effective only (a) when delivered, if delivered by hand (with written confirmation of receipt); (b) on the next Business Day if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient.

 

Notice to Truli or Recruiter:

 

 

 

 

 

with a copy (which shall not constitute notice) to:

 

Truli Technologies Inc.

344 Grove St #2 #4018

Jersey City, NJ 07301

Email: ________________

Attention: Miles Jennings, CEO

 

Nason, Yeager, Gerson, Harris & Fumero, P.A.

3001 PGA Boulevard, Suite 305

Palm Beach Gardens, Florida 33410

E-mail: _____________________

Attention: Michael Harris, Esq.

     
Notice to Genesys:  

Genesys Talent, LLC

100 Waugh Drive, Suite 300

Houston, Texas 77007

Email: __________________

Attention: Tim O’Rourke

     
with a copy (which shall not constitute notice) to:  

Crady, Jewett, McCulley & Houren LLP

2727 Allen Parkway, Suite 1700

Houston, Texas 77009

E-mail: ____________________

Attention: Peter J. Marmo, Esq.

 

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14.5 Headings . The headings in this Agreement are for reference only and do not affect the interpretation of this Agreement.

 

14.6 Entire Agreement . This Agreement, together with any and all exhibits, schedules, attachments, and appendices hereto and thereto constitutes the sole and entire agreement among the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, regarding such subject matter.

 

14.7 Assignment . Genesys shall not assign, transfer, delegate, or subcontract any of its rights or obligations under this Agreement without the prior written consent of the Company. Any purported assignment, transfer, delegation or subcontracting with respect to this Agreement by Genesys in violation of this Section 14.7 shall be null and void. No assignment, transfer, delegation or subcontracting shall relieve Genesys of any of its obligations hereunder. The Company may at any time assign or transfer any of its right or obligations under this Agreement without Genesys’s consent. This Agreement is binding upon and inures to the benefit of the Parties hereto and their respective permitted successors and assigns.

 

14.8 No Third-Party Beneficiaries . Other than as set forth in Section 9 with respect to the Indemnitees, this Agreement benefits solely the Parties and their respective successors and permitted assigns and nothing in this Agreement, express or implied, confers on any third party any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement. The Parties hereby designate the Person(s) that are not Parties and included in the definition of Indemnified Parties as third-party beneficiaries of this Agreement, having the right to enforce Section 9.

 

14.9 Amendment and Modification; Waiver . No amendment to or modification of this Agreement is effective unless it is in writing and signed by a Representative of each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Agreement will operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

14.10 Severability . If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

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14.11 Choice of Law . This Agreement and all matters related to the matters contemplated herein shall be governed by and construed in accordance with the internal laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction).

 

14.12 Choice of Forum . Each Party irrevocably and unconditionally agrees that any Action arising out of or based upon this Agreement or the matters contemplated hereby or thereby shall be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in New York County, New York and each party irrevocably submits to the exclusive jurisdiction of such courts in any such Action. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Action in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum.

 

14.13 Waiver of Jury Trial . EACH PARTY ACKNOWLEDGES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT, INCLUDING EXHIBITS, SCHEDULES, ATTACHMENTS, AND APPENDICES ATTACHED HERETO , IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING ANY EXHIBITS, SCHEDULES, ATTACHMENTS, OR APPENDICES ATTACHED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

14.14 Equitable Relief . Each Party acknowledges and agrees that a breach or threatened breach by such Party of any of its obligations under this Agreement would cause the other Party irreparable harm for which monetary damages would not be an adequate remedy and agrees that, in the event of such breach or threatened breach, the other Party will be entitled to equitable relief, including a restraining order, an injunction, specific performance, and any other relief that may be available from any court, without any requirement to post a bond or other security, or to prove actual damages or that monetary damages are not an adequate remedy. Such remedies are not exclusive and are in addition to all other remedies that may be available at law, in equity, or otherwise.

 

14.15 Interpretation . For purposes of this Agreement: (a) the words “include,” “includes”, and “including” are deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; (c) the words “herein,” “hereof,” “hereby,” “hereto”, and “hereunder” refer to this Agreement as a whole; (d) words denoting the singular have a comparable meaning when used in the plural, and vice-versa; and (e) words denoting any gender include all genders. Unless the context otherwise requires, references in this Agreement: (x) to sections, exhibits, schedules, attachments, and appendices mean the sections of, and exhibits, schedules, attachments, and appendices attached to, this Agreement; (y) to an agreement, instrument, or other document means the agreement, instrument, or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means the statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. The Parties drafted this Agreement without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The exhibits, schedules, attachments, and appendices referred to herein are an integral part of this Agreement to the same extent as if they were set out verbatim herein.

 

14.16 Exhibits . All Schedules and Exhibits that are referenced herein and attached hereto, or are signed by the Parties on or after the Effective Date, are hereby incorporated by reference.

 

14.17 Counterparts . This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

 

  RECURITER.COM RECRUITING SOLUTIONS, LLC
     
  By:
  Name: Miles Jennings
  Title: Chief Executive Officer
     
  GENESYS TALENT, LLC
     
  By:  
  Name:  
  Title:  
     
  TRULI TECHNOLOGIES INC.
     
  By:
  Name: Miles Jennings
  Title: Chief Executive Officer

 

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EXHIBIT A

SERVICES AND PAYMENT

 

No Monthly Payments shall be owed to Genesys for the first 90 days of the Company’s use of the Services. Beginning on the date that is 90 days from the date of this Agreement, the Company shall make payments to Genesys on a monthly basis in the amount of $5,000 per month for the Avature Services (the “ Monthly Payments ”). Additionally, the Company shall pay Genesys an annual fee of $1,995 for each recruiter being licensed through the Match List Services (the “ Annual Payments ”).

 

Genesys has entered into that certain Master Service Agreement with Avature Limited (“ Avature ”), dated on or about February 26, 2015, as amended (the “ MSA ”), pursuant to which Avature has agreed to provide Genesys with online, web-based automated data processing services developed, hosted and maintained by Avature. Avature has set up an instance of its services for Genesys that integrates the online recruiting network and communities developed by Genesys into the platform and services provided by Avature under the MSA (the “ Genesys Instance ”). The term “ Avature Services ” means the following:

 

Genesys shall provide Company with access to the Genesys Instance for 10 Company employees, and portal access to the Genesys Instance for an unlimited number of independent recruiters other than employees of the Company or an Affiliate of the Company.

 

The Avature Services shall include full use and access to all software, enhancements, improvements, and updates provided by Avature to Genesys pursuant to the MSA, as well as any modifications to the Genesys Instance, without any additional payments by the Company.

 

The Match List Services means the following (the “Specifications ”):

 

Access to and use of the Genesys Talent (collectively, “ Genesys Talent Technology ”). For the avoidance of doubt, the Genesys Talent is proprietary computer software designed to provide a matched list of talent against job requirements provided by a client, and a “matched list of talent” is a group of profiles that (i) have been matched by the use of proprietary technology, (ii) may have indicated a level of interest in the role, and (iii) may be available to perform the work.

 

The Match List Services shall initially include a minimum of nine recruiter licenses for purposes of using the Genesys Talent Technology. Each license shall include a maximum of ten job requisitions per month and between two and ten matched candidates per requisition. The Company shall pay an Annual Payment per license being used in the Match List Services, regardless of whether the Company makes less than the number of job requisitions per month. From time to time, Genesys may advise the Company that a particular job requisition submitted by Company is unlikely to generate suitable matched candidates, including, for example, because the format and/or contents of the job requisition is unlikely to be compatible with the Genesys Talent Technology. In that event, the job requisition so identified shall not count towards the maximum monthly job requisitions of Company, nor shall it count as an unfulfilled requisition by Genesys.

 

The Match List Services shall include full use and access to all software, enhancements, improvements, and updates for the Match List Services made throughout the Term by Genesys without any additional payments by the Company.

 

Independent Recruiter Fee : Genesys shall pay Company an amount equal to twenty percent (20%) of the gross revenue received by Genesys from an Independent Recruiter for the services provided by the Independent Recruiter for Match List Services. The term “Independent Recruiter” means a recruiter other than the Company or its Affiliates that is introduced to Genesys by the Company or via the Company’s platform. Genesys shall calculate the Independent Recruiter Fee on a monthly basis, and shall pay directly to Company any such fee within five Business Days of the calculation of the Independent Recruiter Fee.

 

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EXHIBIT B

AVAILABILITY AND SERVICE LEVEL CREDITS FOR AVATURE SERVICE

 

1. Service Availability .

 

The Avature Services will be available seven (7) days a week, twenty four (24) hours per day, three hundred and sixty five (365) days of the year, provided that the Company may from time to time perform maintenance services and upgrades.

 

The Peak Availability Period is any time other than from 16:00 UTC (4 p.m.) Saturday to 16:00 UTC (4 p.m.) Sunday.

 

The Off-peak Availability Period is from 16:00 UTC (4 p.m.) Saturday to 16:00 UTC (4 p.m.) Sunday.

 

Genesys will use all commercially reasonable efforts to ensure that during each calendar month of the Term the Avature Services are available for at least 99.5% of the Peak Availability Period (as a percentage of total hours of service for the month) and 95% of the Off-peak Availability Period, exclusive of any portion of the periods during which the Avature Service is unavailable due to the following: (i) twice weekly upgrades to the Avature Services of a duration of less than twenty (20) minutes each, for which Avature’s version release system will seek out a period of non-use within a twenty-four (24) hour period to perform the release, or if none is found, give the users two hours on-line notice and perform the release, (ii) Peak Period maintenance for which Genesys has provided Company with at least 24 hours advance on-line notice for interruption of less than sixty (60) minutes, (iii) Off-peak Period maintenance for which Genesys has provided at least 8 hours advanced online notice, (iv) 16:00 to 18:00 UTC Saturday, (v) availability issues relating to Company’s or its Authorized Users’ telecommunications and Internet services, (vi) availability issues relating to software or hardware not provided and controlled by Avature or Genesys (including Single Sign On (SSO) authentication or other third-party software or sites through which the Software Service is accessed); or (vii) Force Majeure Events defined in the Agreement. The foregoing clauses (i) through (vii) are collectively referred to as “ Excused Downtime” and such availability requirements in this paragraph, the “ Availability Requirement .”

 

Service Level Availability is calculated in accordance with the following formula:

 

A = S –D +ED and A% = (S – D +ED)/S x 100

 

Where:

 

A = Availability (A) means the total time during the relevant month that the Avature Services are available to Company;

 

Availability Percentage (A%) means the percentage of total time during the relevant month that the Avature Services is available to Company;

 

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S = the total number of hours in the relevant month (calculated by multiplying the number of days in the particular month by 24);

 

D = Downtime, meaning the number of hours that the Avature Services are not accessible by Company (or its Authorized Users) during the relevant month; and

 

ED = Excused Downtime, meaning the number of hours that the Avature Services are not Available during the relevant month as a result of the reasons described in clauses (i) through (iii) above.

 

2. Service Level Credits and Remedies .

 

If during any calendar month during the Term, the Avature Services are available for less than 99% of the Peak Availability Period (exclusive of any portion of the Peak Availability Period during which the Avature Service is unavailable due to Force Majeure Events), then the Company will receive a credit for service interruption (“ Avature Service Level Credits ”) on its next service fee invoice equal to the corresponding percentage noted below of the calendar month’s Monthly Fee in which the Service Level Uptime Percentage was not achieved.

 

Any Service credits not applied during the Term will be paid no less than thirty (30) days from the earlier of: (i) expiration of the Term in the event Company does not renew the Avature Service; or (ii) when such Service credit is greater than amounts to be paid by Company under the Agreement to Genesys.

 

Service Level Availability   Avature Service Level Credits  
Less than 99%     2 %
Less than 98%     4 %
Less than 97%     7 %
Less than 96%     12 %
Less than 95%     18 %

 

In addition to the rights afforded to Company in the event of an Epidemic Failure as provided for in Section 10.6 of this Agreement, if Genesys fails to meet a Service Level Availability Percentage of 95% for the Peak Availability Period for any combination of two (2) months within a six (6) month rolling period during the Term, Genesys will be in material breach of the Agreement, in which case Company may provide written notice and shall have the right to terminate this Agreement without penalty, regardless of the Term.

 

3. Avature Services Maintenance . Avature Services maintenance shall include, at a minimum, the timely application of all corrections, updates, new releases or new versions of the Avature Services, together with all accompanying documentation.

 

4. Application Replication . The Avature Services will include application replication to a slave instance in an alternative data center. This replication will include all database logs, attachments, and indexes.

 

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5. Data Backup . Genesys will perform an incremental/differential backup of the Avature Services daily and a full backup weekly of all Company Data on both the production instance and replication instance of the Services. These backups will include data based binary logs, attachments in their native format, indexes, and instance configuration files. Backup systems shall be tested periodically to insure that they are functioning properly, including without limitation, the restoration and coverage functions.

 

6. Monitoring . Genesys shall proactively manage and monitor all Avature systems to ensure optimal performance and reliability, as well as to detect abnormal events or excessive utilization that may negatively impact performance. Genesys shall proactively monitor the status of the operating systems (CUP, disk, I/O, memory, processors, etc.), critical application layer daemons and processes, software applications, and networks.

 

7. Standard Limits by Software Service Instance . A proportional amount of Genesys’s total limits under the MSA, which total standard limits are:

 

Mail limits are set at 500 messages per user per day and 50,000 messages per month in total across all users. Messaging beyond these limits requires purchasing a High Volume Email Marketing user account, DKIM, and SPF registration, and other requirements that improve delivery and prevent spam.

 

The number of User Defined Fields (UDF) is limited to 60 for each Main Record.

 

Form Library capacity is 40 forms.

 

Workflow Library capacity is the following: an initial set of workflows that meets the agreed business requirements as per the implementation plan, 10 additional Workflows, plus one additional workflow for each Client managed on the system.

 

List Library capacity is limited to 50 lists.

 

Authorized User in non-User Admin roles are limited to 20 lists each.

 

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EXHIBIT C

SUPPORT SERVICE LEVEL REQUIREMENTS

 

Key Terms:

 

1. Genesys shall correct all Service Errors and respond to and resolve all Support Requests in accordance with the required times and other terms and conditions set forth in this Exhibit (“ Support Service Level Requirements ”) and in the Agreement.

 

Each incident will be assigned a severity level by Genesys in accordance with the following table (“ Severity Level ”). If an incident falls within more than one Severity Level category, then the incident shall be assigned the highest of the Severity Levels.

 

Severity Level   Type of Incident
S1-Critical  

Any issue or defect that prevents multiple Authorized Users or portal users from accessing the Software Service, or a making use of a sub-system of the Avature Services.

 

S2-Major  

Authorized users of the Avature Services are unable to perform a mission-critical business function and where there is no Workaround in place. “Mission-critical” is defined as any problem under Genesys’s or Avature’s control that results in Authorized Users or portal users being unable to complete materially important data processing functions on the Avature Services.

 

S3-Minor  

Minor defects with the Avature Services that have limited or little impact on Company business and are isolated to a particular non-critical function of the system. This includes failure to connect to a third-party system with the exception of SSO integration, which is an S1.

 

S4-Trivial   The Avature Services displays minor defects which are easily circumvented such as incorrect labels, colors, or screen configuration that have no material impact on Company’s normal business operations.

 

Issue response

 

Severity Level   Response Time   Status Update  

Escalation

 

Resolution

Critical   1 hour   Every 4 hours   Every 8 hours  

24 hours

Major   2 hours   Every 8 hours   Every 24 hours  

3 days

Minor   48 hours   NA   NA  

Next release cycle

Trivial   72 hours   NA   NA   NA

 

Response time commences when Company reports an incident to Genesys during Genesys’s normal support hours (a “ Support Request ”), and ends when Genesys contacts Customer to confirm the incident details. Genesys will begin the process of problem determination and resolution at this point. Status reports consist of regular communications to Company either through email or phone, as to the status of the problem. Escalation consists of notifying and ensuring the involvement of each of the following management levels in problem determination and resolution in an escalating manner as follows: (i) Director of Customer Service; (ii) Vice-President of Quality Engineering and Customer Service; and (iii) Senior Vice-President of Global Service Delivery.

 

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Exhibit D

DATA SECURITY AND BACKUP REQUIREMENTS

 

With respect to the Avature Services, Genesys will maintain industry standard technical (logical and physical) and organizational security safeguard and controls and exercise due diligence to protect Company data and the Services against unauthorized access or use. Genesys shall maintain written security management policies, a formal risk management program, a change management program, a vulnerability management program, a disaster recovery program, and maintain industry standard practices and procedures.

 

With respect to the Match List Services, Genesys will maintain industry standard technical (logical and physical) and organizational security safeguard and controls and exercise due diligence to protect Company data and the Services against unauthorized access or use.

 

 

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Exhibit E

AVAILABILITY AND SERVICE LEVELS FOR MATCH LIST SERVICES

 

If during a month, Genesys is unable to fulfill one or more job requisitions of Company due to the unavailability of the Genesys Talent Technology, Genesys shall credit to Company an amount equal to the following formula (“ Match List Service Level Credits ,” together with Avature Service Level Credits, the “ Service Level Credit ”): N/10 *A/12\

 

Where N is equal to the number of unfulfilled requests for the month, and A is equal to the Annual Payment.

 

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Exhibit D

Management Services Agreement

 

This MANAGEMENT SERVICES AGREEMENT (this “ Agreement ”), dated as of March 31, 2019 (the “ Effective Date ”), by and among Icon Information Services, LP, a Texas limited partnership (“ Icon ”), and Recruiter.com Recruiting Solutions, LLC, a Delaware limited liability company (the “ Purchaser ”). Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in that certain Asset Purchase Agreement (the “ Purchase Agreement ”), dated as of the Effective Date, by and among Genesys Talent LLC (“ Genesys ”), Truli Technologies, Inc., a Delaware corporation, and the Purchaser.

 

WHEREAS, pursuant to the Purchase Agreement, the Purchaser has agreed to purchase certain assets from Genesys;

 

WHEREAS, after the consummation of the transactions contemplated by the Purchase Agreement, Icon will provide the Purchaser with certain services pursuant to the terms of this Agreement; and

 

WHEREAS, Icon has agreed to perform such services for the Purchaser pursuant to the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1. Services .

 

(a) Icon shall provide, or designate one of its Affiliates or other third parties to provide to the Purchaser the services set forth on Annex A attached hereto and such other services reasonably related thereto as may be agreed to by the parties from time to time (the “ Icon Services ”). Except as mutually agreed to by the parties pursuant to the terms of this Agreement, the Purchase Agreement or any other agreement entered into by the parties thereto, Icon shall not be required to provide services other than Icon Services. The Purchaser shall pay to Icon the fee for such Icon Service (the “ Applicable Icon Fee ”) set forth on Annex A . If any Applicable Icon Fee is “TBD”, the parties shall work in good faith to set such Applicable Icon Fee as mutually agreed by the parties; provided, however, that if the parties do not agree on such Applicable Icon Fee, such Applicable Icon Fee shall be equal to the actual cost of such Icon Service.

 

(b) Icon shall not be required to provide any Icon Service after the maximum service period specified in Annex A attached hereto (a “ Service Period ”), for the provision of such Icon Services, or, if no Service Period is specified for a particular Icon Service, for longer than ninety (90) days following the Effective Date.

 

(c) All employees and representatives of Icon, and of its Affiliates, as applicable, who are providing Icon Services pursuant to this Agreement (the “ Icon Employees ”) shall be deemed for all purposes to be employees or representatives of Icon or Icon’s Affiliates, as applicable, and not employees of the Purchaser. In performing Icon Services, Icon Employees shall be under the direction, control and supervision of Icon or such Affiliates, as applicable, and Icon and its Affiliates shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such Icon Employees. Icon shall cause Icon Employees to cooperate with the Purchaser in connection with the provision of Icon Services.

 

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(d) The Purchaser acknowledges that Icon and its respective Affiliates may be providing the same or similar services (or services that involve the same personnel or resources as those used to provide Icon Services) to its internal organizations, Affiliates and third parties. Icon reserves the right to modify Icon Services upon seven (7) days prior written notice to the Purchaser in connection with changes to its internal organization in the ordinary course of business; provided , that if such modifications adversely affect Icon Services (including the type of Icon Service, the level of service or the price associated therewith, if any), Icon will cooperate in good faith with the Purchaser to minimize such effect and, if necessary, provide replacement services. Notwithstanding the terms of this Section 1(d), in no event shall the Purchaser be required to pay Icon an increased Applicable Icon Fee until the expiration of the current Term of this Agreement and renewal of this Agreement for a subsequent Term.

 

(e) Except as expressly set forth in this Agreement, in providing Icon Services, Icon shall not be obligated to: (i) maintain the employment of any specific employee; (ii) purchase, lease, upgrade, or license any additional equipment or software, except any equipment or software necessary to provide Icon Services pursuant to the terms of this Agreement; (iii) expand its facilities, incur long-term capital expenses or employ additional personnel; or (iv) (A) convert from one format to another the Purchaser’s or Icon’s business data for any Person, including any alternate supplier of services similar to Icon Services to the extent not otherwise provided for in this Agreement, or (B) integrate the Purchaser’s or Icon’s systems for purposes of receiving or providing Icon Services or pay any costs incurred by the other party hereto in connection with clauses (A) or (B) of this Section 1(e) ; provided , that all business data shall be delivered between the parties hereto in a format reasonably acceptable to each party hereto.

 

2. Subcontractors . Icon will have the right (but not the obligation), at their respective sole cost and expense, directly or through one or more of their respective Affiliates, to hire or engage one or more subcontractors or other third parties (each, a “ Subcontractor ”), to perform all or any of Icon’s obligations; provided , that such subcontracting or delegating (by either party hereto) shall not relieve Icon of its responsibility for the performance of Icon Services hereunder; provided , further , that in no event shall Icon or any of its Affiliates be responsible for any failure of a Subcontractor to provide Icon Services so long as Icon or its Affiliates or other Subcontractors promptly provide replacement Icon Services at no additional cost to the Purchaser. Icon shall supervise the performance on its behalf of any such Subcontractors to ensure that Icon Services meet the requirements of this Agreement, and shall be responsible for the compliance by such Subcontractors with the terms and conditions of this Agreement, including requiring such Subcontractors to enter into written confidentiality agreements in a form reasonably acceptable to each party hereto. All Subcontractors or third parties shall be qualified in accordance with applicable Laws and experienced to perform such obligations.

 

3. Title to Equipment; Management and Control . Upon the Closing, except as set forth in the Purchase Agreement, all procedures, methods, systems, strategies, tools, equipment, facilities and other resources owned and licensed by Icon and any of its Affiliates in connection with the provision of Icon Services hereunder will remain the property of Icon and its Affiliates, and except as otherwise provided in this Agreement, will at all times be under the sole direction and control of Icon and its Affiliates.

 

D- 2

 

 

4. Cooperation; Informal Dispute Resolution

 

(a) Upon request the Purchaser will afford Icon and Icon’s Affiliates, reasonably prompt access, during regular business hours and such other times as reasonably requested in writing, to such properties, books of account, financial and other records related to Icon Services (the “ Services Records ”) to the extent necessary to enable Icon to provide Icon Services, and complete its legal, tax, or regulatory requirements or as otherwise required by such other party in connection with any third party action, tax contest or the preparation of any tax return or financial statements.

 

(b) The parties will first attempt in good faith to resolve any dispute or claim arising out of or relating to this Agreement through negotiations between the parties. Upon the written request of either Icon or the Purchaser, Icon and the Purchaser shall require such personnel from whom it is reasonable to anticipate that input may be required in order to resolve the dispute to meet within ten (10) business days of the request for the purpose of resolving such dispute (or such longer period as the parties may agree in writing). In no event shall the existence of a dispute or claim disrupt, suspend or terminate (i) any of the services that are required to be provided hereunder during the applicable Service Period or (ii) the obligation to pay the Applicable Icon Fee unless, in each case, as mutually agreed upon by the parties hereto.

 

5. Compensation; Payment .

 

(a) As consideration for the provision of Icon Services, the Purchaser shall, for each Icon Service to be performed, pay Icon in advance the Applicable Icon Fee for such Icon Service set forth in Annex A attached hereto.

 

(b) In the event any Applicable Icon Fee is on a per-month basis and the corresponding Icon Service begins on any day other than the first day of a month or is terminated on any other day other than the last day of the month, the Applicable Icon Fee for Icon Services performed in any such month shall be prorated based on the number of days on which such Icon Services shall be performed and determined using a 30 day month. In addition to the Applicable Icon Fee, Icon shall also be entitled to reimbursement from the Purchaser within 30 days of Icon’s receipt of reasonable supporting documentation for all reasonable and necessary out-of-pocket expenses incurred in connection with the provision of Icon Services that are specifically not included in the provision of such Icon Services and are necessary to complete such Icon Services in accordance with the terms and conditions of this Agreement; provided , that the Purchaser shall have the right to review in good faith such out-of-pocket expenses and Icon shall first obtain the Purchaser’s written consent (which shall not be unreasonably withheld, conditioned or delayed) prior to incurring any such out-of-pocket expenses for which it expects reimbursement.

 

(c) Each month, Icon shall submit to the Purchaser, via e-mail or other electronic means, a monthly invoice with reasonable detail of such calendar month’s Icon Services to be performed, if any, and the Applicable Icon Fees for such calendar month. All amounts shall be due and payable on or before the later of (i) the due date provided in Annex X or (ii) the 15th day following the Purchaser’s receipt of an invoice delivered in accordance with this Section 6(c) . Icon shall provide supporting information and documentation as reasonably requested by the Purchaser to validate any amounts payable by the Purchaser pursuant to this Section 6 .

 

D- 3

 

 

(d) Icon and the Purchaser shall use commercially reasonable efforts to keep the Service Records and reasonable supporting documentation of all charges incurred and amounts owed in connection with providing such Icon Services for the longer of three years following the termination of this Agreement or as required by applicable Law, and shall make such books and records available to the other party hereto.

 

6. Taxes .

 

(a) In addition to any amounts otherwise payable pursuant to this Agreement, each party shall be responsible for any and all withholding, sales, use, excise, services or similar taxes imposed by Law on the provision of goods and services (but, in each case, excluding income or franchise taxes) by the other party or any of its Affiliates or Subcontractors to such party pursuant to this Agreement (“ Sales Taxes ”) and shall remit such Sales Taxes to the applicable taxing authority unless the prospective withholding party provides the other party with a certificate or other proof, reasonably acceptable to both parties, evidencing an exemption from liability for such Sales Taxes.

 

(b) The parties agree to cooperate with each other in determining the extent to which any Sales Tax is due and owing under the circumstances, and will provide and make available to each other any resale certificate, information regarding out of state use of materials, services or sale, and other exemption certificates or information reasonably requested by either party. For the avoidance of doubt, all amounts under this Agreement are expressed exclusive of Sales Taxes.

 

7. Term; Termination .

 

(a) Initially, this Agreement shall be for the period commencing with the Effective Date and ending three months from the Effective Date (the “Term”). Thereafter, this Agreement shall be renewable for a term of three months and shall be automatically renewed for successive three month terms unless and until terminated by either Icon or the Purchaser on written notice given not less than 30 days prior to expiration of the current Term..

 

(b) Notwithstanding anything to the contrary contained herein or in Annex A attached hereto, the Purchaser may terminate any individual Icon Service on an Icon Service-by-Icon Service basis upon 30 days written notice, identifying the particular Icon Service to be terminated and the effective date of termination.

 

(c) This Agreement may be terminated prior to the expiration of the Term as set forth in Section 7(a) and (b) , upon written notice as set forth below:

 

i. by mutual written consent of the parties hereto at any time;

 

D- 4

 

 

ii. with respect to Icon Services, by Icon, if the Purchaser fails to pay any invoice within 30 days following the date when payment of such invoice is due, unless the Purchaser is disputing such invoice in good faith or the parties have initiated the dispute resolution procedures set forth in Section 4 .

 

(d) The Purchaser and Icon each specifically agrees and acknowledges that all obligations of Icon to provide any Icon Service shall immediately cease upon the termination of this Agreement, in each case, in the manner set forth herein. Upon the cessation of Icon’s obligation to provide any Icon Service, the Purchaser, shall immediately cease using, directly or indirectly, such Icon Service.

 

(e) Upon termination of an Icon Service with respect to which Icon holds books, records or files, including current or archived copies of computer files, owned by the Purchaser and used by Icon in connection with the provision of an Icon Service to the Purchaser, Icon will return to the Purchaser all of such books, records or files as soon as reasonably practicable; provided , however , that Icon may make a copy, at its expense and with prior written consent of the Purchaser, of such books, records or files for archival purposes only.

 

8. Liability and Indemnity .

 

(a) No party to this Agreement nor any of their respective Affiliates will be liable to the other party for any special, punitive, consequential, incidental or exemplary damages (including lost or anticipated revenues or profits relating to the same and attorneys’ fees) arising from any claim relating solely to the services provided pursuant to this Agreement (other than with respect to Section 9 or to the extent such special, punitive, consequential, incidental or exemplary damages are payable to a third party), whether such claim is based on warranty, contract, tort (including negligence or strict liability) or otherwise, and regardless of whether such damages are foreseeable or an authorized representative of such party is advised of the possibility or likelihood of such damages. In addition, none of the parties hereto nor any of their respective Affiliates will be liable to the other party or any third party for any damages arising from any claim relating solely to the services provided pursuant to this Agreement, except to the extent that such damages are caused by (i) failure to make a payment required under this Agreement, (ii) the Purchaser’s or Icon’s breach of any of the terms hereof, (iii) the bad faith, fraud, or willful misconduct of any such party or its respective Affiliates, or (iv) the failure of Icon to provide Icon Services as required under this Agreement.

 

(b) The aggregate liability of any party arising out of or in connection with this Agreement shall not exceed an amount equal to the amount actually paid to Icon for Icon Services that gave rise to or related to the incurrence of such liability (except for any liability or loss caused by Icon’s or any of its Affiliate’s or Subcontractor’s bad faith or willful misconduct).

 

(c) During the Term, each party shall maintain insurance as required by Law and of the types and in the amounts which are commercially reasonable for such party’s business.

 

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9. Proprietary Information . Each party agrees to maintain the confidentiality of all non-public information relating to the other party, their respective Affiliates or any third party that may be disclosed by a party to the other party in connection with the performance of this Agreement or the Icon Services and to use such information solely for the purposes of providing or receiving Icon Services. Each party shall retain the entire right, interest and title to its proprietary information. Any and all records, data, or documents created by or on behalf of either party (or its respective employees, contractors, or agents) during the Term in connection with Icon Services (collectively, the “ Service Assets ”), will be owned in all respects by such party, and the other party will have no right, title or interest in any of the Service Assets.

 

10. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10):

 

If to Icon:

Icon Information Consultants, LP

100 Waugh, Suite 300

Houston, TX 77007

E-Mail: ___________________

Attention: Tim O’Rourke

 

with a copy (which shall not constitute notice) to:

 

 

 

 

 

If to the Purchaser:

Crady, Jewett, McCulley & Houren LLP

2727 Allen Parkway, Suite 1700

Houston, Texas 77009

E-mail: ___________________

Attention: Peter J. Marmo

 

Recruiter.com Recruiting Solutions, LLC

344 Grove Street, Suite 2-4018

Jersey City, New Jersey 07302

E-mail: ____________________

Attention: Miles Jennings

 

with a copy (which shall not constitute notice) to:

Nason, Yeager, Gerson, Harris & Fumero, P.A.

3001 PGA Boulevard, Suite 305

Palm Beach Gardens, Florida 33410

E-mail: ____________________

Attention: Michael Harris, Esq. 

 

11. Amendments and Waivers . No amendment of this Agreement will be effective unless it is in writing and signed by Icon and the Purchaser. No waiver of any provision of this Agreement will be effective unless it is in writing and signed by the party against whom the waiver is sought to be enforced, and no such waiver will constitute a waiver of satisfaction of any other provision of this Agreement.

 

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12. Expenses . Except as otherwise provided in this Agreement, each party shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby and thereby, including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties.

 

13. Assignment and Delegation . Neither this Agreement nor any rights, benefits or obligations set forth herein may be assigned by any of the parties hereto, except that (a) the Purchaser may, without consent of Icon, assign this Agreement and any of the provisions hereof: (i) to any of its Affiliates; (ii) in connection with the sale of all or a substantial part of its assets or business; or (iii) to any of its financing sources as collateral security and (b) Icon may, without consent of the Purchaser, assign this Agreement and any of the provisions hereof: (i) to any of its Affiliates; (ii) in connection with the sale of all or a substantial part of its assets or business; or (iii) to any of its financing sources as collateral security. Except as otherwise provided herein, each and all of the covenants, terms, provisions and agreements contained herein shall be binding upon, and shall inure to the benefit of, the successors, executors, heirs, representatives, administrators and assigns of each of the respective parties. Any assignment or purported assignment in violation of this Section 13 shall be void ab initio .

 

14. Governing Law . The Laws of the State of Texas, without giving effect to principles of conflict of Laws, govern all matters arising out of or relating to this Agreement and all of the transactions it contemplates.

 

15. Consent to Jurisdiction . Each party hereto irrevocably submits to the exclusive jurisdiction of any state or federal court located in New York County, NY for the purposes of any action arising out of this Agreement or any transaction contemplated hereby, and agrees to commence any such action only in such courts. Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth herein shall be effective service of process for any such Action. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action arising out of this Agreement or the transactions contemplated hereby in such courts, and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

16. Counterparts . The parties may sign this Agreement in several counterparts, each of which will be deemed an original but all of which together will constitute one instrument. The parties agree that delivery of this Agreement may be effected by means of an exchange of facsimile or other electronic copies.

 

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17. Third Party Beneficiaries . Except as set forth herein, this Agreement does not and is not intended to confer any rights or remedies upon any Person (other than Icon and the Purchaser), including any employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, other than the parties to this Agreement.

 

18. Entire Agreement . This Agreement, Annex A attached hereto, and the other documents, instruments and other agreements specifically referred to in this Agreement (including the Purchase Agreement) or those documents or delivered under this Agreement or the Purchase Agreement constitute the final agreement between the parties. It is the complete and exclusive expression of the parties’ agreement on the subject matter of this Agreement. This Agreement supersedes all prior oral or written agreements or policies relating to this Agreement, except for the Purchase Agreement and the other Ancillary Documents, which will continue in full force and effect in accordance with its terms. The provisions of this Agreement may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings or performance. Nothing in this Agreement will reduce, change, supersede, replace or otherwise affect any obligations of either party under the Purchase Agreement or the Ancillary Documents.

 

19. Captions; Interpreting Provisions . All captions contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Any singular defined term in this Agreement shall be deemed to include the plural, and any plural defined term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.

 

20. Severability . If any provision of this Agreement is held invalid, illegal or unenforceable in any jurisdiction, the remainder of this Agreement, or application of that provision to any Persons or circumstances, or in any jurisdiction, other than those as to which it is held unenforceable, will not be affected by that unenforceability and will be enforceable to the fullest extent permitted by Law.

 

21. Specific Performance . Icon and the Purchaser each agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each party shall be entitled to an injunction or injunctions or other specific performance to prevent breaches of this Agreement and/or to enforce specifically the terms hereof without posting any bond or undertaking, in addition to any other remedy to which they are entitled at Law or in equity.

 

22. Interpretation . The parties hereto have participated jointly in the negotiation and drafting of this Agreement, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party by virtue of the authorship of this Agreement shall not apply to the construction and interpretation hereof.

 

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23. Independent Contractor . Icon, and if applicable, its Affiliates, will perform Icon Services in the capacity of an independent contractor. Nothing in this Agreement will be construed or inferred to imply that any party is a partner, joint venturer, agent or representative of, or otherwise associated with the other party and no party shall be authorized to legally bind the other party contractually or otherwise. Each of the parties hereto agrees not to represent to any Person or take any action from which any Person could reasonably infer another party or such party’s Affiliates is a partner, joint venturer, agent or representative of, or otherwise associated with that party.

 

24. Affiliates . The term “ Affiliate ” of any Person means any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.

 

25. Survival . The provisions of Sections 8 through 26 shall survive the expiration or earlier termination of this Agreement for any reason whatsoever.

 

26. Force Majeure . Neither party hereunder shall be in default to the other party hereunder by reason of any failure or delay in the performance of their obligations hereunder where such failure or delay is due to any cause beyond their reasonable control, including strikes, labor disputes, civil disturbances, riot, rebellion, invasion, epidemic, hostilities, war, embargo, natural disaster, acts of God, acts of terrorism, flood, fire, sabotage, accident, delay in transportation, loss and destruction of property, intervention by governmental entities, change in laws, regulations or orders, other events or any other circumstances or causes beyond such party’s reasonable control.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

  Recruiter.com Recruiting Solutions, LLC
     
  By:
  Name:  Miles Jennings
  Title:   CEO

 

  Icon Information Services, LP
     
  By:                 
  Name:    
  Title:    

 

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ANNEX A

 

ICON SERVICES

 

    Service   Applicable Fee
1.   Initial setup of Microsoft Dynamics GP  

$1,500, due by March ___, 2019.

 

2.   Telecomm and interest access bills  

Split 50%/50% between Icon and the Purchaser, paid monthly within 20 days of the date that Icon provides the Purchaser with its share of costs *

 

3.  

Accounts receivable, accounts payable, journal entries (but not to include any regulatory or other accounting)

 

  $1,600 per week, paid monthly within 20 days of the end of each month
4.   Any building related charges (e.g. access badges) to the extent not covered in that certain Sublease between Icon and the Purchaser  

Passed through at Icon’s cost; payable within 20 days of the date Icon provides the Purchaser with its share of costs.

 

*Phone bill generally ranges from $2,000 to $3,000/month depending on usage, and internet is approximately $500 per month. These numbers are estimates only provide for information purposes, and are not a guaranty of future costs.

 

 

D-10

 

 

Exhibit 3.1

 

AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION OF

PREFERENCES, RIGHTS AND LIMITATIONS

OF

SERIES D CONVERTIBLE PREFERRED STOCK

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

  

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series D Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series D Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series D Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series D Convertible Preferred Stock” (the “ Series D Preferred Stock ”). The authorized number of shares of the Series D Preferred Stock shall be 500,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

 

 

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary (in each case, the “ Liquidation Date ”), each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of the first $2,000,000 of cash and/or other property received by the Corporation pursuant to such liquidation, dissolution or winding up; and (b) after the Series E Stockholders and the Series F Stockholders have received the Second Liquidation Preference, a pro rata portion of 28.78% of the value of any cash or other property to be distributed to the Holders, the Series E Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a)   Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b)   Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c)   Mechanics of Conversion .

 

(i)    Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii)  Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

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(d)  Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series D Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series D Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Rights Upon Issuance of Other Securities .

 

(a)  Adjustment of Conversion Price upon Issuance of Common Stock . For a period of two (2) years commencing on the Closing Date, if the Corporation issues or sells, or in accordance with this Section 6 is deemed to have issued or sold, any Convertible Securities or Options, excluding any Excluded Securities (issued or sold or deemed to have been issued or sold) convertible or exercisable into shares of Common Stock less than a price equal to the Conversion Price (“ New Conversion Price ”) in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “ Applicable Price ”) (the foregoing a “ Dilutive Issuance ”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to the New Conversion Price. For all purposes of the foregoing (including determining the adjusted Conversion Price and the New Conversion Price under this Section 6 ), the following shall be applicable:

 

(i)  Issuance of Options . If the Corporation in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Option for such price per share. For purposes of this Section 6(a)(i) , the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

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(ii)  Issuance of Convertible Securities . If the Corporation in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For purposes of this Section 6(a)(ii) , the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 6(a)(ii) , except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(iii)  Change in Option Price or Rate of Conversion . If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased Conversion Rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 6(a)(iii) , if the terms of any Option or Convertible Security that was outstanding as of the Closing Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 6(a)(iii) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

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(iv)  Calculation of Consideration Received . If any Option and/or Convertible Security is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Corporation (as determined by the Required Holders, the “ Primary Security ”, and such Option and/or Convertible Security, the “ Secondary Securities ”), together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Corporation either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant to Section 6(a)(i) or Section 6(a)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (A) the Consideration Value of each such Option, if any, (B) the fair market value (as determined by the Required Holders in good faith) or the Consideration Value, as applicable, and (C) the fair market value (as determined by the Required Holder) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 6(a)(iv) . If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security) will be deemed to be the net amount of consideration received by the Corporation therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security), the amount of such consideration received by the Corporation will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Corporation for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Corporation and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “ Valuation Event ”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10 th ) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Corporation and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Corporation.

 

(v)  Record Date . If the Corporation takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

Provided , however, that if the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, is listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 6(a) shall not apply.

 

(b)   Holder’s Right of Adjusted Conversion Price . In addition to and not in limitation of the other provisions of this Section 6(b) , if the Corporation in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “ Variable Price Securities ”) that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock pursuant to such Options or Convertible Securities, as applicable, at a price which varies with the market price of the shares of Common Stock (the “ Variable Price ”), the Corporation shall provide written notice thereof via (i) electronic mail or (ii) overnight courier to each Holder on the date of such agreement and/or the issuance of such shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the Corporation enters into such agreement or issues any such Variable Price Securities, each Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of the Preferred Shares by designating in the Conversion Notice delivered upon any conversion of Preferred Shares that solely for purposes of such conversion such Holder is relying on the Variable Price rather than the Conversion Price then in effect. A Holder’s election to rely on a Variable Price for a particular conversion of Preferred Shares shall not obligate such Holder to rely on a Variable Price for any future conversions of Preferred Shares; provided; further, that the provisions of this Section 6(b) shall not apply to any Excluded Securities.

 

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(c)   Adjustment of Conversion Price upon Exchange Listing or Mandatory Conversion . If: (i) the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, and the closing bid price quoted on the Principal Market on the Trading Day prior to such listing is less than the Conversion Price (accounting for any stock split or prior adjustment to the Conversion Price), then the Conversion Price shall be reduced by 20% of the difference between the current Conversion Price and such bid price; or (ii) a broker-dealer conducts a financing pursuant to which a Holder is required to convert its Preferred Shares (regardless of the type or amount of such financing), then the current Conversion Price shall be reduced by 20%.

 

(d)   Calculations . All calculations under this Section 6 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 Corporation, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

(e)   Voluntary Adjustment by Corporation . The Corporation may at any time while any Preferred Shares remain outstanding, with the prior consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors.

 

(f)   Excluded Securities . No adjustments contained in this Section 6 shall be made upon the sale or issuance of any Excluded Securities sold or deemed to have been sold.

 

(g)   Termination . The provisions of this Section 6 shall terminate and be of no further force or effect on the earlier of: (i) the two (2) year anniversary of the Closing Date and (ii) the date of which no Preferred Shares remain outstanding.

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

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Section 8. Other Provisions .

 

(a)   Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

  

(b)   Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c)   Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d)   Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

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Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series D Preferred Stock.

 

Section 10. Certain Adjustments .

 

(a)   Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series D Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series D Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a)  “ Closing Date ” shall mean the date of first issuance of the shares of Series D Preferred Stock.

 

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(b)  “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

(c)  “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(d)  “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(e)  “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

(f)  ““ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(g)  “ Holder ” or “ Holders ” means a holder of Series D Preferred Stock.

 

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

 

(i)  “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(j)  “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(k)  “ Remaining Liquidation Amount ” means $9,000,000.

 

(l)  “ Required Holders ” means a majority of the Holders, which shall include Cavalry Fund I LP as long as it owns at least five percent (5%) of the Preferred Shares.

 

(m)  “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Series E Stockholders and the Series F Stockholders after the Holders have received the First Liquidation Preference.

 

(n)  “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and the Holders party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

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(o)  “ Series E Stockholders ” means a Person holding Series E Convertible Preferred Stock of the Corporation.

 

(p)  “ Series F Stockholders ” means a Person holding Series F Convertible Preferred Stock of the Corporation.

 

(q)  “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

(r)  “ Transaction Documents ” means this Amended and Restated Certificate of Designations, the Securities Purchase Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Securities Purchase Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(s)  “ Triggering Events ” means each of the following events:

 

(i)  at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designations and such breach remains uncured for a period of five (5) consecutive Trading Days (the “ Cure Period ”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii)   upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii)  other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv)  a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

11

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By: /s/ Miles Jennings
  Name: Miles Jennings
  Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS
AND LIMITATIONS OF SERIES D CONVERTIBLE PREFERRED STOCK]

 

 

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:

 

Aggregate number of Preferred Shares to be converted

 

 

Aggregate Stated Value of such Preferred Shares to be converted:

 

 

Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:

 

 

AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:

 

 

Please confirm the following information:

 

Conversion Price:

 

 

Number of shares of Common Stock to be issued:

 

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:

 

 
             

Date: _____________ __,

 

 

 
Name of Registered Holder  

 

By: _______________________
Name:
Title:

Tax ID:_____________________

Facsimile:___________________

 

E-mail Address:

   

 

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRULI TECHNOLOGIES, INC.
     
  By:  
    Name:
    Title:

  

 

 

 

 

 

 

Exhibit 3.2

 

AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION OF

PREFERENCES, RIGHTS AND LIMITATIONS

OF

SERIES E CONVERTIBLE PREFERRED STOCK

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series E Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series E Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series E Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series E Convertible Preferred Stock” (the “ Series E Preferred Stock ”). The authorized number of shares of the Series E Preferred Stock shall be 775,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary, each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of 79.48% of the Second Liquidation Preference; and (b) a pro rata portion of 56.60% of the value of any cash or other property to be distributed to the Holders, the Series D Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

 

 

 

Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

3

 

 

(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series E Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series E Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Reserved .

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

4

 

 

(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series E Preferred Stock.

 

5

 

 

Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series E Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series E Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Closing Date ” shall mean the date of first issuance of the shares of Series E Preferred Stock.

 

(b) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

(c) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

6

 

 

(d) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(e) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

(f) “ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(g) “ First Liquidation Preference ” means the first $2,000,000 of cash and/or other property received by the Corporation pursuant to the liquidation, dissolution or winding up of the business of the Corporation, and which is payable to the Series D Stockholders.

 

(h) “ Holder ” or “ Holders ” means a holder of Series E Preferred Stock.

 

(i) “ Merger Agreement ” means that certain Agreement and Plan of Merger dated as of the Closing Date by and among the Corporation and the additional parties thereto.

 

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

 

(k) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(l) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(m) “ Remaining Liquidation Amount ” means $9,000,000.

 

(n) “ Required Holders ” means Holders representing a majority of the outstanding Preferred Stock.

 

(o) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Holders and the Series D Stockholders after the Series F Stockholders have received the First Liquidation Preference.

 

(p) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and certain investors party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

(q) “ Series D Stockholders ” means a Person holding Series D Convertible Preferred Stock of the Corporation.

 

7

 

 

(r) “ Series F Stockholders ” means a Person holding Series F Convertible Preferred Stock of the Corporation.

 

(s) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

(t) “ Transaction Documents ” means this Amended and Restated Certificate of Designation, the Merger Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Merger Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(u) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designation and such breach remains uncured for a period of five (5) consecutive Trading Days (the “ Cure Period ”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

8

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By: /s/ Miles Jennings
  Name: Miles Jennings
  Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND
LIMITATIONS OF SERIES E CONVERTIBLE PREFERRED STOCK]

 

 

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designation, Preferences and Rights of the Series E Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series E Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:

 

 

Aggregate number of Preferred Shares to be converted

 

 

Aggregate Stated Value of such Preferred Shares to be converted:

 

 

Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:

 

 

AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:

 

 

Please confirm the following information:

 

Conversion Price:

 

 

Number of shares of Common Stock to be issued:

 

 

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:

 

 

 

Date: _____________ __,  
   
   
Name of Registered Holder  

 

By:        
  Name:  
  Title:  
   
  Tax ID:____________________________  
  Facsimile:_____________________ _____  
   
E-mail Address:  

 

 

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRULI TECHNOLOGIES, INC.
     
  By:            
    Name:
    Title:

 

 

 

 

 

Exhibit 3.3

 

AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION OF
PREFERENCES, RIGHTS AND LIMITATIONS

OF

SERIES F CONVERTIBLE PREFERRED STOCK

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series F Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series F Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series F Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series F Convertible Preferred Stock” (the “ Series F Preferred Stock ”). The authorized number of shares of the Series F Preferred Stock shall be 200,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary (in each case, the “ Liquidation Date ”), each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of 20.52% of the Second Liquidation Preference; and (b) a pro rata portion of 14.62% of the value of any cash or other property to be distributed to the Holders, the Series D Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

 

 

 

Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

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(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series F Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series F Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Reserved .

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

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(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series F Preferred Stock.

 

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Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series F Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series F Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Asset Purchase Agreement ” means that certain Asset Purchase Agreement dated as of the Closing Date by and among the Corporation and the additional parties thereto.

 

(b) “ Closing Date ” shall mean the date of first issuance of the shares of Series D Preferred Stock.

 

(c) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

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(d) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(e) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(f) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

(g) “ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(h) “ First Liquidation Preference ” means the first $2,000,000 of cash and/or other property received by the Corporation pursuant to the liquidation, dissolution or winding up of the business of the Corporation, and which is payable to the Series D Stockholders.

 

(i) “ Holder ” or “ Holders ” means a holder of Series F Preferred Stock.

 

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

 

(k) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(l) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(m) “ Remaining Liquidation Amount ” means $9,000,000.

 

(n) “ Required Holders ” means Holders representing a majority of the outstanding Preferred Shares.

 

(o) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Holders and the Series E Stockholders after the Series D Stockholders have received the First Liquidation Preference.

 

(p) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and certain investors party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

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(q) “ Series D Stockholders ” means a Person holding Series D Convertible Preferred Stock of the Corporation.

 

(r) “ Series E Stockholders ” means a Person holding Series E Convertible Preferred Stock of the Corporation.

 

(s) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

(t) “ Transaction Documents ” means this Amended and Restated Certificate of Designation, the Asset Purchase Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Asset Purchase Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(u) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designation and such breach remains uncured for a period of five (5) consecutive Trading Days (the “Cure Period”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By: /s/ Miles Jennings
  Name: Miles Jennings
  Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS
AND LIMITATIONS OF SERIES F CONVERTIBLE PREFERRED STOCK]

 

 

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designation, Preferences and Rights of the Series E Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series E Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:  
   
Aggregate number of Preferred Shares to be converted  
   
Aggregate Stated Value of such Preferred Shares to be converted:  
   
Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:  
   
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:  
   
Please confirm the following information:  
   
Conversion Price:  
   
Number of shares of Common Stock to be issued:  
   
Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:  

 

Date: _____________ __, _____  
   
   
Name of Registered Holder  
   
By:    
  Name:  
  Title:  
     
  Tax ID:_____________________________  
  Facsimile:___________________________  
   
E-mail Address:  

 

 

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRxULI TECHNOLOGIES, INC.
     
  By:                                    
  Name:  
  Title:  

 

 

 

 

Exhibit 3.4

 

CERTIFICATE OF ELIMINATION

OF

SERIES B CONVERTIBLE PREFERRED STOCK

OF

TRULI TECHNOLOGIES, INC.

 

(Pursuant to Section 151 (g) of the Delaware General Corporation Law)

 

TRULI TECHNOLOGIES, INC. (the “Company”), a corporation organized and existing under the laws of the State of Delaware, certifies as follows:

 

FIRST: By a Certificate of Designations filed with the Secretary of State of the State of Delaware on October 24, 2017 (the “Series B Certificate of Designations”), the Company authorized the issuance of a series of preferred stock consisting of 1,875,000 shares, par value $0.0001 per share, designated as the Series B Convertible Preferred Stock (the “Series B Preferred Stock”), and established the designations and the voting and other powers, preferences and the relative participating, optional or other rights and the qualifications, limitations and restrictions thereof.

 

SECOND: None of the authorized shares of Series B Preferred Stock are outstanding and none will be issued.

 

THIRD: Pursuant to Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”) and the authority vested in the Board of Directors by the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), the Board of Directors adopted the following resolutions approving the elimination of the Series B Preferred Stock, as set forth herein:

 

NOW THEREFORE LET IT BE:

 

RESOLVED, that none of the authorized shares of Series B Preferred Stock are outstanding and none will be issued; it is further

 

RESOLVED, that the Chief Executive Officer of the Company is authorized and directed in accordance with Section 151(g) of DGCL, to file with the Secretary of State of Delaware a certificate of elimination, eliminating from the Certificate of Incorporation of the Company all matters set forth in the Series B Certificate of Designations with respect to the Series B Preferred Stock and to pay any fees related to such filing.

 

FOURTH: Pursuant to the provisions of Section 151(g) of the DGCL, all references to Series B Preferred Stock in the Certificate of Incorporation, are hereby eliminated, and the authorized shares of Series B Preferred Stock are hereby returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series.

  

[Signature Page Follows]

 

 

 

    

IN WITNESS WHEREOF, the Company has caused this Certificate of Elimination to be executed by its duly authorized officer as of this 31 day of March, 2019.

  

  By: /s/ Miles Jennings
    Miles Jennings, Chief Executive Officer

 

[Signature Page to Certificate of Elimination of Series B Convertible Preferred Stock]

 

 

 

 

Exhibit 4.1  

 

EXECUTION VERSION

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

TRULI TECHNOLOGIES, INC.

 

Warrant Shares: __________________ Initial Exercise Date: March 31, 2019

  

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, __________________, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Truli Technologies, Inc., a Delaware corporation (the “ Company ”), up to ___________ shares of Common Stock (subject to adjustment hereunder, the “ Warrant Shares ”). The purchase price of one Warrant Share shall be equal to the Exercise Price (defined below).

 

Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated March 31, 2019, among the Company and the Buyers listed on the Schedule of Buyers attached thereto.

 

 

 

 

Section 2 . Exercise .

 

(a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the “Notice of Exercise Form” annexed hereto. Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice. The Holder by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

(b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be equal to $0.06 per share, subject to adjustment under Section 3 (the “ Exercise Price ”).

 

(c) Cashless Exercise . If at any time after the Initial Exercise Date, there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A x B) – (A x C)] by (D), where:

 

(A) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

 

(B) = the greater of (i) the arithmetic average of the VWAPs (as defined below) for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election;

 

(C) = the Exercise Price of this Warrant, as adjusted hereunder, at the time of such exercise; and

 

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(D) = the lesser of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election.

 

VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Principal Market upon which the Common Stock is then listed or quoted is a trading market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Principal Market as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Principal Market upon which the Common Stock is then listed or quoted is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on such Principal Market as applicable, (c) if the Common Stock is not then listed or quoted on the Principal Market, and if prices for the Common Stock are then reported in the OTC Pink Marketplace of OTC Markets Group, Inc., the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c) .

 

Notwithstanding anything herein to the contrary, if on the Termination Date (unless the Holder notifies the Company otherwise) if there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c) .

 

(d) Mechanics of Exercise .

 

(i) Delivery of Certificates Upon Exercise . Certificates for shares purchased hereunder shall be transmitted to the Holder by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (unless by cashless exercise, if permitted) (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $5 per Trading Day (increasing to $10 per Trading Day after the fifth (5 th ) Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for which this Warrant is exercised which are not timely delivered. In no event shall liquidated damages for any one transaction exceed $1,000.00 for the first ten Trading Days. The Company shall pay any payments incurred under this Section 2(d)(i) in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

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(ii) Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

 

(iii) Rescission Rights . If the Company fails to deliver the Warrant Shares by crediting the account of the Holder’s prime broker via DWAC and causes the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.

 

(iv) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to deliver the Warrant Shares, or cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a 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 upon exercise of the Warrant as required pursuant to the terms hereof.

 

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(v) No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi) Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate including any charges of any clearing firm, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

(vii) Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

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(e) Holder’s Exercise Limitations . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e) , beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the 1934 Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing 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 Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant, provided that the Beneficial Ownership Limitation in no event exceeds 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 this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase will not be effective until the 61 st day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

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Section 3 . Certain Adjustments .

 

(a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b) Adjustments for Issuance of Additional Securities. For a period of two (2) years from the Initial Exercise Date, in the event that the Company shall, at any time, effect a Subsequent Placement (in a transaction other than in connection with the issuance of any Excluded Securities), at a price per share less than the Exercise Price then in effect or without consideration (a “ Dilutive Issuance ” based on a “ Dilutive Issuance Price ”), then the Exercise Price upon each such issuance shall be reduced to the Dilutive Issuance Price, and the number of Warrant Shares (excluding Warrant Shares previously exercised) shall be increased on a full ratchet basis to the number of shares of Common Stock determined by multiplying the Exercise Price then in effect immediately prior to such adjustment by the number of Warrant Shares (excluding Warrant Shares previously exercised) acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. By way of example, if E is the total number of Warrant Shares in effect immediately prior to such Dilutive Issuance, F is the Exercise Price in effect immediately prior to such Dilutive Issuance, and G is the Dilutive Issuance Price, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such Dilutive Issuance = the quotient obtained from dividing [E x F] by G. P rovided , however , that if the Company’s Common Stock (including the Warrant shares) is listed on any of the New York Stock exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 3(b) shall not apply following such listing, subject to Section 3(c) .

 

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(c) Adjustment of Conversion Price upon Exchange Listing . If the Company’s Common Stock becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, then (accounting for any stock split or prior adjustment to the Exercise Price) the Exercise Price shall be reduced to the lesser of (i) a 20% discount to the closing bid price quoted on the Principal Market on the Trading Day prior to such listing and (ii) a 20% discount to the Exercise Price in effect on the date of such listing.

 

(d) Change in Option Price or Rate of Conversion . If the price per share for which shares of Common Stock may be issuable pursuant to any Common Stock Equivalent, is less than the applicable Exercise Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Exercise Price in effect at the time of such amendment or adjustment, then the applicable Exercise Price and number of Warrant Shares shall be adjusted upon each such issuance or amendment as provided in this Section 3(d) .

 

(e) Calculation of Consideration Received . In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

 

Option Value ” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the "OV" function on Bloomberg L.P. determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of (A) the Trading Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

 

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The provisions of this Section 3(e) shall apply each time the Company, at any time after the Initial Exercise Date and prior to the date that is eighteen (18) months from the Initial Exercise Date, shall issue any securities with a Dilutive Issuance Price.  Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(e) with respect to an Exempt Issuance (as defined in the Purchase Agreement).

 

(f) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above and any rights contained in the Purchase Agreement, for a period of two (2) years from the Initial Exercise Date, if the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares 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 Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, no Purchase Rights will be made under this Section 3(f) in respect of Excluded Securities.

 

(g) Pro Rata Distributions . If the Company, for a period of two (2) years from the Initial Exercise Date, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(d) ), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

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(h) Fundamental Transaction . For a period of two (2) years from the Initial Exercise Date, if (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), at the option of the Holder the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to (i) the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction or (ii) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(h) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(h) with respect to an Exempt Issuance (as defined in the Purchase Agreement).

 

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(i) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3 , the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(j) Notice to Holder .

 

(i) Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3 , the Company shall promptly email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Holder may supply an email address to the Company and change such address.

 

(ii) Notice to Allow Exercise by Holder . For a period of two (2) years from the Initial Exercise Date, if (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to email such notice or any defect therein or in the emailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4 . Transfer of Warrant .

 

(a) Transferability . Subject to compliance with any applicable securities laws and the provisions of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a) , as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

(d) Representation of the Holder . The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the 1933 Act or any applicable state securities law, except pursuant to sales registered or exempted under the 1933 Act.

 

Section 5 . Miscellaneous .

 

(a) No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof other than as explicitly set forth in Section 3 .

 

(b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

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(c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

(d) Authorized Shares .

 

The Company covenants that from 60 days following the Initial Exercise Date (subject to tolling as provided for in Section 4(k) of the Purchase Agreement), any time during the period the Warrant is outstanding, it will maintain the Required Reserved Amount as set forth in Section 4(k) of the Purchase Agreement. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue 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 Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

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(f) Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered or if not exercised on a cashless basis when Rule 144 is available, may have restrictions upon resale imposed by state and federal securities laws.

 

(g) Non-waiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

(i) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j) Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate or that there is no irreparable harm and not to require the posting of a bond or other security.

 

(k) Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or Holders of Warrant Shares.

 

(l) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders of 100% of the outstanding Warrants issued pursuant to the Purchase Agreement.

 

(m) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  TRULI TECHNOLOGIES, INC.
     
  By:
  Name:   Miles Jennings
  Title: Chief Executive Officer

 

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NOTICE OF EXERCISE

 

To: TRULI TECHNOLOGIES, INC.

 

(1) The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

☐    in lawful money of the United States; or

 

☐    [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c) , to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c) .

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

(4) After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

  

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________________________

Signature of Authorized Signatory of Investing Entity : ________________________________________________

Name of Authorized Signatory: __________________________________________________________________

Title of Authorized Signatory: ___________________________________________________________________

Date: _______________________________________________________________________________________

 

 

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

TRULI TECHNOLOGIES, INC.

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________

 

_______________________________________________________________

 

Dated: ______________, _______

 

Holder’s Signature: _____________________________

 

Holder’s Address:  _____________________________

 

  _____________________________

 

Signature Guaranteed: ___________________________________________

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

 

 

 

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “ Agreement ”), is entered into as of March 31, 2019 (the “ Execution Date ”), by and among Truli Technologies, Inc. (f.k.a. Truli Media Group, Inc.), a Delaware corporation, with headquarters located at 4 Oakland Street, Bristol CT 06010 (the “ Company ”), and the investors listed on the Schedule of Buyers attached hereto (individually, a “ Buyer ” and collectively, the “ Buyers ”).

 

RECITALS

 

A. WHEREAS, the Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ 1933 Act ”), and Rule 506(b) of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the 1933 Act.

 

B. WHEREAS, the Company has authorized a new series of convertible preferred stock of the Company designated as Series D Convertible Preferred Stock (the “ Series D Preferred Stock ”), the terms of which are set forth in the certificate of designation for such series of preferred stock (the “ Certificate of Designations ”) in the form attached hereto as Exhibit A (together with any convertible preferred stock issued in replacement thereof in accordance with the terms thereof, the “ Preferred Shares ”), which Preferred Shares shall be convertible into the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”), in accordance with the terms of the Certificate of Designations.

 

C. WHEREAS, each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number of Preferred Shares set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate number for all Buyers shall be 49,500), and (ii) Warrants, in substantially the form attached hereto as Exhibit B (the “ Warrants ”), representing the right to acquire that number of shares of Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (which aggregate number for all Buyers shall be 24,750,000) (as exercised, collectively, the “ Warrant Shares ”). The shares of Common Stock issuable pursuant to the terms of the Preferred Shares are referred to herein as the “ Conversion Shares ”.

 

D. WHEREAS, the Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares are collectively referred to herein as the “ Securities ”.

 

 

 

 

NOW, THEREFORE, in consideration of the foregoing premises, and the promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Company and each Buyer (severally and not jointly), intending to be legally bound, hereby agree as follows:

 

AGREEMENT

 

1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS .

 

(a) Closing.

 

(i) Preferred Shares and Warrants . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company agrees to issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company (the “ Closing ”) on the Closing Date (as defined below), (x) the number of Preferred Shares, as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers , and (y) Warrants to acquire up to that number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, for an aggregate amount of $1,000,000 for all Buyers (the “ Investment Amount ”).

 

(ii) Closing . The date and time of the Closing (the “ Closing Date ”) shall be 10:00 a.m., New York City time, on the Execution Date (or such later date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Nason, Yeager, Gerson, Harris & Fumero, P.A., 3001 PGA Boulevard, Suite 305, Palm Beach Gardens, FL 33410.

 

(iii) Purchase Price . The aggregate purchase price for the Preferred Shares to be purchased by each Buyer (the “ Purchase Price ”) shall be the amount set forth opposite such Buyer’s name in Column (5) on the Schedule of Buyers in each case reflecting a 10% original issuance discount from the stated value of the Preferred Shares.

 

(iv) Form of Payment . On or before the Closing Date, (A) each Buyer shall deliver to Nason, Yeager, Gerson, Harris & Fumero, P.A. as escrow agent (“ Escrow Agent ”), its portion of the Purchase Price to be paid in cash to the Company for the Preferred Shares and Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Escrow Agent’s written wire instructions, (B) such Buyer who is delivering the “Stock Purchase Price” to the Company in securities in lieu of cash as set forth on the Schedule of Buyers to purchase 11,000 Preferred Shares shall deliver the Stock Purchase Price directly to the Company and (C) the Company shall deliver to each Buyer the Preferred Shares (allocated in such number of shares as the Buyer shall request) and related Warrants (allocated in such number of shares as the Buyer shall request) which such Buyer is purchasing hereunder, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

 

2. BUYER’S REPRESENTATIONS AND WARRANTIES .

 

Each Buyer, severally and not jointly, represents and warrants with respect to only itself, as of the Execution Date and as of the Closing Date, that:

 

(a) Organization; Authority . Such Buyer 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 Transaction Documents (as defined in Section 3(b) below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

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(b) No Public Sale or Distribution . Such Buyer is (i) acquiring the Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares will acquire the Conversion Shares and (iii) upon exercise of the Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise of the Warrants, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute any of the Securities. 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 and a government or any department or agency thereof.

 

(c) Accredited Investor Status . Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(d) Reliance on Exemptions . Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

 

(e) Information . Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer in writing. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

(f) No Governmental Review . Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

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(g) Transfer or Resale . Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “ Rule 144 ”) (which shall in no event include an opinion of counsel of such Buyer unless the reasonable fees of such counsel are paid by the Company); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the 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 no Buyer 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 Transaction Document (as defined in Section 3(b) ), including, without limitation, this Section 2(g) .

 

(h) Legends .

 

(i) Such Buyer understands that the certificates or other instruments representing the Preferred Shares and the Warrants, until such time as the resale of the Conversion Shares and the Warrant Shares have been registered under the 1933 Act, the stock certificates representing the Conversion Shares and the Warrant Shares, except as set forth below, shall bear 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][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, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

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At any time after the Execution Date, the legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or, if available, issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company (“ DTC ”), if (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer (other than pursuant to Rule 144), such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A without the need to comply with public information requirements or volume limitations. The Company shall be responsible for the fees of its transfer agent, legal counsel (including, without limitation, with respect to any legal opinion upon any sale pursuant to Rule 144) and all DTC fees associated with such issuance.

 

(i) Validity; Enforcement . This Agreement and the other Transaction Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer 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.

 

(j) No Conflicts . The execution, delivery and performance by such Buyer of this Agreement and the other Transaction Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(k) No Bad Actor Disqualification Event . Such Buyer represents, after reasonable inquiry, that none of the “Bad Actor” disqualifying events described in Rule 506(d)(l)(i) to (viii) under the 1933 Act (a “ Disqualification Event ”) is applicable to such Buyer or any of its Rule 506(d) Related Parties (if any), except a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) applies. “ Rule 506(d) Related Party ” means a person or entity that is a beneficial owner of such Buyer’s securities for purposes of Rule 506(d).

 

(l) Previous Transactions . Prior to this Agreement, each Buyer has purchased or otherwise obtained securities issued by the Company.

 

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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that, as of the Execution Date and as of the Closing Date:

 

(a) Organization and Qualification . Each of the Company and its “ Subsidiaries ” (which for purposes of this Agreement means any joint venture or any entity in which the Company, directly or indirectly, owns more than 10% of the capital stock or holds an equivalent equity or similar interest) 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 authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its 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 Material Adverse Effect. As used in this Agreement, “ Material Adverse Effect ” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole, or on the transactions contemplated hereby or in the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents. As used in this Agreement, any adverse event that does not have a long-term effect on the Company is not a Material Adverse Effect. For purposes of this subsection, “long-term effect” means an effect lasting more than six (6) months. The Company has no Subsidiaries, except as set forth on Schedule 3(a ) .

 

(b) Authorization; Enforcement; Validity . The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Certificate of Designations, the Warrants, and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “ Transaction Documents ”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Preferred Shares and Warrants and the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Preferred Shares and the reservation for issuance and issuance of Warrant Shares issuable upon exercise of the Warrants have been duly authorized by the Company’s Board of Directors and no further filing, consent, or authorization is required by the Company, its board of directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. The Certificate of Designations in the form attached hereto as Exhibit A has been filed with the Secretary of State of the State of Delaware and is in full force and effect, enforceable against the Company in accordance with its terms and has not been amended.

 

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(c) Issuance of Securities . The issuance of the Preferred Shares and the Warrants have been duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof, and the Preferred Shares shall be entitled to the rights and preferences set forth in the Certificate of Designations. Upon the Company conducting a reverse split or increase of authorized shares in order to be able to reserve additional shares of Common Stock within 60 days after the Closing, the Company shall reserve from its duly authorized capital stock not less than the sum of 200% of the maximum number of shares of Common Stock issuable (i) upon conversion of the maximum number of Preferred Shares (assuming for purposes hereof, that the Preferred Shares are convertible at the Conversion Price (as defined in the Certificate of Designations) and without taking into account any limitations on the conversion of the Preferred Shares set forth in the Certificate of Designations) and (ii) upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants), in each case, determined as if issued as of the trading day immediately preceding the applicable date of determination, it being understood that the reservation of stock by the Company is a material obligation of the Company, and the failure of the Company to reserve sufficient stock under this Section 3(c) within 60 days of Closing shall constitute a default under this Agreement and entitle each Buyer to pursue all remedies available under this Agreement and the Transaction Documents. Provided, however, that if the Company has used its best efforts to effect a reverse stock split or combination and has filed applications with the Financial Industry Regulatory Authority (“FINRA”) the 60-day period in this Section 3(c) shall be tolled by an additional 15 days. Upon issuance or conversion in accordance with the Certificate of Designations or the exercise of the Warrants and payment of the exercise price under the Warrants (including by Cashless Exercise) thereunder, the Conversion Shares and the Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

 

(d) No Conflicts . The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares and the Warrants, and reservation for issuance and issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of any certificate of incorporation, any certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state laws and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.

 

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(e) Consents . Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any government, court, regulatory, self-regulatory, administrative agency or commission or other governmental agency, authority or instrumentality, domestic or foreign, of competent jurisdiction (a “ Governmental Authority ”) or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, except for (i) the filing of the Certificate of Designations with the Secretary of State of the State of Delaware, (ii) the filing of a Form D pursuant to Regulation D promulgated by the SEC under the 1933 Act and (iii) the filings required by applicable state “blue sky” securities laws, rules and regulations. The Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

 

(f) Acknowledgment Regarding Buyer’s Purchase of Securities . The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, or (ii) an “affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

 

(g) No General Solicitation; Placement Agent . Neither the Company, nor any of its 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 Securities. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities. In the event that a broker-dealer or other agent or advisory is engaged by the Company subsequent to the initial Closing, the Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby in connection with the sale of the Securities. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.

 

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(h) No Integrated Offering . None of the Company, its Subsidiaries, any of their affiliates, and 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 any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or caused this offering of the Securities to require approval of stockholders of the Company for purposes of 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, but excluding stockholder consents required to authorize and issue the Securities or waive any anti-dilution provisions in connection therewith. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

 

(i) Dilutive Effect . The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Preferred Shares will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Preferred Shares in accordance with this Agreement and the Certificate of Designations, and its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants, is, in each case, not limited by the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

 

(j) Application of Takeover Protections; Rights Agreement . The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, (as defined in Section 3(r) ) any certificates of designations or the laws of the jurisdiction of its formation or incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and its board of directors have taken all necessary actions, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

 

(k) Material Liabilities; Financial Statements . Except as set forth on Schedule 3(k) , the Company has no liabilities or obligations, absolute or contingent (individually or in the aggregate), except (i) liabilities and obligations incurred after December 31, 2018 in the ordinary course of business that are not material and (ii) obligations under contracts made in the ordinary course of business that would not be required to be reflected in financial statements prepared in accordance with generally accepted accounting principles as applied in the United States, consistently applied for the periods covered thereby (“ GAAP ”). The financial statements of the Company delivered to the Buyers on or prior to the Execution Date are a correct and complete copy of the audited financial statements (including, in each case, any related notes thereto) of the Company and its Subsidiaries, on a consolidated basis, for the fiscal years ended March 31, 2018 and 2017, which have been filed with the SEC (the “ Financial Statements ”), and such statements fairly present in all material respects the financial position of the Company and its Subsidiaries, on a consolidated basis, at the respective dates thereof and the results of its operations and cash flows for the periods indicated. The Financial Statements do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except as disclosed on Schedule 3(k) .

 

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(l) Absence of Certain Changes . Except as disclosed on Schedule 3(l) , since April 1, 2018, except as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on June 29, 2018 (the “ 10-K ”), there has been no material adverse change and no material adverse development in the business, assets, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries. Without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries has:

 

(i) declared, set aside or paid any dividend or other distribution with respect to any shares of capital stock of the Company or any of its Subsidiaries or any direct or indirect redemption, purchase or other acquisition of any such shares;

 

(ii) sold, assigned, pledged, encumbered, transferred or otherwise disposed of any tangible asset of the Company or any of its Subsidiaries (other than sales or the licensing of its products to customers in the ordinary course of business consistent with past practice), or sold, assigned, pledged, encumbered, transferred or otherwise disposed of any Intellectual Property (other than licensing of products of the Company or its Subsidiaries in the ordinary course of business and on a non-exclusive basis);

 

(iii) entered into any licensing or other agreement with regard to the acquisition or disposition of any Intellectual Property (as hereinafter defined) other than licenses in the ordinary course of business consistent with past practice or any amendment or consent with respect to any licensing agreement filed or required to be filed with respect to any Governmental Authority;

 

(iv) made any capital expenditures, individually or in the aggregate, in excess of $100,000;

 

(v) incurred any obligation or liability (whether absolute, accrued, contingent or otherwise, and whether due or to become due) incurred by the Company or any of its Subsidiaries, in excess of $100,000 individually, other than obligations under customer contracts, current obligations and liabilities, in each case incurred in the ordinary course of business and consistent with past practice;

 

(vi) incurred any Lien on any property of the Company or any of its Subsidiaries except for Permitted Liens and Liens in existence on the date of this Agreement that are described on Schedules 3(m) or 3(s) ;

 

(vii) made any payment, discharge, satisfaction or settlement of any suit, action, claim, arbitration, proceeding or obligation of the Company or any of its Subsidiaries, except in the ordinary course of business and consistent with past practice;

 

(viii) effected any split, combination or reclassification of any equity securities;

 

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(ix) sustained any material loss, destruction or damage to any property of the Company or any Subsidiary, whether or not insured;

 

(x) effected any acceleration or prepayment of any Indebtedness (as defined below) for borrowed money or the refunding of any such Indebtedness;

 

(xi) experienced any labor trouble involving the Company or any Subsidiary or any material change in their personnel or the terms and conditions of employment;

 

(xii) made any waiver of any valuable right, whether by contract or otherwise;

 

(xiii) except as disclosed in Schedule 3(q) , made any loan or extension of credit to any officer or employee of the Company;

 

(xiv) made any change in the independent public accountants of the Company or its Subsidiaries or any material change in the accounting methods or accounting practices followed by the Company or its Subsidiaries, as applicable, or any material change in depreciation or amortization policies or rates;

 

(xv) experienced any resignation or termination of any officer, key employee or group of employees of the Company or any of its Subsidiaries;

 

(xvi) effected any change in any compensation arrangement or agreement with any employee, officer, director or stockholder that would result in the aggregate compensation to such Person in such year to exceed $100,000, except as disclosed on Schedule 3(l)(xvi) ;

 

(xvii) effected any material increase in the compensation of employees of the Company or its Subsidiaries (including any increase pursuant to any written bonus, pension, profit sharing or other benefit or compensation plan, policy or arrangement or commitment), or any increase in any such compensation or bonus payable to any officer, stockholder, director, consultant or agent of the Company or any of its Subsidiaries having an annual salary or remuneration in excess of $100,000, except as disclosed on Schedule 3(l)(xvii) ;

 

(xviii) made any revaluation of any of their respective assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts receivable or any sale of assets other than in the ordinary course of business;

 

(xix) effected any acquisition or disposition of any material assets (or any contract or arrangement therefor), or any other material transaction by the Company or any Subsidiary otherwise than for fair value in the ordinary course of business;

 

(xx) written-down the value of any asset of the Company or its Subsidiaries or written-off as uncollectible of any accounts or notes receivable or any portion thereof except in the ordinary course of business and in a magnitude consistent with historical practice;

 

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(xxi) cancelled any debts or claims or any material amendment, termination or waiver of any rights of the Company or its Subsidiaries; or

 

(xxii) entered into any agreement, whether in writing or otherwise, to take any of the actions specified in the foregoing items (i) through ( xxii ), except as disclosed on Schedule 3(l)(xxii) .

 

Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any Knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any Knowledge of any fact that would reasonably lead a creditor to do so.

 

(m) No Undisclosed Events, Liabilities, Developments or Circumstances . Except as set forth in Schedule 3(m) hereto, the Company and its Subsidiaries have no liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise and whether due or to become due) other than those liabilities or obligations that are disclosed in the Financial Statements or which do not exceed, individually in excess of $30,000 and in the aggregate in excess of $100,000. The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the Execution Date and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for in the Financial Statements.

 

(n) Conduct of Business; Regulatory Permits . Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, the Certificate of Designations, any other certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or the Bylaws (as defined in Section 3(r) ) or their organizational charter or Certificate of Incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation (each a “ Legal Requirement ”) applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and could not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.

 

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(o) Foreign Corrupt Practices . Neither the Company nor any of its Subsidiaries nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(p) Management . During the past five year period (or two year period for former officers or directors), no current or former officer or director or, to the Knowledge of the Company, stockholder of the Company or any of its Subsidiaries has been the subject of:

 

(i) a petition under bankruptcy laws or any other insolvency or moratorium law or has a receiver, fiscal agent or similar officer been appointed by a court for such Person, or any partnership in which such person was a general partner at or within two years before the time of such filing, or any corporation or business association of which such person was an executive officer at or within two years before the time of such filing;

 

(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);

 

(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:

 

(1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

 

(2) Engaging in any type of business practice; or

 

(3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;

 

(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than 60 days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;

 

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(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or

 

(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.

 

(q) Transactions With Affiliates . Except as set forth on Schedule 3(q) , no current employee, director, officer or, to the Knowledge of the Company, any former employee, director or officer, any stockholder of the Company or its Subsidiaries, affiliate of any thereof who occupied such role during the past 12 months, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been in the last 12 months, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or stockholder or such associate or affiliate or relative (but excluding any employment or consulting contract with the Company) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are publicly traded on or quoted), nor does any such Person receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. As used in this Agreement, Knowledge means the actual or constructive knowledge of Miles Jennings. Except as set forth on Schedule 3(q) , no employee, officer, stockholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved by the board of directors of the Company).

 

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(r) Equity Capitalization . As of the Execution Date, after giving effect to the Acquisitions, as defined below, and the exchange of the Company’s outstanding Series A, Series A-1, Series C, Series C-1 Convertible Preferred Stock, certain warrants and certain convertible notes for shares of Series D Preferred Stock, the authorized capital stock of the Company consists of (i) 250,000,000 shares of Common Stock, of which as of the Execution Date, 139,830,306 are issued and outstanding, 3,705,000 are reserved for issuance pursuant to the Company’s stock option and purchase plans, (ii) 4,270,939 shares of Preferred Stock including Series A, Series A-1, Series B, Series C, Series C-1, Series E, and Series F Convertible Preferred Stock, $0.0001 par value per share; of which as of the Execution Date 1,363,445 shares are issued and outstanding, (iii) 500,000 Shares of Series D Convertible Preferred Stock, of which a total of 45,000 shares are to be issued to the Buyers pursuant to Section 1(a)(i), and (iv) 5,229,061 shares of undesignated preferred stock, $0.0001 par value per share, of which as of the Execution Date, no shares are issued and outstanding. All of the Company’s outstanding shares have been, or upon issuance will be, validly issued and fully paid and nonassessable. The capitalization of the Company immediately prior to the Closing Date is set forth on Schedule 3(r)(A) attached hereto and the capitalization of the Company immediately following the Closing Date is set forth on Schedule 3(r)(B) attached hereto. Except as disclosed in the 10-K or in Schedule 3(r)(C) : (i) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) 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 capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company has not issued any stock appreciation rights or “phantom stock” or any similar rights; and (ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the Financial Statements in accordance with GAAP but not so disclosed in the Financial Statements. The Company has furnished to the Buyers true, correct and complete copies of the Company’s certificate of incorporation, as amended and as in effect on the date hereof (the “ Certificate of Incorporation ”), and the Company’s Bylaws, as amended and as in effect on the date hereof (the “ Bylaws ”), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.

 

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(s) Indebtedness and Other Contracts . Except for Permitted Liens and as disclosed on Schedule 3(s) , neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Schedule 3(s) provides a description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) “ Indebtedness ” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge, security interest, easement, covenant, right of way, restriction, equity or encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract rights) with respect to any asset (a “ Lien ”) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “ Contingent Obligation ” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

(t) Absence of Litigation . There is no action, suit, arbitration or other legal, administrative or other governmental investigation, inquiry or proceeding (whether federal, state, local or foreign) pending or, to the best of the Company’s Knowledge, threatened against or affecting the Company or any of its Subsidiaries or any of their respective properties, assets, capital stock or businesses or any of the Company’s or any of its Subsidiaries’ officers or directors. After reasonable inquiry of its employees, the Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority.

 

(u) Employee Matters; Benefit Plans .

 

(i) The employment of each officer and employee of the Company is terminable at the will of the Company, except as disclosed on Schedule 3(u)(i). The Company and its Subsidiaries have complied in all material respects with all applicable laws relating to wages, hours, equal opportunity, collective bargaining, workers’ compensation insurance and the payment of social security and other taxes. Except as disclosed on Schedule 3(u)(i), (i) the Company is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company or its Subsidiaries, as the case may be, nor does (ii) the Company have a present intention, or know of a present intention of its Subsidiaries, to terminate the employment of any officer, key employee or group of employees. There are no pending or, to the Knowledge of the Company, threatened employment discrimination charges or complaints against or involving the Company or its Subsidiaries before any federal, state, or local board, department, commission or agency, or unfair labor practice charges or complaints, disputes or grievances affecting the Company or its Subsidiaries.

 

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(ii) Since the Company’s inception, to the Knowledge of the Company neither the Company nor its Subsidiaries has experienced any labor disputes, union organization attempts or work stoppage due to labor disagreements. There are no unfair labor practice charges or complaints against the Company or its Subsidiaries pending, or to the Knowledge of the Company, threatened before the National Labor Relations Board or any comparable state agency or authority. There are no written or oral contracts, commitments, agreements, understandings or other arrangements with any labor organization, nor work rules or practices agreed to with any labor organization or employee association, applicable to employees of the Company or any of its Subsidiaries, nor is the Company or its Subsidiaries a party to, or bound by, any collective bargaining or similar agreement; there is not, and since the Company’s inception there has not been, any representation of the employees of the Company or its Subsidiaries by any labor organization and, to the Knowledge of the Company, there are no union organizing activities among the employees of the Company or its Subsidiaries, and to the Knowledge of the Company, no question concerning representation has been raised or is threatened respecting the employees of the Company or its Subsidiaries.

 

(iii) Schedule 3(u)(iii) contains a true, correct and complete list of each pension, retirement, savings, deferred compensation and profit-sharing plan and each stock option, stock appreciation, stock purchase, performance share, bonus or other incentive plan, severance plan, health, group insurance or other welfare plan, or other similar plan (whether written or otherwise) and any “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), under which the Company has any current or future obligation or liability (including any potential, contingent or secondary liability under Title IV of ERISA) or under which any employee or former employee (or beneficiary of any employee or former employee) of the Company has or may have any current or future right to benefits (the term “plan” shall include any contract, agreement (including an employment or independent contractor agreement), policy or understanding, each such plan being hereinafter referred to in this Agreement individually as a “ Benefit Plan ”). The Company has delivered to each Buyer true, correct and complete copies of (i) each material Benefit Plan, including any amendments thereto, (ii) the summary plan description, if any, for each Benefit Plan, including any summaries of material modifications made since the most recent summary plan description, (iii) the latest annual report which has been filed with the Internal Revenue Service (the “ IRS ”) for each Benefit Plan required to file an annual report, and (iv) the most recent IRS determination letter for each Benefit Plan that is a pension plan (as defined in ERISA) intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”). Each Benefit Plan intended to be tax qualified under Sections 401(a) and 501(a) of the Code is and has been determined by the IRS to be tax qualified under Sections 401(a) and 501(a) of the Code and, since such determination, no amendment to or failure to amend any such Benefit Plan and no other event or circumstance has occurred that could reasonably be expected to adversely affect its tax qualified status.

 

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(iv) There are no actions, claims, audits, lawsuits or arbitrations pending, or, to the Knowledge of the Company, threatened, with respect to any Benefit Plan or the assets of any Benefit Plan. Each Benefit Plan has been administered in all material respects in accordance with its terms and with all applicable Legal Requirements (including, without limitation, the Code and ERISA).

 

(v) Except as set forth on Schedule 3(u)(v) , the consummation of the transactions contemplated by this Agreement will not (1) entitle any employee or independent contractor of the Company or its Subsidiaries to severance pay or termination benefits, (2) accelerate the time of payment or vesting, or increase the amount of compensation due to any current or former employee or independent contractor of the Company or its Subsidiaries, (3) obligate the Company or any of its affiliates to pay or otherwise be liable for any compensation, vacation days, pension contribution or other benefits to any current or former employee, consultant, agent or independent contractor of the Company or its Subsidiaries for periods before the Closing Date, (4) require assets to be set aside or other forms of security to be provided with respect to any liability under a Benefit Plan, or (5) result in any “parachute payment” (within the meaning of Section 280G of the Code) under any Benefit Plan.

 

(vi) No Benefit Plan is subject to the provisions of Section 412 of the Code or Part 3 of Subtitle B of Title I of ERISA. No Benefit Plan is subject to Title IV of ERISA and no Benefit Plan is a “multiemployer plan” (within the meaning of Section 3(37) of ERISA). Since inception, neither the Company, its Subsidiaries, nor any business or entity treated as a single employer with the Company or its Subsidiaries for purposes of Title IV of ERISA contributed to or was obliged to contribute to a pension plan that was at any time subject to Title IV of ERISA.

 

(vii) No Benefit Plan has provided, been required to provide, provides or is required to provide, at any time in the past, present, or future, health, medical, dental, accident, disability, death or survivor benefits to or in respect of any Person beyond one year following termination of employment, except to the extent required under any state insurance law or under Part 6 of Subtitle B of Title I of ERISA and under Section 4980B of the Code. No Benefit Plan covers any individual that is not an employee or advisor of the Company or its Subsidiaries, other than spouses and dependents of employees under health and child care policies listed in Schedule 3(u)(vii) , true and complete copies of which have been made available to each Buyer.

 

Except as otherwise permitted pursuant to employment agreements with the Company disclosed to the Buyers, each officer of the Company is currently devoting all of such officer’s business time to the conduct of the business of the Company. Except as otherwise permitted pursuant to employment agreements with the Company disclosed to the Buyers, the Company is not aware of any officer or key employee of the Company or any of its Subsidiaries planning to work less than full time at the Company or its Subsidiaries in the future.

 

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(v) Assets; Title .

 

(i) Except as disclosed on Schedule 3(v)(i) , each of the Company and its Subsidiaries has good and valid title to, a valid license to, or a valid leasehold interest in, as applicable, all of its properties and assets, free and clear of all Liens except (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, and (iv) such as have been terminated in the ordinary course of business (collectively, “ Permitted Liens ”). To the Company’s Knowledge, all tangible personal property owned by the Company and its Subsidiaries has been maintained in good operating condition and repair, except (x) for ordinary wear and tear, and (y) where such failure would not have a Material Adverse Effect. To the Company’s Knowledge, all assets leased by the Company or any of its Subsidiaries are in the condition required by the terms of the lease applicable thereto during the term of such lease and upon the expiration thereof. To the Company’s Knowledge, the Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

 

(ii) Schedule 3(v)(ii) sets forth a complete list of all real property and interests in real property, leased by the Company as of the Execution Date. The Company has good and valid leasehold interest in all real property and interests in real property shown on Schedule 3(v)(ii) to be leased by it free and clear of all Liens except for Permitted Liens or where such Liens would not have a Material Adverse Effect. Except as set forth on Schedule 3(v)(ii) , there exists no default, or any event which upon notice or the passage of time, or both, would give rise to any default, in the performance of the Company or by any lessor under any such lease, nor, to the Knowledge of the Company, is the landlord of any such lease in default except where any such default would not have a Material Adverse Effect.

 

(w) Intellectual Property .

 

(i) Except as set forth on Schedule 3(w)(i) , the Company and its Subsidiaries own all right, title and interest in and to, or have a valid and enforceable license to use all the Intellectual Property used by them in connection with the their respective businesses, which, to the Company’s Knowledge, represents all intellectual property rights necessary to the conduct of the Company’s business as now conducted. To the Company’s Knowledge, the Company and its Subsidiaries are in material compliance with all contractual obligations relating to the protection of such of the Intellectual Property as they use pursuant to license or other agreement. To the Company’s Knowledge, the conduct of the business of the Company and its Subsidiaries as currently conducted or contemplated does not conflict with or infringe any proprietary right or Intellectual Property of any third party, including, without limitation, the transmission, reproduction, use, display or modification of any content or material (including framing, and linking web site content) on a web site, bulletin board or other like medium hosted by or on behalf of the Company or any of its Subsidiaries, except for such infringements and conflicts which could not reasonably be expected to have a Material Adverse Effect. To the Company’s Knowledge, there is no claim, suit, action or proceeding pending or, to the Knowledge of the Company, threatened against the Company or any Subsidiary: (i) alleging any such conflict or infringement with any third party’s proprietary rights; or (ii) challenging the Company’s or any Subsidiary’s ownership or use of, or the validity or enforceability of any Intellectual Property.

 

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(ii) Schedule 3(w)(ii) sets forth a complete and current list of registered trademarks or copyrights, issued patents, applications thereof, or other forms of registration anywhere in the world that is owned by the Company or a Subsidiary (“ Listed Intellectual Property ”) and the owner of record, date of application or issuance and relevant jurisdiction as to each. To the Company’s Knowledge, all Listed Intellectual Property is owned by the Company or a Subsidiary, free and clear of security interests, liens, encumbrances or claims of any nature. To the Company’s Knowledge, all Listed Intellectual Property is valid, subsisting, unexpired, in proper form and enforceable and all renewal fees and other maintenance fees that have fallen due on or prior to the Execution Date have been paid. To the Company’s Knowledge, no Listed Intellectual Property is the subject of any proceeding before any governmental, registration or other authority in any jurisdiction, including any office action or other form of preliminary or final refusal of registration, except as noted on Schedule 3(w)(ii) . To the Company’s Knowledge, the consummation of the transactions contemplated hereby will not alter or impair in any material respect any Intellectual Property that is owned or licensed by the Company or a Subsidiary.

 

(iii) Schedule 3(w)(iii) sets forth a complete list of all material agreements relating to Intellectual Property to which the Company or a Subsidiary is a party, subject or bound (the “ Intellectual Property Contracts ”) (other than agreements involving (A) the license of the Company of standard, generally commercially available “off-the-shelf” third party products or (B) non-disclosure agreements). To the Company’s Knowledge, each Intellectual Property Contract: (i) is valid and binding on the Company or a Subsidiary, as the case may be, and, to the Company’s Knowledge, the counterparties thereto, and is in full force and effect and (ii) upon consummation of the transactions contemplated hereby shall continue in full force and effect without penalty or other adverse consequence.

 

(iv) To the Company’s Knowledge, and except as disclosed on Schedule 3(w)(iv) , the Company and its Subsidiaries are not under any obligation to pay royalties or other payments in connection with any agreement, nor restricted from assigning their rights respecting Intellectual Property nor will the Company or any Subsidiary otherwise be, as a result of the execution and delivery of this Agreement or the performance of the Company’s obligations under this Agreement, in material breach of any agreement relating to the Intellectual Property.

 

(v) To the Company’s Knowledge, and except as disclosed on Schedule 3(w)(v) , no present or former employee, officer or director of the Company or any Subsidiary, or agent or outside contractor of the Company or any Subsidiary, holds any right, title or interest, directly or indirectly, in whole or in part, in or to any Intellectual Property that is owned or licensed by the Company or any Subsidiary.

 

(vi) To the Company’s Knowledge, and except as disclosed on Schedule 3(w)(vi) : (i) none of the Listed Intellectual Property has been used, disclosed or appropriated to the detriment of the Company or any Subsidiary for the benefit of any Person other than the Company; and (ii) no employee, independent contractor or agent of the Company or any Subsidiary has misappropriated any trade secrets or other confidential information of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of the Company or any Subsidiary that would reasonably be expected to have a Material Adverse Effect.

 

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(vii) To the Company’s Knowledge, and except as disclosed on Schedule 3(w)(vii) , any programs, modifications, enhancements or other inventions, improvements, discoveries, methods or works of authorship (“ Works ”) that were created by employees of the Company or any Subsidiary were made in the regular course of such employees’ employment or service relationships with the Company or its Subsidiary using the Company’s or the Subsidiary’s facilities and resources and, as such, constitute either works made for hire or all rights and title to and in such Works have been fully assigned to the Company or a Subsidiary.

 

(viii) For the purpose of this Section 3(w) , “ Intellectual Property ” shall mean all of the following: (A) trademarks and service marks, trade dress, product configurations, trade names and other indications of origin, applications or registrations in any jurisdiction pertaining to the foregoing and all goodwill associated therewith; (B) inventions, discoveries, improvements, ideas, know-how, formula methodology, processes, technology, software (including password unprotected interpretive code or source code, object code, development documentation, programming tools, drawings, specifications and data) and applications and patents in any jurisdiction pertaining to the foregoing, including re-issues, continuations, divisions, continuations-in-part, renewals or extensions; (C) trade secrets, including confidential information and the right in any jurisdiction to limit the use or disclosure thereof; (D) copyrights in writings, designs software, mask works or other works, applications or registrations in any jurisdiction for the foregoing and all moral rights related thereto; (E) database rights; (F) Internet Web sites, domain names and applications and registrations pertaining thereto and all intellectual property used in connection with or contained in all versions of the Company’s Web sites; (G) rights under all agreements relating to the foregoing; (H) books and records pertaining to the foregoing; and (I) claims or causes of action arising out of or related to past, present or future infringement or misappropriation of the foregoing.

 

(x) Environmental Laws . To its Knowledge, the Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “ Environmental Laws ” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “ Hazardous Materials ”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

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(y) Subsidiary Rights . The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all equity securities of its Subsidiaries as owned by the Company or such Subsidiary.

 

(z) Tax Status .

 

(i) Except as disclosed on Schedule 3(z) , each of the Company and its Subsidiaries has filed or caused to be filed in a timely manner (within any applicable extension periods) and in the appropriate jurisdictions all material returns, reports, information statements and other documentation (including any additional or supporting materials) filed or maintained, or required to be filed or maintained, in connection with the calculation, determination, assessment or collection of any and all federal, state, local, foreign and other taxes, levies, fees, imposts, duties, governmental fees and charges of whatever kind (including any interest, penalties or additions to the tax imposed in connection therewith or with respect thereto), including, without limitation, taxes imposed on, or measured by, income, franchise, profits, gross income or gross receipts, and also ad valorem , value added, sales, use, service, real or personal property, capital stock, stock transfer, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, environmental, transfer and gains taxes and customs duties (each a “ Tax ”) and shall include amended returns required as a result of examination adjustments made by the IRS or other Governmental Authority responsible for the imposition of any Tax (collectively, the “ Returns ”) and, to the Company’s Knowledge, such Returns are true, correct and complete in all material respects.

 

(ii) To the Company’s Knowledge, each of the Company and its Subsidiaries has paid all material Taxes and other assessments due from and payable by the Company and its Subsidiaries on or prior to the date hereof on a timely basis except as to those set forth in Schedule 3(z)(ii) . The charges, accruals, and reserves for Taxes with respect to the Company and its Subsidiaries are adequate to cover Tax liabilities of the Company and its Subsidiaries accruing throughout the Execution Date. To the Company’s Knowledge, and except as set forth in Schedule 3(z)(ii) , each of the Company and its Subsidiaries has complied in all material respects with all applicable Legal Requirements relating to the payment and withholding of Taxes (including withholding and reporting requirements under Sections 1441 through 1464, 3401 through 3406, and 6041 and 6049 of the Code and similar provisions under any other applicable Legal Requirements) and, within the time and in the manner prescribed by law, to the Company’s Knowledge, has withheld from wages, fees and other payments and paid over to the proper governmental or regulatory authorities all amounts required. To the Company’s Knowledge, and except as set forth in Schedule 3(z)(ii) , neither the Company nor any of its Subsidiaries has received notice of assessment or proposed assessment of any Taxes claimed to be owed by it or any other Person on its behalf. To the Company’s Knowledge, and except as set forth in Schedule 3(z)(ii) , no Returns filed by or on behalf of the Company or any of its Subsidiaries with respect to Taxes are currently being audited or examined. To the Company’s Knowledge, and except as set forth in Schedule 3(z)(ii) , neither the Company nor any of its Subsidiaries has received notice of any such audit or examination. To the Company’s Knowledge, and except as set forth in Schedule 3(z)(ii) , no issue has been raised by any taxing authority with respect to the Company or any of its Subsidiaries in any audit or examination which, by application of similar principles, would reasonably be expected to result in a proposed material adjustment to the liability for Taxes for any period not so examined.

 

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(iii) To the Company’s Knowledge, no known Liens have been filed and no claims are being asserted by or against the Company or any of its Subsidiaries with respect to any Taxes (other than Liens for Taxes not yet due and payable). Neither the Company nor any of its Subsidiaries has elected pursuant to the Code to be treated as an S corporation or any comparable provision of local, state or foreign law, or has made any other elections pursuant to the Code (other than elections that relate solely to entity classification, methods of accounting, depreciation, or amortization) that would have a material effect on the business, properties, prospects, or financial condition of the Company and its Subsidiaries, individually or in the aggregate.

 

(iv) To the Company’s Knowledge, no claim has ever been made, or, to the Knowledge of the Company, is threatened or pending, by any authority in a jurisdiction where the Company or any of its Subsidiaries, respectively, does not file Returns, and, to the Company’s Knowledge, neither the Company nor any of its Subsidiaries has received any notice or request for information from any such authority. Neither the Company nor any of its Subsidiaries has been a member of an affiliated group (as defined in Section 1504(a) of the Code) or filed or been included in a combined, consolidated or unitary income tax return other than the affiliated group of which the Company is currently the common parent. To the Company’s Knowledge, neither the Company nor any of its Subsidiaries is required to include in income any adjustment pursuant to Section 481(a) of the Code by reason of a voluntary change in accounting methods initiated by the Company or any of its Subsidiaries, and to the Company’s Knowledge, no Governmental Authority has proposed an adjustment or change in accounting method. To the Company’s Knowledge, all transactions or methods of accounting that could give rise to a substantial understatement of federal income tax as described in Section 6662(d)(2)(B)(i) of the Code have been adequately disclosed on the Company’s and its Subsidiaries’ federal income tax returns in accordance with Section 6662(d)(2)(B) of the Code. To the Company’s Knowledge, neither the Company nor any of its Subsidiaries is a party to any Tax sharing or Tax indemnity agreement or any other agreement of a similar nature that remains in effect. To the Company’s Knowledge, neither the Company nor any of its Subsidiaries has consented to any waiver of the statute of limitations for the assessment of any Taxes or has requested any extension of time for the payment of any Taxes. To the Company’s Knowledge, neither the Company nor any of its Subsidiaries has ever held a material beneficial interest in any other Person, other than those listed in Schedule 3(z)(iv) . To the Company’s Knowledge, neither the Company nor any of its Subsidiaries is obligated to make, nor as a result of any event connected with the transactions contemplated by this Agreement will become obligated to make, any payment that would not be deductible under Section 280G of the Code. Neither the Company nor any Subsidiary of the Company is a “passive foreign investment company” within the meaning of Section 1296 of the Code (a “ PFIC ”), and the Company does not anticipate that the Company or any additional foreign Subsidiary will become a PFIC in the foreseeable future.

 

(aa) Internal Accounting and Disclosure Controls . The Company and each of its Subsidiaries maintain a system of internal accounting controls appropriate for its size. However, the Company’s internal controls and disclosure controls are not effective as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on June 29, 2018.

 

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(bb) Off Balance Sheet Arrangements . There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is not disclosed by the Company in its Financial Statements or that otherwise would be reasonably likely to have a Material Adverse Effect.

 

(cc) Investment Company Status . The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(dd) Illegal or Unauthorized Payments; Political Contributions . Neither the Company or any of its Subsidiaries nor, to the best of the Company’s Knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (a) as a kickback or bribe to any Person or (b) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.

 

(ee) Transfer Taxes . On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

(ff) Books and Records . To the Company’s knowledge, the books of account, ledgers, order books, records and documents of the Company and its Subsidiaries accurately and completely reflect all information relating to the respective businesses of the Company and its Subsidiaries, the nature, acquisition, maintenance, location and collection of each of their respective assets, and the nature of all transactions giving rise to material obligations or accounts receivable of the Company or its Subsidiaries, as the case may be, except where the failure to so reflect such information would not have a Material Adverse Effect. To the Company’s Knowledge, the minute books of the Company and its Subsidiaries contain accurate records in all material respects of all meetings and accurately reflect all other actions taken by the stockholders, boards of directors and all committees of the boards of directors, and other governing Persons of the Company and its Subsidiaries, respectively.

 

(gg) Money Laundering . The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA PATRIOT ACT of 2001 (the “ PATRIOT Act ”) and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control (“ OFAC ”), including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V (collectively, the “ Anti-Money Laundering/OFAC Laws ”).

 

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(hh) Acknowledgement Regarding Buyers’ Trading Activity . It is understood and acknowledged by the Company (a) (i) that none of the Buyers have been asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed with the Company or its Subsidiaries, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; and (ii) that each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counter party in any “derivative” transaction. The Company further understands and acknowledges that one or more Buyers may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Conversion Shares and/or the Warrant Shares are being determined and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of any of the Transaction Documents.

 

(ii) U.S. Real Property Holding Corporation . The Company is not, has never been, and so long as any Securities remain outstanding, shall not become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon any Buyer’s request.

 

(jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “ BHCA ”) and to regulation by the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(kk) Shell Company Status . The Company is not an issuer identified in Rule 144(i)(1) of the 1933 Act.

 

(ll) No Disqualification Events . With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the 1933 Act (“ Regulation D Securities ”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “ Issuer Covered Person ” and, together, “ Issuer Covered Persons ”) is subject to any Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.

 

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(mm) Other Covered Persons . The Company is not aware of any Person (other than any Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.

 

(nn) Disclosure . The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. No statement made by the Company in this Agreement, any other Transaction Document or the Exhibits and Schedules attached hereto or in any certificate or schedule furnished or to be furnished by or on behalf of the Company to the Investors or any of their representatives in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. The due diligence materials previously provided by or on behalf of the Company to each Buyer (the “ Due Diligence Materials ”), have been prepared in a good faith effort by the Company to describe the Company’s present and proposed products, and projected growth and the Company and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, except that with respect to assumptions, projections and expressions of opinion or predictions contained in the Due Diligence Materials, the Company represents only that such assumptions, projections, expressions of opinion and predictions were made in good faith and that the Company believes there is a reasonable basis therefor. To the Company’s Knowledge, the Due Diligence Materials contain all material agreements of the Company and its Subsidiaries and no material agreements of the Company or its Subsidiaries exist other than those provided in the Due Diligence Materials. The Company acknowledges and agrees that no Buyer participated in the preparation of, or has any responsibility for, the content of any Due Diligence Materials.

 

(oo) Absence of Schedules . In the event that on the Closing Date, the Company does not deliver and attached hereto any disclosure schedule contemplated by this Agreement, the Company hereby acknowledges and agrees that (i) each such undelivered disclosure schedule shall be deemed to read as follows: “Nothing to Disclose”, and (ii) each Buyer has not otherwise waived delivery of such disclosure schedule.

 

4. COVENANTS.

 

(a) Best Efforts . Each party shall use its best efforts to timely satisfy each of the covenants below and the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

 

(b) Use of Proceeds . The Company shall use the proceeds from the sale of the Securities for working capital and other general corporate purposes in connection with or following the acquisitions of Recruiter.com, Inc. and Genesys Talent LLC (the “ Acquisitions ”) and shall not, directly or indirectly, use such proceeds for any loan or advances to, or investment in, any of its officers, directors or affiliates or any other corporation, partnership, enterprise or other Person, except with respect to the Acquisitions.

 

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(c) Reporting Status . Until the date on which a Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights as a holder of Securities under this Agreement and/or the Certificate of Designations (each an “ Investor ”, and collectively, the “ Investors ”) shall have sold all of the Conversion Shares, and Warrant Shares as applicable, and none of the Preferred Shares or Warrants remain outstanding (the “ Reporting Period ”), the Company shall timely file all reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination, and the Company shall take all actions necessary to permit it to, and thereafter to maintain its eligibility to, register the Conversion Shares for resale by the Buyers on Form S-1.

 

(d) Financial Information . As long as any Securities remain outstanding, the Company agrees to send the following to each Investor 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 Current Reports on Form 8-K (or any analogous reports under the 1934 Act) and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, e-mailed copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) 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. As used herein, “ 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.

 

(e) Listing . The Company shall promptly secure the listing or quotation of the Conversion Shares and Warrant Shares upon each national securities exchange or trading market including the OTCQB, OTCQX, or OTC Pink Open Market if any, upon which the Common Stock is then or on which it becomes listed (subject to official notice of issuance) or quoted (such primary exchange or trading market, the “ Principal Market ”) and shall maintain, in accordance with this Agreement, the listing or quotation of all additional Conversion Shares and Warrant Shares from time to time issued under the terms of the Transaction Documents. The Company shall maintain the listing or quotation of the Conversion Shares and the Warrant Shares on the Principal Market, and neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e) .

 

(f) Fees . Subject to Section 8 below, at the Closing, the Company shall reimburse Cavalry Fund I LP (“ Cavalry ”) or its designee(s) for all costs and expenses incurred in connection with the transactions contemplated by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), and the Company shall cause such amount to be withheld by the Escrow Agent from the Purchase Price at the Closing to the extent not previously reimbursed by the Company. Notwithstanding the foregoing, in no event will the costs and expenses of Cavalry reimbursed by the Company pursuant to this Section 4(f) exceed $40,000.00 with respect to the Closing without the prior approval of the Company. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions relating to or arising out of the transactions contemplated hereby but only to the extent that the Company has agreed with any such party to pay such fees. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.

 

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(g) Pledge of Securities . 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 Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company 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 an Investor.

 

(h) Disclosure of Transactions and Other Material Information . By the close of business on the fourth (4th) 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 by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement and the forms of all exhibits to this Agreement) (including all attachments and content required by the applicable disclosure regulations, the " 8-K Filing "). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the Execution Date without the express prior written consent of such Buyer. If a Buyer has, or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries, it may provide the Company with written notice thereof. The Company shall, within two (2) trading days of receipt of such notice, make public disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have 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 Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby without the consent of Cavalry; provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations, provided further that each Buyer 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 any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise, except as the Company has been advised by its counsel as may be required by law including the Rules of the SEC or in response to written comments of the staff of the SEC. Notwithstanding the foregoing, in no event will the Company have an obligation to disclose any information which a Buyer receives from a member of the Company’s Board of Directors that is an affiliate of such Buyer.

 

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(i) Additional Preferred Shares; Variable Securities . So long as any Buyer beneficially owns any Securities, the Company will not issue any Preferred Shares other than to the Buyers as contemplated hereby, except for Excluded Securities, and the Company shall not issue any other securities that would cause a breach or default under the Certificate of Designations or the Warrants. From the Execution Date until the three year anniversary thereof, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which varies or may vary with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less than the greater of (x) the then applicable Conversion Price (as defined in the Certificate of Designations) with respect to the Common Stock into which any Preferred Share is convertible and (y) the then applicable Exercise Price (as defined in the Warrants) with respect to the Common Stock into which any Warrant is exercisable.

 

(j) Corporate Existence . So long as any Buyer beneficially owns any Securities, the Company shall (i) maintain its corporate existence and (ii) with the exception of the Proposed Acquisition, not be party to any Fundamental Transaction unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Certificate of Designations and the Warrants. “ Fundamental Transaction ” shall mean one in which (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination).

 

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(k) Reservation of Shares . Subject to the Company conducting a reverse split or increase of authorized shares in order to be able to reserve the Required Reserve Amount, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 200% of the maximum number of shares of Common Stock issuable (i) upon conversion of the maximum number of Preferred Shares issued (assuming for purposes hereof, that the Preferred Shares are convertible at the Conversion Price (as defined in the Certificate of Designations) and without taking into account any limitations on the conversion of the Preferred Shares set forth in the Certificate of Designations) and (ii) upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants), in each case, determined as if issued as of the trading day immediately preceding the applicable date of determination (the “ Required Reserved Amount ”). If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved 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 under Section 3(c) , in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting any treasury 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 Reserved Amount. In connection with any such vote, each Buyer hereby agrees that it shall, if requested by the Company, vote all shares of capital stock held by such Buyer in favor of any such increase in the authorized number of shares. In addition to any corporate action taken to authorize additional shares, for so long as the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company shall pay to any Buyer who submits to the Company a request for conversion of Preferred Shares, which request cannot be fulfilled because of insufficient available shares, an amount in cash equal to $500 per day for the initial ten (10) days that such Required Reserved Amount is not met, then $1,000 per day in cash, for each day thereafter until such Required Reserved Amount is satisfied. Provided, however, that if the Company has used its best efforts to effect a reverse stock split or combination and has filed applications with FINRA the 60-day period in this Section 4(k) shall be tolled by an additional 15 days.

 

(l) Conduct of Business . The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect. The Company and its Subsidiaries shall at all times be in compliance with the Foreign Corrupt Practices Act; the PATRIOT Act, and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations; and the laws, regulations and Executive Orders and sanctions programs administered by the OFAC, including, without limitation, the “Anti-Money Laundering/OFAC Laws”.

 

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(m) Public Information . At any time during the period commencing on the Execution Date and ending two years from the Execution Date, if (A) a registration statement is not available for the resale of all of the Securities and the Securities may not be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company becomes an issuer described in Rule 144(i)(1)(i) , and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2), and (B) any such failure continues for more than fifteen (15) trading days (a “ Public Information Failure ”) then, as partial relief for the damages to any holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price of such holder’s Securities (less any Common Stock previously sold) on the day of a Public Information Failure and on every thirtieth day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 4(m) are referred to herein as “ Public Information Failure Payments. ” Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.0% per month (prorated for partial months) until paid in full.

 

(n) Additional Issuances of Securities .

 

(i) For purposes of this Section 4(n) , the following definitions shall apply.

 

(1) “ Common Stock Equivalents ” means, collectively, Options and Convertible Securities.

 

(2) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

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(3) “ Excluded Securities ” means (i) shares of Common Stock, restricted stock units or standard options to purchase Common Stock issued to directors, officers, consultants or employees of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock Plan, provided that the exercise price of any such options is not lowered (except as a result of a stock dividend or stock split), none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Execution Date, provided that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered (other than in accordance with the terms thereof in effect as of the Execution Date) from the conversion price in effect as of the Execution Date (whether pursuant to the terms of such Convertible Securities or otherwise), none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Preferred Shares or otherwise pursuant to the terms of the Certificate of Designations; provided, that the terms of the Certificate of Designations are not amended, modified or changed on or after the Execution Date (other than anti-dilution adjustments pursuant to the terms thereof in effect as of the Execution Date), (iv) the shares of Common Stock issuable upon exercise of the Warrants or warrants required to be issued under this Agreement pursuant to which the Preferred Shares were issued; provided, that the terms of the Warrants and Warrants are not amended, modified or changed on or after the Execution Date (other than anti-dilution adjustments pursuant to the terms thereof in effect as of the Execution Date), (v) securities issued to any placement agent or other registered broker-dealers as reasonable commissions or fees in connection with any financing transactions or securities issued to service providers including investor and public relations firms, (vi) securities issued pursuant to a merger, acquisition or similar transaction; provided that (A) the primary purpose of such issuance is not to raise capital, (B) the purchaser or acquirer of such securities in such issuance solely consists of either (1) the actual participants in such transactions, (2) the actual owners of such assets or securities acquired in such merger, acquisition or similar transaction, (3) the shareholders, partners or members of the foregoing Persons and (4) Persons whose primary business does not consist of investing in securities, and (C) the number or amount (as the case may be) of such shares of Common Stock issued to such Person by the Company shall not be disproportionate to such Person’s actual ownership of such assets or securities to be acquired by the Company (as applicable), or (vii) a strategic transaction approved by a majority of the disinterested directors of the Company, provided that (A) any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, (B) the primary purpose of such issuance is not to raise capital, (C) the purchaser or acquirer of such securities in such issuance solely consists of either (1) the actual participants in such strategic transactions, (2) the actual owners of such strategic assets or securities acquired, (3) the shareholders, partners or members of the foregoing Persons and (4) Persons whose primary business does not consist of investing in securities, and (D) the number or amount (as the case may be) of such shares of Common Stock issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such strategic licensing or development transactions or ownership of such strategic assets or securities to be acquired by the Company (as applicable). Provided , however , that securities issued to a registered broker-dealer as compensation for the services rendered in connection for services for transactions described in clauses (vi) and (vii) shall be Excluded Securities.

 

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

 

(5) “ Subsequent Placement ” means any direct or indirect offer, sale, grant of any option to purchase, or other disposition of (or announcement of any offer, sale, grant or any option to purchase or other disposition of) any of the Company’s or its Subsidiaries’ equity, debt or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents. A Subsequent Placement shall not include (A) any additional closings of the offering contemplated by this Agreement, (B) a public offering for net proceeds to the Company in excess of $5,000,000 pursuant to a firm commitment underwriting agreement, provided that the Company has been unable to raise sufficient funds through a Subsequent Offering on reasonable terms or (C) the issuance of securities in connection with a merger with Recruiter.com, Inc. and asset purchase of Genesys Talent LLC.

 

(ii) Except as provided for herein, from the Closing Date until the earlier of the date (i) that is 24 months thereafter or (ii) the date no Preferred Shares are outstanding, the Company will not, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4(n)(ii) .

 

(1) The Company shall deliver to each holder of Preferred Shares (each a “ Preferred Holder ”, and collectively, the “ Preferred Holders ”) an irrevocable written notice (the “ Offer Notice ”) of any proposed or intended issuance or sale or exchange (the “ Offer ”) of the securities being offered (the “ Offered Securities ”) in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with each Preferred Holder its pro rata portion (based on such Buyer’s pro rata portion of the aggregate Investment Amount of Preferred Shares issued on the Closing Date) of at least twenty-five percent (25%) of the Offered Securities (the “ Basic Amount ”). With respect to each Preferred Holder that elects to purchase its Basic Amount, such Preferred Holder may also indicate it will purchase or acquire any additional portion of the Offered Securities attributable to the Basic Amounts of other Preferred Holders should the other Preferred Holders subscribe for less than their Basic Amounts (the “ Undersubscription Amount ”), which process shall be repeated once until the Preferred Holders shall have an opportunity to subscribe for any remaining Undersubscription Amount.

 

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(2) To accept an Offer, in whole or in part, such Preferred Holder must deliver a written notice to the Company prior to the end of the fifth (5 th ) Business Day after such Preferred Holder’s receipt of the Offer Notice (the “ Offer Period ”), setting forth the portion of such Preferred Holder’s Basic Amount that such Preferred Holder elects to purchase and, if such Preferred Holder shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Preferred Holder elects to purchase (in either case, the “ Notice of Acceptance ”). If the Basic Amounts subscribed for by all Preferred Holders are less than the total of all of the Basic Amounts, then each Preferred Holder who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided , however , that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “ Available Undersubscription Amount ”), each Preferred Holder who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Preferred Holder bears to the total Basic Amounts of all Preferred Holders that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Preferred Holders a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Preferred Holder’s receipt of such new Offer Notice.

 

(3) The Company shall have twenty (20) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Preferred Holders (the “ Refused Securities ”) pursuant to a definitive agreement (the “ Subsequent Placement Agreement ”) but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice and to publicly announce (a) the execution of such Subsequent Placement Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.

 

(4) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(n)(ii)(3) above), then each Preferred Holder may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Preferred Holder elected to purchase pursuant to Section 4(n)(ii)(2) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Preferred Holders pursuant to Section 4(n)(ii)(3) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Preferred Holder so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Preferred Holders in accordance with Section 4(n)(ii)(1) above.

 

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(5) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Preferred Holders shall acquire from the Company, and the Company shall issue to the Preferred Holders, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 4(n)(ii)(3) above if the Preferred Holders have so elected, upon the terms and conditions specified in the Offer. The purchase by the Preferred Holders of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Preferred Holders of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Preferred Holders and their respective counsel.

 

(6) Any Offered Securities not acquired by the Preferred Holders or other persons in accordance with Section 4(n)(ii)(3) above may not be issued, sold or exchanged until they are again offered to the Preferred Holders under the procedures specified in this Agreement.

 

(7) The Company and the Preferred Holders agree that if any Preferred Holder elects to participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “ Subsequent Placement Documents ”) shall include any term or provisions whereby any Preferred Holder shall be required to agree to any restrictions in trading as to any securities of the Company owned by such Preferred Holder prior to such Subsequent Placement, other than restrictions on transfer imposed under federal and state securities laws.

 

(8) Notwithstanding anything to the contrary in this Section 4(n) and unless otherwise agreed to by the Preferred Holders, the Company shall either confirm in writing to the Preferred Holders that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case in such a manner such that the Preferred Holders will not be in possession of material non-public information, by the fifteenth (15 th ) Business Day following delivery of the Offer Notice. If by the fifteenth (15 th ) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by the Preferred Holders, such transaction shall be deemed to have been abandoned and the Preferred Holders shall not be deemed to be in possession of any material, non-public information with respect to the Company. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company shall provide each Preferred Holder with another Offer Notice and each Preferred Holder will again have the right of participation set forth in this Section 4(n)(ii) . From and after the Execution Date, the Company shall not be permitted to deliver more than one such Offer Notice to the Buyers in any 60 day period.

 

(iii) The restrictions contained in subsection (ii) of this Section 4(n) shall not apply in connection with the issuance of any Excluded Securities.

 

(o) Taxes . The Company will pay, and save and hold the Buyers harmless from any and all liabilities (including interest and penalties) with respect to, or resulting from any delay or failure in paying, stamp and other taxes (other than income taxes), if any, which may be payable or determined to be payable on the execution and delivery or acquisition of the Preferred Shares, Warrants, Conversion Shares or Warrant Shares.

 

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(p) D&O Insurance . The Company shall obtain, or maintain if already in existence, such director’s and officer’s insurance in such form, with such carrier and in such amounts as reasonably acceptable to the holders of a majority of the Preferred Shares (the “ D&O Insurance ”) within 30 days following the Closing, and, for so long as any Preferred Shares remain outstanding.

 

(q) Books and Records . The Company will keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and its Subsidiaries in accordance with GAAP.

 

(r) Notice of Disqualification Events . The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.

 

(s) Stock, Option and Equity Plans . From and after the Closing until the first anniversary of the Closing Date, neither the Company nor any Subsidiary shall, without the prior written consent of the Required Holder, (i) amend or modify any economic terms or conditions of any of the Company’s stock, option or other equity incentive plans in existence on the Execution Date (the “ Incentive Plans ”), (ii) grant any stock, options or equity based incentives to any employees, members of management, directors or advisors of the Company or its Subsidiaries, other than pursuant to the Incentive Plans, or (iii) create or implement any stock, option or other equity incentive plan, other than the Incentive Plans. Notwithstanding any terms in this Agreement to the contrary, until the earlier of (i) two years from the Closing Date or (ii) such date as no Preferred Shares remain outstanding, the Company shall not file and/or utilize any registration statements on Form S-8 for the offering or distribution of securities without obtaining the prior written consent of the Required Holder.

 

(t) New Debt . For a period of two-years from the Execution Date, neither the Company nor any Subsidiary shall enter into any agreement creating indebtedness for the Company or any Subsidiary, including but not limited to entering into (i) any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument, under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due that involves, either individually or in aggregate with other such agreements, obligations greater than $25,000.00, and (ii) any equipment lease, agreement evidencing purchase money security interests, or other similar transaction in the ordinary course of business that involves, either individually or in aggregate with other such agreements, obligations greater than $100,000.00, in either case without the prior written consent of the Required Holder.

 

(u) Distributions . While the Securities remain outstanding, the Company shall not make any distributions on equity (other than stock dividends or stock splits in the nature of a dividend), or any payments on debt other than the scheduled payments of principal and interest, without the prior written consent of the Required Holder.

 

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(v) DTC Eligibility . For so long as any Securities are outstanding, the Company will employ as the transfer agent for the Common Stock a participant in the DTC Automated Securities Transfer Program and cause the Common Stock to be transferable pursuant to such program.

 

(w) Closing Documents . On or prior to thirty (30) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and K&L Gates, LLP a complete closing set of the executed Transaction Documents, Securities and any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.

 

5. 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 Preferred Shares in which the Company shall record the name and address of the Person in whose name the Preferred Shares have been issued (including the name and address of each transferee), the number of Preferred Shares held by such Person and the number of Conversion Shares issuable upon conversion of the Preferred Shares held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

 

6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company hereunder to issue and sell the Preferred Shares and the related Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

 

(i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii) Such Buyer shall have delivered to the Escrow Agent the Purchase Price for the Preferred Shares being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Escrow Agent.

 

(iii) The representations and warranties of such Buyer shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.

 

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7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer hereunder to purchase the Preferred Shares and the related Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(i) The Company shall have duly executed and delivered to the Escrow Agent each of the Transaction Documents and the stock certificates representing the Preferred Shares (allocated in such numbers as such Buyer shall request in writing at least two (2) Business Days prior to the Closing Date) being purchased by such Buyer at the Closing pursuant to this Agreement.

 

(ii) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or equivalent) of such jurisdiction of formation as of a date within ten (10) days of the Closing Date.

 

(iii) The Company shall have delivered to such Buyer 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 Closing Date.

 

(iv) The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Secretary of State of the State of Delaware within ten (10) days of the Closing Date.

 

(v) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit C .

 

(vi) The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as Exhibit D .

 

(vii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

 

(viii) The Certificate of Designations in the form attached hereto as Exhibit A shall have been filed with the Secretary of State of the State of Delaware and shall be in full force and effect, enforceable against the Company in accordance with its terms and shall not have been amended.

 

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(ix) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

 

(x) The Company shall have delivered to each Buyer copies of the executed Asset Purchase Agreement with Genesys Talent LLC and Merger Agreement with Recruiter.com, Inc. and Disclosure Schedules for each, together with any other documents each Buyer may request.

 

(xi) The Company shall provide an officer’s certificate evidencing that the acquisitions referred to in Section 7(x) have closed in escrow and upon the Buyers delivering $575,000 to the Escrow Agent and authorizing the Escrow Agent by email or otherwise to release all signature pages to those Agreements and related transactions and also releasing the signature pages of the Buyers and the Company to this Agreement and the signature pages of the Company to the Warrants purchased under this Agreement, each of the acquisitions and this Agreement shall be deemed closed.

 

8. TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the Execution Date due to the Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date by delivering a written notice to that effect to each other party to this Agreement and without liability of any party to any other party; provided, however, that if this Agreement is terminated pursuant to this Section 8 , the Company shall remain obligated to reimburse Cavalry or its designee(s), as applicable, for the expenses described in Section 4(f) above.

 

9. MISCELLANEOUS.

 

(a) 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 choice of law or conflict of law provision 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. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York County, New York, 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. 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 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 IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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(b) Counterparts . This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that an e-mail signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not an e-mail signature.

 

(c) Headings . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(d) Severability . If any provision of this Agreement 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 Agreement 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).

 

(e) Entire Agreement; Amendments . This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and either (i) the holders of at least a majority of the Preferred Shares outstanding as of the applicable date of determination, which must include Cavalry as long as Cavalry (or any of its affiliates) owns at least five percent (5%) of the Preferred Shares issued pursuant to this Agreement, or (ii) Cavalry as long as Cavalry (or any of its affiliates) owns at least five percent (5%) of the Preferred Shares issued pursuant to this Agreement (the “ Required Holder ”); provided that any such amendment or waiver that complies with the foregoing but that disproportionately, materially and adversely affects the rights and obligations of any Buyer relative to the comparable rights and obligations of the other Buyers shall require the prior written consent of such adversely affected Buyer. Any amendment or waiver effected in accordance with this Section 9(e) shall be binding upon each Buyer and holder of Securities and the Company. No such amendment shall be effective to the extent that it applies to less than all of the Buyers or holders of Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to the Transaction Documents, holders of Preferred Shares or holders of Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.

 

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(f) 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 e-mail (provided confirmation of transmission is electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

 

If to the Company:

 

Truli Technologies, Inc.

4 Oakland Street

Bristol CT 06010

Email: ____________________

Attention: Miles Jennings, Chief Executive Officer

 

With a copy (for informational purposes only) to:

 

Nason, Yeager, Gerson, Harris & Fumero, P.A.

3001 PGA Boulevard, Suite 305

Palm Beach Gardens, FL 33410

Telephone: ___________________

Email: ______________________

Attention: Michael D. Harris, Esq.

 

If to a Buyer, to its address and email address set forth on the Schedule of Buyers , with copies to such Buyer’s representatives as set forth on the Schedule of Buyers ,

 

With a copy (for informational purposes only) to:

 

K&L Gates LLP

200 S. Biscayne Boulevard, Suite 3900

Miami, FL 33131

Telephone: ________________

E-mail: _______________________

     _______________________

Attention: Clayton E. Parker, Esq.

    John D. Owens III, Esq.

 

or to such other address and/or email 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 email containing the time, date, recipient e-mail and an image of the first page of such transmission 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.

 

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(g) 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 the Preferred Shares or the Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holder, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Certificate of Designations and the Warrants). A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.

 

(h) 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, except that each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k) .

 

(i) Survival . Unless this Agreement is terminated under Section 8 , the representations, warranties, agreements and covenants hereunder shall survive the Closing and the delivery, conversion and/or exercise of the Securities, as applicable. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(j) 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.

 

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(k) Indemnification .

 

(i) In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the 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 (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit 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) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(h) , or (iv) the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by 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 that is permissible under applicable law.

 

(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in respect thereof is to be made against any indemnifying party under this Section 9(k) , deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel selected to defend the Indemnitee, the representation by such counsel of the Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority of the Purchased Shares. The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld conditioned or delayed, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. No Indemnitee shall enter into any settlement of any action or proceeding subject to this Section 9(k) without the prior written consent of the indemnifying party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9(k) , except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

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(iii) The indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

 

(iv) The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.

 

(l) No Strict Construction . 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.

 

(m) Remedies . Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction 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 to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

 

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

 

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(o) Payment Set Aside . To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

(p) Reproduction of Documents . This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by the Buyers on the Closing Date (except for certificates evidencing the Preferred Shares themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to the Buyers, may be reproduced by any Buyer by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and any Buyer may destroy any original document so reproduced. All parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by a Buyer in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

 

(q) Independent Nature of Buyers’ Obligations and Rights . The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company shall not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.

 

(r) Knowledge Definition . “ Knowledge ”, “ Knowledge of Company ” or “ Company’s Knowledge ” or any other similar knowledge qualification, means the actual or constructive knowledge of Miles Jennings after due inquiry in his capacity as the Chief Executive Officer of the Company and as the Chief Financial Officer of the Company.

 

** Signature Page Follows **

 

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the Execution Date.

 

  COMPANY :
   
  TRULI TECHNOLOGIES, INC.
     
  By: /s/ Miles Jennings
  Name: Miles Jennings
  Title: Chief Executive Officer

 

[Company’s Signature Page to the Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the Execution Date.

 

  BUYERS :
   
  Cavalry Fund I LP
   
  By: Cavalry Fund I Management LLC
  Its: General Partner
     
  By: /s/ Thomas Walsh
  Name: Thomas P. Walsh
  Title: Managing Partner

 

[Buyer’s Signature Page to the Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the Execution Date.

 

  BUYERS:
   
  L1 CAPITAL GLOBAL OPPORTUNITIES
MASTER FUND LTD.
     
  By: /s/ David Feldman
  Name: David Feldman
  Title: Director

 

[Buyer’s Signature Page to the Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the Execution Date.

 

  BUYERS:
   
  MATTHEW HAYDEN
     
  By: /s/ Matthew Hayden
  Name: Matthew Hayden
  Title:  

 

[Buyer’s Signature Page to the Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the Execution Date.

 

  BUYERS:
   
  DAVID S. NAGELBERG 2003 REVOCABLE TRUST
     
  By: /s/ David Nagelberg
  Name: David Nagelberg
  Title: Trustee

 

[Buyer’s Signature Page to the Securities Purchase Agreement]

 

 

 

 

SCHEDULE OF BUYERS

 

(1)   (2)   (3)   (4)   (5)   (6)
Buyer   Address and E-mail   Aggregate Number of Preferred Shares   Aggregate Number of Warrants   Purchase Price   Legal Representative’s
Address and E-mail
                     
                     
                     

 

 

 

 

EXHIBITS

 

Exhibit A   Form of Certificate of Designation
Exhibit B   Form of Warrant
Exhibit C   Form of Secretary’s Certificate
Exhibit D   Form of Officer’s Certificate

 

 

 

 

Exhibit A

Form of Certificate of Designation

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series D Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series D Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series D Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series D Convertible Preferred Stock” (the “ Series D Preferred Stock ”). The authorized number of shares of the Series D Preferred Stock shall be 500,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary (in each case, the “ Liquidation Date ”), each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of the first $2,000,000 of cash and/or other property received by the Corporation pursuant to such liquidation, dissolution or winding up; and (b) after the Series E Stockholders and the Series F Stockholders have received the Second Liquidation Preference, a pro rata portion of 28.78% of the value of any cash or other property to be distributed to the Holders, the Series E Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

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Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

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(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series D Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series D Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

Section 6. Rights Upon Issuance of Other Securities .

 

(a) Adjustment of Conversion Price upon Issuance of Common Stock . For a period of two (2) years commencing on the Closing Date, if the Corporation issues or sells, or in accordance with this Section 6 is deemed to have issued or sold, any Convertible Securities or Options, excluding any Excluded Securities (issued or sold or deemed to have been issued or sold) convertible or exercisable into shares of Common Stock less than a price equal to the Conversion Price (“ New Conversion Price ”) in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “ Applicable Price ”) (the foregoing a “ Dilutive Issuance ”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to the New Conversion Price. For all purposes of the foregoing (including determining the adjusted Conversion Price and the New Conversion Price under this Section 6 ), the following shall be applicable:

 

(i) Issuance of Options . If the Corporation in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Option for such price per share. For purposes of this Section 6(a)(i) , the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

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(ii) Issuance of Convertible Securities . If the Corporation in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For purposes of this Section 6(a)(ii) , the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 6(a)(ii) , except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

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(iii) Change in Option Price or Rate of Conversion . If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased Conversion Rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 6(a)(iii) , if the terms of any Option or Convertible Security that was outstanding as of the Closing Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 6(a)(iii) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

(iv) Calculation of Consideration Received . If any Option and/or Convertible Security is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Corporation (as determined by the Required Holders, the “ Primary Security ”, and such Option and/or Convertible Security, the “ Secondary Securities ”), together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Corporation either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant to Section 6(a)(i) or Section 6(a)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (A) the Consideration Value of each such Option, if any, (B) the fair market value (as determined by the Required Holders in good faith) or the Consideration Value, as applicable, and (C) the fair market value (as determined by the Required Holder) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 6(a)(iv) . If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security) will be deemed to be the net amount of consideration received by the Corporation therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security), the amount of such consideration received by the Corporation will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Corporation for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Corporation and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “ Valuation Event ”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10 th ) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Corporation and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Corporation.

 

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(v) Record Date . If the Corporation takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

Provided , however, that if the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, is listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 6(a) shall not apply.

 

(b) Holder’s Right of Adjusted Conversion Price . In addition to and not in limitation of the other provisions of this Section 6(b) , if the Corporation in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “ Variable Price Securities ”) that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock pursuant to such Options or Convertible Securities, as applicable, at a price which varies with the market price of the shares of Common Stock (the “ Variable Price ”), the Corporation shall provide written notice thereof via (i) electronic mail or (ii) overnight courier to each Holder on the date of such agreement and/or the issuance of such shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the Corporation enters into such agreement or issues any such Variable Price Securities, each Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of the Preferred Shares by designating in the Conversion Notice delivered upon any conversion of Preferred Shares that solely for purposes of such conversion such Holder is relying on the Variable Price rather than the Conversion Price then in effect. A Holder’s election to rely on a Variable Price for a particular conversion of Preferred Shares shall not obligate such Holder to rely on a Variable Price for any future conversions of Preferred Shares; provided; further, that the provisions of this Section 6(b) shall not apply to any Excluded Securities.

 

(c) Adjustment of Conversion Price upon Exchange Listing or Mandatory Conversion . If: (i) the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, and the closing bid price quoted on the Principal Market on the Trading Day prior to such listing is less than the Conversion Price (accounting for any stock split or prior adjustment to the Conversion Price), then the Conversion Price shall be reduced by 20% of the difference between the current Conversion Price and such bid price; or (ii) a broker-dealer conducts a financing pursuant to which a Holder is required to convert its Preferred Shares (regardless of the type or amount of such financing), then the current Conversion Price shall be reduced by 20%.

 

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(d) Calculations . All calculations under this Section 6 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 Corporation, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

(e) Voluntary Adjustment by Corporation . The Corporation may at any time while any Preferred Shares remain outstanding, with the prior consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors.

 

(f) Excluded Securities . No adjustments contained in this Section 6 shall be made upon the sale or issuance of any Excluded Securities sold or deemed to have been sold.

 

(g) Termination . The provisions of this Section 6 shall terminate and be of no further force or effect on the earlier of: (i) the two (2) year anniversary of the Closing Date and (ii) the date of which no Preferred Shares remain outstanding.

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

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(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series D Preferred Stock.

 

Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series D Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

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Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series D Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Closing Date ” shall mean the date of first issuance of the shares of Series D Preferred Stock.

 

(b) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

(c) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(d) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(e) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

(f) ““ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(g) “ Holder ” or “ Holders ” means a holder of Series D Preferred Stock.

 

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

 

(i) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

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(j) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(k) “ Remaining Liquidation Amount ” means $9,000,000.

 

(l) “ Required Holders ” means a majority of the Holders, which shall include Cavalry Fund I LP as long as it owns at least five percent (5%) of the Preferred Shares.

 

(m) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Series E Stockholders and the Series F Stockholders after the Holders have received the First Liquidation Preference.

 

(n) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and the Holders party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

(o) “ Series E Stockholders ” means a Person holding Series E Convertible Preferred Stock of the Corporation.

 

(p) “ Series F Stockholders ” means a Person holding Series F Convertible Preferred Stock of the Corporation.

 

(q) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

(r) “ Transaction Documents ” means this Amended and Restated Certificate of Designations, the Securities Purchase Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Securities Purchase Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

A- 11

 

 

(s) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designations and such breach remains uncured for a period of five (5) consecutive Trading Days (the “ Cure Period ”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By:  
  Name:  Miles Jennings
  Title: Chief Executive Officer

 

A- 12

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

Date of Conversion:  
   
Aggregate number of Preferred Shares to be converted  
   
Aggregate Stated Value of such Preferred Shares to be converted:  
   
Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:  
   
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:  

 

Please confirm the following information:
 
Conversion Price:  
   

 

Number of shares of Common Stock to be issued:  

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:  

 

Date: _____________ __,  
   
   
Name of Registered Holder  
 
By:             
  Name:  
  Title:  
     
  Tax ID:    
  Facsimile:             
 
E-mail Address:  

 

A- 13

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRULI TECHNOLOGIES, INC.
     
  By:                     
    Name:
    Title:

 

A- 14

 

 

Exhibit B

Form of Warrant

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

TRULI TECHNOLOGIES, INC.

 

Warrant Shares: __________________ Initial Exercise Date: March 31, 2019

 

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, __________________, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Truli Technologies, Inc., a Delaware corporation (the “ Company ”), up to ___________ shares of Common Stock (subject to adjustment hereunder, the “ Warrant Shares ”). The purchase price of one Warrant Share shall be equal to the Exercise Price (defined below).

 

Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated March 31, 2019, among the Company and the Buyers listed on the Schedule of Buyers attached thereto.

 

Section 2 . Exercise .

 

(a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the “Notice of Exercise Form” annexed hereto. Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice. The Holder by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

B- 1

 

 

(b) Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be equal to $0.06 per share, subject to adjustment under Section 3 (the “ Exercise Price ”).

 

(c) Cashless Exercise . If at any time after the Initial Exercise Date, there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A x B) – (A x C)] by (D), where:

 

(A) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

 

(B) = the greater of (i) the arithmetic average of the VWAPs (as defined below) for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election;

 

(C) = the Exercise Price of this Warrant, as adjusted hereunder, at the time of such exercise; and

 

(D) = the lesser of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election.

 

B- 2

 

 

VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Principal Market upon which the Common Stock is then listed or quoted is a trading market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Principal Market as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Principal Market upon which the Common Stock is then listed or quoted is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on such Principal Market as applicable, (c) if the Common Stock is not then listed or quoted on the Principal Market, and if prices for the Common Stock are then reported in the OTC Pink Marketplace of OTC Markets Group, Inc., the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c) .

 

Notwithstanding anything herein to the contrary, if on the Termination Date (unless the Holder notifies the Company otherwise) if there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c) .

 

(d) Mechanics of Exercise .

 

(i) Delivery of Certificates Upon Exercise . Certificates for shares purchased hereunder shall be transmitted to the Holder by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (unless by cashless exercise, if permitted) (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $5 per Trading Day (increasing to $10 per Trading Day after the fifth (5 th ) Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for which this Warrant is exercised which are not timely delivered. In no event shall liquidated damages for any one transaction exceed $1,000.00 for the first ten Trading Days. The Company shall pay any payments incurred under this Section 2(d)(i) in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

B- 3

 

 

(ii) Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

 

(iii) Rescission Rights . If the Company fails to deliver the Warrant Shares by crediting the account of the Holder’s prime broker via DWAC and causes the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.

 

(iv) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to deliver the Warrant Shares, or cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a 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 upon exercise of the Warrant as required pursuant to the terms hereof.

 

B- 4

 

 

(v) No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

(vi) Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate including any charges of any clearing firm, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

(vii) Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

B- 5

 

 

(e) Holder’s Exercise Limitations . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e) , beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the 1934 Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing 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 Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant, provided that the Beneficial Ownership Limitation in no event exceeds 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 this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase will not be effective until the 61 st day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

B- 6

 

 

Section 3 . Certain Adjustments .

 

(a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b) Adjustments for Issuance of Additional Securities. For a period of two (2) years from the Initial Exercise Date, in the event that the Company shall, at any time, effect a Subsequent Placement (in a transaction other than in connection with the issuance of any Excluded Securities), at a price per share less than the Exercise Price then in effect or without consideration (a “ Dilutive Issuance ” based on a “ Dilutive Issuance Price ”), then the Exercise Price upon each such issuance shall be reduced to the Dilutive Issuance Price, and the number of Warrant Shares (excluding Warrant Shares previously exercised) shall be increased on a full ratchet basis to the number of shares of Common Stock determined by multiplying the Exercise Price then in effect immediately prior to such adjustment by the number of Warrant Shares (excluding Warrant Shares previously exercised) acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. By way of example, if E is the total number of Warrant Shares in effect immediately prior to such Dilutive Issuance, F is the Exercise Price in effect immediately prior to such Dilutive Issuance, and G is the Dilutive Issuance Price, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such Dilutive Issuance = the quotient obtained from dividing [E x F] by G. P rovided , however , that if the Company’s Common Stock (including the Warrant shares) is listed on any of the New York Stock exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 3(b) shall not apply following such listing, subject to Section 3(c) .

 

B- 7

 

 

(c) Adjustment of Conversion Price upon Exchange Listing . If the Company’s Common Stock becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, then (accounting for any stock split or prior adjustment to the Exercise Price) the Exercise Price shall be reduced to the lesser of (i) a 20% discount to the closing bid price quoted on the Principal Market on the Trading Day prior to such listing and (ii) a 20% discount to the Exercise Price in effect on the date of such listing.

 

(d) Change in Option Price or Rate of Conversion . If the price per share for which shares of Common Stock may be issuable pursuant to any Common Stock Equivalent, is less than the applicable Exercise Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Exercise Price in effect at the time of such amendment or adjustment, then the applicable Exercise Price and number of Warrant Shares shall be adjusted upon each such issuance or amendment as provided in this Section 3(d) .

 

(e) Calculation of Consideration Received . In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

 

B- 8

 

 

Option Value ” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the “OV” function on Bloomberg L.P. determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of (A) the Trading Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

 

The provisions of this Section 3(e) shall apply each time the Company, at any time after the Initial Exercise Date and prior to the date that is eighteen (18) months from the Initial Exercise Date, shall issue any securities with a Dilutive Issuance Price.  Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(e) with respect to an Exempt Issuance (as defined in the Purchase Agreement).

 

(f) Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above and any rights contained in the Purchase Agreement, for a period of two (2) years from the Initial Exercise Date, if the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares 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 Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, no Purchase Rights will be made under this Section 3(f) in respect of Excluded Securities.

 

(g) Pro Rata Distributions . If the Company, for a period of two (2) years from the Initial Exercise Date, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(d) ), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

B- 9

 

 

(h) Fundamental Transaction . For a period of two (2) years from the Initial Exercise Date, if (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), at the option of the Holder the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to (i) the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction or (ii) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(h) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(h) with respect to an Exempt Issuance (as defined in the Purchase Agreement).

 

B- 10

 

 

(i) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3 , the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(j) Notice to Holder .

 

(i) Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3 , the Company shall promptly email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Holder may supply an email address to the Company and change such address.

 

(ii) Notice to Allow Exercise by Holder . For a period of two (2) years from the Initial Exercise Date, if (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to email such notice or any defect therein or in the emailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

B- 11

 

 

Section 4 . Transfer of Warrant .

 

(a) Transferability . Subject to compliance with any applicable securities laws and the provisions of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b) New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a) , as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c) Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

(d) Representation of the Holder . The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the 1933 Act or any applicable state securities law, except pursuant to sales registered or exempted under the 1933 Act.

 

Section 5 . Miscellaneous .

 

(a) No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof other than as explicitly set forth in Section 3 .

 

(b) Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

B- 12

 

 

(c) Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

(d) Authorized Shares .

 

The Company covenants that from 60 days following the Initial Exercise Date (subject to tolling as provided for in Section 4(k) of the Purchase Agreement), any time during the period the Warrant is outstanding, it will maintain the Required Reserved Amount as set forth in Section 4(k) of the Purchase Agreement. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue 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 Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

B- 13

 

 

(e) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

(f) Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered or if not exercised on a cashless basis when Rule 144 is available, may have restrictions upon resale imposed by state and federal securities laws.

 

(g) Non-waiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(h) Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

(i) Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(j) Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate or that there is no irreparable harm and not to require the posting of a bond or other security.

 

(k) Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or Holders of Warrant Shares .

 

(l) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders of 100% of the outstanding Warrants issued pursuant to the Purchase Agreement.

 

(m) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(n) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

B- 14

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  TRULI TECHNOLOGIES, INC.
   
  By:  
  Name: Miles Jennings
  Title: Chief Executive Officer

 

B- 15

 

 

NOTICE OF EXERCISE

 

To: TRULI TECHNOLOGIES, INC.

 

(1) The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

☐ in lawful money of the United States; or

 

☐ [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c) , to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c) .

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

(4) After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________

Signature of Authorized Signatory of Investing Entity : __________________________________

Name of Authorized Signatory: ____________________________________________

Title of Authorized Signatory: _______________________________________

Date: _______________________________________________________________

 

B- 16

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

TRULI TECHNOLOGIES, INC.

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________

 

_______________________________________________________________

 

Dated: ______________, _______

 

Holder’s Signature: _____________________________

 

Holder’s Address: _____________________________

 

_____________________________

 

Signature Guaranteed: ___________________________________________

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

B- 17

 

 

Exhibit C

Form of Secretary’s Certificate

 

This certificate is delivered pursuant to Section 7(v) of that certain Securities Purchase Agreement, dated as of March ___, 2019 (the “Agreement”), by and among Truli Technologies, Inc., a Delaware corporation (the “Company”) and each of the investors listed on the Schedule of Buyers attached thereto (individually, a “Buyer” and collectively, the “Buyers”). Capitalized terms used herein without definition shall have the meanings set forth in the Agreement.

 

The undersigned, the duly appointed and qualified Secretary of the Company, hereby certifies as follows:

 

1. Attached hereto as Exhibit A is a true and complete copy of resolutions duly adopted by the Board of Directors approving the Securities Purchase Agreement and the transactions contemplated thereby, which resolutions are in full force and effect as of the Closing Date and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

 

2. Attached hereto as Exhibit B is a true and complete copy of the Certificate of Incorporation of the Company, as amended, which is in full force and effect as of the Closing Date.

 

3. Attached hereto as Exhibit C is a true and correct copy of the Bylaws of the Company, which are in full force and effect as of the Closing Date.

 

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date written above.

 

   
  Miles Jennings, Chief Executive Officer

 

C- 1

 

 

Exhibit A

Resolutions

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C- 2

 

 

Exhibit B

Certificate of Incorporation

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C- 3

 

 

Exhibit C

Bylaws

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C- 4

 

 

Exhibit D

Form of Officer’s Certificate

 

This certificate is delivered pursuant to Sections 7(vi) and 7(xi) of that certain Securities Purchase Agreement, dated as of March ___, 2019 (the “Agreement”), by and among Truli Technologies, Inc., a Delaware corporation (the “Company”) and each of the investors listed on the Schedule of Buyers attached thereto (individually, a “Buyer” and collectively, the “Buyers”). Capitalized terms used herein without definition shall have the meanings set forth in the Agreement.

 

The undersigned, being the duly elected Chief Executive Officer of the Company, hereby certifies as follows:

 

(a) the representations and warranties in the Agreement are true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date);

 

(b) the Company has performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date; and

 

(c) the following transactions (the “Acquisitions”) have closed in escrow:

 

(i) the merger pursuant to that certain Merger Agreement and Plan of Merger, dated March __, 2019 (the “Merger Agreement”) by and among the Company, Truli Acquisition Co., Inc. and Recruiter.com, Inc.; and

 

(ii) asset purchase pursuant to that certain Asset Purchase Agreement, dated March __, 2019 (the “Asset Purchase Agreement”) by and among the Company, Recruiter.com Recruiting Solutions LLC, and Genesys Talent LLC.

 

Each of the Acquisitions and the transactions contemplated by the Agreement shall be deemed closed upon the Buyers delivering to the Escrow Agent the total amount of funds referred to in Section 7(xi) of the Agreement and authorizing the Escrow Agent by email or otherwise to release all signature pages to the Merger Agreement and the Asset Purchase Agreement and related transactions and also releasing the signature pages of the Buyers and the Company to the Agreement and the signature pages of the Company to the Warrants purchased under this Agreement.

 

IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date written above.

 

   
  Miles Jennings, Chief Executive Officer

 

 

D-1

 

Exhibit 10.2

 

Execution Version

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “ Agreement ”) is made as of the 31st day of March, 2019, by and between, Truli Technologies, Inc., a Delaware corporation (the “ Company ”), and the investor signatory hereto (the “ Investor ”).

 

WHEREAS, the Investor has previously acquired shares of preferred stock, convertible promissory notes and warrants from the Company as set forth on Schedule I (the “ Securities ”).

 

WHEREAS, the Company has authorized a new series of convertible preferred stock of the Company designated as Series D Convertible Preferred Stock, par value $0.0001 per share, the terms of which are set forth in the Certificate of Designations for such series of Series D Preferred Stock (the “ Certificate of Designations ”) in the form attached hereto as Exhibit A .

 

WHEREAS, subject to the satisfaction of the conditions set forth herein, the Company and the Investor desire to enter into a transaction whereby the Company shall issue such number of shares of Series D Convertible Preferred Stock (the “ Series D ”) in exchange for the Securities as set forth on Schedule I .

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Exchange . The closing of the Exchange (the “ Closing ”) will occur on or before March 31, 2019 (or such later date as the parties hereto may agree) following the satisfaction or waiver of the conditions set forth herein (such date, the “ Closing Date ”). On the Closing Date, subject to the terms and conditions of this Agreement, each Investor shall, and the Company shall, pursuant to Section 3(a)(9) of the Securities Act of 1933 (the “ Securities Act ”), exchange the Securities for the Series D. At the Closing, the following transactions shall occur (such transactions in this Section 1, the “ Exchange ”):

 

1.1. On the Closing Date, the Company shall issue the Series D to the Investor. Promptly after the Closing Date, the Company shall deliver a certificate evidencing the Series D to the Investor. On the Closing Date, the Investor shall be deemed for all corporate purposes to have become the holder of record of the Series D and shall have the right to convert the Series D, irrespective of the date the Company delivers the certificate evidencing the Series D to the Investor.

 

1.2. Upon receipt of the Series D in accordance with Section 1.1, all of the Investor’s rights under the Securities shall be extinguished (including, without limitation, the rights to receive, as applicable, any premium, make-whole amount, accrued and unpaid interest or dividends thereon or any shares of Common Stock with respect thereto (whether in connection with a fundamental transaction, event of default or otherwise)).

 

1.3. The Company and the Investor shall execute and/or deliver such other documents and agreements as are customary and reasonably necessary to effectuate the Exchange.

 

 

 

 

1.4. If the Closing has not occurred on or prior to April 30, 2019, the Investor shall have the right, by delivery of written notice to the Company to terminate this Agreement (such date, the “ Termination Date ”). From the date hereof until the earlier of (x) the Closing Date (as defined below) and (y) the Termination Date, the Investor shall forbear from taking any actions with respect to the Securities not explicitly set forth herein, including, without limitation, conversions, exercises, redemptions, exchanges or delivery of written notice to the Company to require the conversion, exercise, redemption or exchange of any of the Securities.

 

1.5. It shall be a condition to the obligation of the Investor on the one hand and the Company on the other hand, to consummate the Exchange contemplated hereunder that the other party’s representations and warranties contained herein are true and correct on the Closing Date with the same effect as though made on such date, unless waived in writing by the party to whom such representations and warranties are made.

 

1.6. At or before the Closing, the Investor shall deliver or cause to be delivered to Nason Yeager Gerson Harris & Fumero, P.A., as counsel to the Company, (i) the executed Agreement and (ii) other items required to effectuate the Exchange.

 

2. Representations and Warranties of the Company . The Company hereby represents and warrants to the Investor that:

 

2.1. Organization, Good Standing and Qualification . Each of the Company and its “ Subsidiaries ” (which for purposes of this Agreement means any joint venture or any entity in which the Company, directly or indirectly, owns more than 10% of the capital stock or holds an equivalent equity or similar interest) 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 authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect (as defined below) on its business or properties. 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, if any, individually or taken as a whole, or on the transactions contemplated hereby or on the Exchange (as defined above) 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 or the Exchange.

 

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2.2. Authorization . 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 Exchange and the performance of all obligations of the Company hereunder and thereunder, and the authorization of the Exchange, the issuance (and reservation for issuance) of the Series D have been taken on or prior to the date hereof and no further filing, consent, or authorization is required by the Company, its board of directors or its stockholders. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its 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. The Certificate of Designations has been validly filed with the Secretary of State of Delaware and, as of the date hereof and the Closing Date, remains in full force and effect, enforceable against the Company in accordance with its terms and has not been amended.

 

2.3. Valid Issuance of the Series D . The Series D shares when issued and delivered in accordance with the terms of this Agreement, for the consideration expressed herein, and the Common Stock when issued in accordance with the terms of the Certificate of Designations, will be duly and validly issued, fully paid and non-assessable. Upon conversion of the Series D, the Common Stock shall be freely tradable and may be sold under Rule 144 promulgated under the Securities Act (“ Rule 144 ”) subject to the public information requirement under Rule 144(c). Within 60 days following the Closing, the Company shall have reserved from its duly authorized capital stock not less than 200% of the maximum number of shares of Common Stock (assuming for purposes hereof that such Series D are convertible at the initial Conversion Price (as defined in the Certificate of Designations) and any such reservation shall not take into account any limitations on the conversion of the Series D set forth in the Certificate of Designations).

 

2.4. Compliance With Laws . 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 notice of any such violation.

 

2.5. Consents; Waivers . No consent, waiver, approval or authority of any nature, or other formal action, by any Person (as defined below), not already obtained, is required in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions provided for herein and therein. 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 and a government or any department or agency thereof.

 

2.6. Acknowledgment Regarding Investor’s Purchase of Series D . The Company acknowledges and agrees that each Investor is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and Exchange and the transactions contemplated hereby and thereby and that each Investor is not (i) an officer or director of the Company, (ii) an “affiliate” of the Company (as defined in Rule 144 promulgated under the Securities Act), or (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 under the Exchange Act). The Company further acknowledges that each Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Exchange and the transactions contemplated hereby and thereby, and any advice given by the Investor or any of its representatives or agents in connection with the Exchange and the transactions contemplated hereby and thereby is merely incidental to the Investor’s acceptance of the Series D. The Company further represents to the Investor that the Company’s decision to enter into the Exchange has been based solely on the independent evaluation by the Company and its representatives. The Company has not (i) received any consideration from the Investor for the Series D received in the Exchange, other than the Securities, (ii) paid any commission or remuneration for the solicitation of the Exchange or (iii) offered any shares of the Series D to any Person.

 

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2.7. Absence of Litigation . To the knowledge of the Company, 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, the Securities or any of the Company’s officers or directors in their capacities as such.

 

2.8. Validity; Enforcement; No Conflicts . This Agreement has 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 its 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. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of any certificate of incorporation, any certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state laws and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

2.9. Disclosure . The Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

 

3. Representations and Warranties of the Investor. The Investor hereby represents, warrants and covenants that:

 

3.1. Authorization . The Investor has full power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby and has taken all action necessary to authorize the execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby.

 

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3.2. Exchange Only . The Investor has not provided any consideration to the Company for the Series D received in the Exchange other than the Securities. The Investor understands that: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and the Series D issued in the Exchange may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) pursuant to Rule 144, or (C) pursuant to another exemption from registration under the Securities Act, including but not limited to Section 3(a)(9) thereunder.

 

3.3. No Governmental Review . The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Series D or the fairness or suitability of the investment in the Series D nor have such authorities passed upon or endorsed the merits of the offering of the Series D.

 

3.4. Validity; Enforcement; No Conflicts . This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and shall constitute the legal, valid and binding obligations of the Investor enforceable against the Investor 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.

 

3.5. Ownership of Securities . The Investor owns and holds, beneficially and of record, the entire right, title, and interest in and to the Securities free and clear of all rights and liens (other than pledges or security interests (x) arising by operation of applicable securities laws and (y) that the Investor may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker). The Investor has full power and authority to transfer and dispose of the Securities to the Company free and clear of any right or lien. Other than the transactions contemplated by this Agreement, there is no outstanding, plan, pending proposal, or other right of any Person to acquire all or any part of the Securities or any shares of Common Stock issuable upon conversion of the Securities.

 

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4. Additional Covenants

 

4.1. Disclosure . The Company shall, on or before 8:30 a.m., New York New York time, within four business days after the date of this Agreement, file with the Securities and Exchange Commission a Current Report on Form 8-K disclosing all material terms of the transactions contemplated hereby and attaching the form of this Agreement and the Certificate of Designations as exhibits thereto (collectively with all exhibits attached thereto, the “ 8-K Filing ”). From and after the issuance of the 8-K Filing, the Investor shall not be in possession of any material, nonpublic information received from the Company or any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that is not disclosed in the 8-K Filing. The Company shall not, and shall cause its officers, directors, employees, affiliates and agents, not to, provide the Investor with any material, nonpublic information regarding the Company from and after the filing of the 8-K Filing without the express written consent of the Investor. To the extent that the Company delivers any material, non-public information to the Investor without the Investor’s express prior written consent, the Company hereby covenants and agrees that the Investor shall not have any duty of confidentiality to the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agent with respect to, or a duty to the Company, any of its subsidiaries or any of their respective officers, directors, employees, affiliates or agent or not to trade on the basis of, such material, non-public information. The Company shall not disclose the name of the Investor in any filing, announcement, release or otherwise, unless such disclosure is required by law or regulation. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and the Investor or any of its affiliates, on the other hand, shall terminate and be of no further force or effect. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

 

4.2. Holding Period . For the purposes of Rule 144 of the Securities Act, the Company acknowledges that (i) the holding period of the Securities may be tacked onto the holding period of the Series D as long as no payment is made in connection with any conversion, and (ii) the holding period of the Series D may be tacked onto the holding period of the Common Stock, and the Company agrees not to take a position contrary to this Section 4.2.

 

4.3. 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.

 

4.4. Public Information . At any time following the Closing while the Investor owns any shares of Series D, if a registration statement is not available for the resale of all of the shares of Common Stock issuable upon conversion of Series D, and such shares of Common Stock may not be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) for a period of more than 30 consecutive days or (ii) fail to satisfy any condition set forth in Rule 144(i)(2) then, as partial relief for the damages to the Investor by reason of any such delay in or reduction of its ability to sell the Conversion Shares (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall immediately issue to the Investor shares of Series D equal to 20% of the number of shares of Series D then held by the Investor.

 

4.5. Right of First Refusal . The provisions of Section 4(n) of that certain Securities Purchase Agreement by and among the Company, the Investor, et. al. , dated March 31, 2019 shall apply mutatis mutandis to the shares of Series D acquired by the Investor pursuant to the Exchange.

 

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4.6. Fees and Expenses . Except as otherwise set forth above, each party to this Agreement shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

 

5. Miscellaneous

 

5.1. Successors and Assigns . Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

5.2. Governing Law; Jurisdiction . 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 choice of law or conflict of law provision 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. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York County, New York, 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. 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 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 IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

5.3. Notices . All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar overnight next business day delivery, or by email followed by overnight next business day delivery, to the address as provided for on the signature page to this Agreement.

 

5.4. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.

 

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5.5. Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms 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).

 

5.6. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

5.7. Survival . The representations, warranties and covenants of the Company and the Investor contained herein shall survive the Closing and delivery of the Series D.

 

[ Signature page follows ]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.

 

  TRULI TECHNOLOGIES INC.
       
  By:  
    Name:                     
    Title:  
       
  Address for Notices:
   
  Truli Technologies, Inc.
  54 W 40th Street,
  New York, NY 10018
  Attention: ________________
  Email: ________________

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.

 

  INVESTOR:
     
  By:                      
     
  Name:  
     
  Title:  
     
  Address for Notices:
     
   
   
   
   
   
     
  Email:  
     
  EIN#:  

 

[Signature page to the Exchange Agreement]

 

 

 

 

EXHIBIT A

 

AMENDED AND RESTATED

CERTIFICATE OF DESIGNATION OF
PREFERENCES, RIGHTS AND LIMITATIONS

OF

SERIES D CONVERTIBLE PREFERRED STOCK

 

The undersigned, Miles Jennings, the Chief Executive Officer of Truli Technologies, Inc. (the “ Corporation ”), a corporation organized and existing under the Delaware General Corporation Law (“ DGCL ”), in accordance with the provisions of Section 151 of the DGCL, does hereby certify:

 

That pursuant to the authority expressly conferred upon the Board of Directors of the Corporation (the “ Board of Directors ”) by the Corporation’s Certificate of Incorporation, as amended (the “ Certificate of Incorporation ”), the Board of Directors at a meeting on December 19, 2018, adopted resolutions authorizing the creation and issuance of a series of preferred stock designated as the “Series D Convertible Preferred Stock”, none of which shares have been issued;

 

That the Certificate of Designation for the Series D Convertible Preferred Stock (the “ Certificate of Designation ”) was filed with the Secretary of State for the State of Delaware on March 25, 2019.

 

That pursuant to the authority expressly conferred upon the Board of Directors by the Corporation’s Certificate of Incorporation, the Board of Directors, by unanimous written consent on March 29, 2019, adopted the following resolutions amending and restating the Certificate of Designation (the “ Amended and Restated Certificate of Designations ”):

 

RESOLVED, that pursuant to the authority expressly vested in the Board of Directors and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designation for the Series D Convertible Preferred Stock shall be amended and restated in its entirety, and the designation and number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series, in addition to any set forth in the Certificate of Incorporation, shall be as follows:

 

Section 1. Designation and Authorized Shares . There shall hereby be created and established a series of preferred stock of the Corporation designated as “Series D Convertible Preferred Stock” (the “ Series D Preferred Stock ”). The authorized number of shares of the Series D Preferred Stock shall be 500,000 shares (the “ Preferred Shares ”). Each Preferred Share shall have a par value of $0.0001. Capitalized terms not defined herein shall have the meaning as set forth in Section 12 below.

 

Section 2. Stated Value . Each Preferred Share shall have a stated value of $20 per share (the “ Stated Value ”).

 

 

 

 

Section 3. Liquidation . Upon the liquidation, dissolution or winding up of the business of the Corporation, whether voluntary or involuntary (in each case, the “ Liquidation Date ”), each Holder shall be entitled to receive out of assets of the Corporation legally available therefor: (a) a pro rata portion of the first $2,000,000 of cash and/or other property received by the Corporation pursuant to such liquidation, dissolution or winding up; and (b) after the Series E Stockholders and the Series F Stockholders have received the Second Liquidation Preference, a pro rata portion of 28.78% of the value of any cash or other property to be distributed to the Holders, the Series E Stockholders and the Series F Stockholders as payment of the Remaining Liquidation Amount. Any distribution in connection with the liquidation, dissolution or winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall be made in cash to the extent possible.

 

Section 4. Voting . Except as otherwise expressly required by law, each Holder shall be entitled to vote on all matters submitted to stockholders of the Corporation and shall be entitled to the number of votes for each Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, equal to the number of shares of Common Stock such Preferred Shares are convertible into at such time, but not in excess of the conversion limitations set forth in Section 5(d) herein. Except as otherwise required by law, the Holders shall vote together with the holders of Common Stock on all matters and shall not vote as a separate class.

 

Section 5. Conversion .

 

(a) Conversion Right . Subject to the provisions of Section 5(d) , at any time or times on or after the Closing Date, each Holder shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Share (as defined below).

 

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 5(c) shall be determined by dividing (x) the Stated Value of such Preferred Share by (y) the Conversion Price (the “ Conversion Rate ”).

 

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(c) Mechanics of Conversion .

 

(i) Optional Conversion . To convert a Preferred Share into shares of Common Stock on any date after the Closing Date (a “ Conversion Date ”), a Holder shall deliver (via, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion of the Preferred Shares subject to such conversion in the form attached hereto as Exhibit I (the “ Conversion Notice ”) to the Corporation. Within three (3) Trading Days following a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Corporation the original certificates representing the Preferred Shares (the “ Preferred Share Certificates ”) so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft or destruction). On or before the first (1 st ) Trading Day following the date of receipt of a Conversion Notice, the Corporation shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II , of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “ Transfer Agent ”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the third (3 rd ) Trading Day following the date of receipt of a Conversion Notice (or such earlier date as required pursuant to the Securities Exchange Act of 1934, (the “ Exchange Act ”) or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “ Share Delivery Deadline ”), the Corporation shall (1) provided that the Transfer Agent is participating in The Depository Trust Corporation’s (“ DTC ”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred Share Certificate(s) submitted for conversion pursuant is greater than the number of Preferred Shares being converted, then the Corporation shall, as soon as practicable and in no event later than three (3) Trading Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate representing the number of Preferred Shares not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii) Corporation’s Failure to Timely Convert . If the Corporation shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, to credit such Holder’s or its designee’s balance account with DTC (or subject to Section 5(c)(i) to issue to such Holder a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Corporation’s share register) for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Share, a Triggering Event shall be deemed to have occurred, and such Holder shall be entitled to the remedies set forth in Section 7 , in addition to all other remedies available to such Holder.

 

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(d) Maximum Conversion . Notwithstanding anything to the contrary set forth in this Amended and Restated Certificate of Designation, at no time may all or a portion of the Preferred Shares be converted if the number of shares of Common Stock to be issued pursuant to such conversion would cause the holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Stock beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by such holder at such time, the number of shares of Common Stock more than 4.99% of all of the Common Stock issued and outstanding at such time (which provision may be waived by such Holder by written notice from such Holder to the Corporation, which notice shall be effective 61 calendar days after the date of such notice). Additionally, in no event shall any Preferred Shares be converted if after giving effect to the conversion, the Holder would beneficially own more than 9.99% of all of the Common Stock issued and outstanding at such time. For purposes of this Section 5(d) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Corporation’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a holder of Series D Preferred Stock, the Corporation shall within one (1) business day confirm orally and in writing to such 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 Corporation, including shares of Series D Preferred Stock, held by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported, which in any event are convertible or exercisable, as the case may be, into shares of the Corporation’s Common Stock within sixty (60) days’ of such calculation and which are not subject to a limitation on conversion or exercise analogous to the limitation contained herein. The provisions of this Section 5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitations herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

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Section 6. Rights Upon Issuance of Other Securities .

 

(a) Adjustment of Conversion Price upon Issuance of Common Stock . For a period of two (2) years commencing on the Closing Date, if the Corporation issues or sells, or in accordance with this Section 6 is deemed to have issued or sold, any Convertible Securities or Options, excluding any Excluded Securities (issued or sold or deemed to have been issued or sold) convertible or exercisable into shares of Common Stock less than a price equal to the Conversion Price (“ New Conversion Price ”) in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “ Applicable Price ”) (the foregoing a “ Dilutive Issuance ”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to the New Conversion Price. For all purposes of the foregoing (including determining the adjusted Conversion Price and the New Conversion Price under this Section 6 ), the following shall be applicable:

 

(i) Issuance of Options . If the Corporation in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Option for such price per share. For purposes of this Section 6(a)(i) , the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

(ii) Issuance of Convertible Securities . If the Corporation in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For purposes of this Section 6(a)(ii) , the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 6(a)(ii) , except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

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(iii) Change in Option Price or Rate of Conversion . If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased Conversion Rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 6(a)(iii) , if the terms of any Option or Convertible Security that was outstanding as of the Closing Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 6(a)(iii) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

(iv) Calculation of Consideration Received . If any Option and/or Convertible Security is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Corporation (as determined by the Required Holders, the “ Primary Security ”, and such Option and/or Convertible Security, the “ Secondary Securities ”), together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Corporation either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant to Section 6(a)(i) or Section 6(a)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (A) the Consideration Value of each such Option, if any, (B) the fair market value (as determined by the Required Holders in good faith) or the Consideration Value, as applicable, and (C) the fair market value (as determined by the Required Holder) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 6(a)(iv) . If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security) will be deemed to be the net amount of consideration received by the Corporation therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security), the amount of such consideration received by the Corporation will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Corporation for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Corporation and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “ Valuation Event ”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10 th ) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Corporation and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Corporation.

 

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(v) Record Date . If the Corporation takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

Provided , however, that if the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, is listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 6(a) shall not apply.

 

(b) Holder’s Right of Adjusted Conversion Price . In addition to and not in limitation of the other provisions of this Section 6(b) , if the Corporation in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “ Variable Price Securities ”) that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock pursuant to such Options or Convertible Securities, as applicable, at a price which varies with the market price of the shares of Common Stock (the “ Variable Price ”), the Corporation shall provide written notice thereof via (i) electronic mail or (ii) overnight courier to each Holder on the date of such agreement and/or the issuance of such shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the Corporation enters into such agreement or issues any such Variable Price Securities, each Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of the Preferred Shares by designating in the Conversion Notice delivered upon any conversion of Preferred Shares that solely for purposes of such conversion such Holder is relying on the Variable Price rather than the Conversion Price then in effect. A Holder’s election to rely on a Variable Price for a particular conversion of Preferred Shares shall not obligate such Holder to rely on a Variable Price for any future conversions of Preferred Shares; provided; further, that the provisions of this Section 6(b) shall not apply to any Excluded Securities.

 

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(c) Adjustment of Conversion Price upon Exchange Listing or Mandatory Conversion . If: (i) the Corporation’s Common Stock, issuable upon conversion of the Series D Preferred Stock, becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, and the closing bid price quoted on the Principal Market on the Trading Day prior to such listing is less than the Conversion Price (accounting for any stock split or prior adjustment to the Conversion Price), then the Conversion Price shall be reduced by 20% of the difference between the current Conversion Price and such bid price; or (ii) a broker-dealer conducts a financing pursuant to which a Holder is required to convert its Preferred Shares (regardless of the type or amount of such financing), then the current Conversion Price shall be reduced by 20%.

 

(d) Calculations . All calculations under this Section 6 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 Corporation, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

(e) Voluntary Adjustment by Corporation . The Corporation may at any time while any Preferred Shares remain outstanding, with the prior consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors.

 

(f) Excluded Securities . No adjustments contained in this Section 6 shall be made upon the sale or issuance of any Excluded Securities sold or deemed to have been sold.

 

(g) Termination . The provisions of this Section 6 shall terminate and be of no further force or effect on the earlier of: (i) the two (2) year anniversary of the Closing Date and (ii) the date of which no Preferred Shares remain outstanding.

 

Section 7. Triggering Events . If at any time while any Preferred Shares remain outstanding and any Triggering Event occurs, the Corporation shall pay within three (3) days to each Holder $210 per each $1,000 of the Stated Value of each such Holder’s Preferred Shares, provided however that this Section 7 shall not apply in the case of a failure to timely convert under Section 5(c)(ii) due to an insufficient number of authorized shares until 120 days from the Closing Date.

 

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Section 8. Other Provisions .

 

(a) Reservation of Common Stock . After the expiration of sixty (60) days from the Closing Date, or such longer period as provided for in Section 3(c) of the Securities Purchase Agreement, so long as any Preferred Shares remain outstanding, the Corporation shall at all times reserve at least two (2) times the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding and the exercise of all Warrants then outstanding under the Transaction Documents (without regard to any limitations on conversions) (the “ Required Reserve Amount ”). Any failure of the Corporation to maintain the Required Reserve Amount shall be deemed to be a Triggering Event. The Required Reserve Amount (including each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Closing Date 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 Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number of the Preferred Shares then held by the Holders.

 

(b) Record Holders . The Corporation shall maintain a register (the “ Register ”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Corporation and each Holder of the Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice to the contrary.

 

(c) Transfer of Preferred Shares . A Holder may transfer some or all of its Preferred Shares without the consent of the Corporation, subject to compliance with the Securities Act of 1933, as amended. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred Share Certificate to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate, registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate to such Holder representing the outstanding number of Preferred Shares not being transferred. The Corporation shall record all such transfers pursuant to this Section 8(c) in the Register.

 

(d) Lost, Stolen or Mutilated Preferred Share Certificate . Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a Preferred Share Certificate (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 applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of such Preferred Share Certificate, the Corporation shall execute and deliver to such Holder a new Preferred Share Certificate representing the applicable outstanding number of Preferred Shares.

 

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Section 9. Restriction and Limitations . Except as expressly provided herein or as required by law, so long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent of the Required Holders, take any action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series D Preferred Stock.

 

Section 10. Certain Adjustments .

 

(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any Preferred Shares remain outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to the conversion of the Series D Preferred Stock), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Corporation, each Preferred Share shall receive such consideration as if such number Preferred Shares had been, immediately prior to such foregoing dividend, distribution, subdivision, combination or reclassification, the holder of the number of shares of Common Stock into which it could convert at such time. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. Notwithstanding the preceding, there shall be no adjustment as a result of the contemplated reverse stock split.

 

Section 11. Equal Treatment of Holders . No consideration (including any modification of this Amended and Restated Certificate of Designation or related Transaction Document) shall be offered or paid to any person or entity to amend or consent to a waiver or modification of any provision of this Amended and Restated Certificate of Designation or Transaction Document unless the same consideration is also offered to all of the Holders. For clarification purposes, this provision constitutes a separate right granted to each holder by the Corporation and negotiated separately by each holder, and is intended for the Corporation to treat all Holders as a class and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of the Series D Preferred Stock or otherwise.

 

Section 12. Certain Defined Terms . For purposes of this Amended and Restated Certificate of Designation, the following terms shall have the following meanings:

 

(a) “ Closing Date ” shall mean the date of first issuance of the shares of Series D Preferred Stock.

 

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(b) “ Common Stock ” shall mean the Corporation’s common stock, $0.0001 par value per share.

 

(c) “ Consideration Value ” means the value of the applicable Option, Convertible Security as of the date of issuance thereof (as determined by the Board of Directors in good faith).

 

(d) “ Conversion Price ” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.02, subject to adjustment as provided herein.

 

(e) “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

 

(f) “ Excluded Securities ” means those securities identified and defined as such in the Securities Purchase Agreement.

 

(g) “ Holder ” or “ Holders ” means a holder of Series D Preferred Stock.

 

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

 

(i) “ Person ” means an individual, a limited liability corporation, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(j) “ Principal Market ” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or OTCQX and any successor markets thereto.

 

(k) “ Remaining Liquidation Amount ” means $9,000,000.

 

(l) “ Required Holders ” means a majority of the Holders, which shall include Cavalry Fund I LP as long as it owns at least five percent (5%) of the Preferred Shares.

 

(m) “ Second Liquidation Preference ” means a liquidation preference of $3,000,000 in cash and/or other property received by the Corporation pursuant to a liquidation, dissolution or winding up of the business of the Corporation, and which is to be paid to the Series E Stockholders and the Series F Stockholders after the Holders have received the First Liquidation Preference.

 

(n) “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and among the Corporation and the Holders party thereto, a form of which will be on file with the Securities and Exchange Commission.

 

(o) “ Series E Stockholders ” means a Person holding Series E Convertible Preferred Stock of the Corporation.

 

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(p) “ Series F Stockholders ” means a Person holding Series F Convertible Preferred Stock of the Corporation.

 

(q) “ Trading Day ” means any day on which the Common Stock is eligible to be traded on the Principal Market 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.

 

(r) “ Transaction Documents ” means this Amended and Restated Certificate of Designations, the Securities Purchase Agreement and each of the other agreements and instruments entered into or delivered by the Corporation or any of the Holders in connection with the transactions contemplated hereby and under the Securities Purchase Agreement, each as may be amended from time to time in accordance with the terms thereof.

 

(s) “ Triggering Events ” means each of the following events:

 

(i) at any time the Corporation has breached any provision of this Amended and Restated Certificate of Designations and such breach remains uncured for a period of five (5) consecutive Trading Days (the “ Cure Period ”), except as set forth in Section 10(n)(ii) below for which such Cure Period shall not apply;

 

(ii) upon the occurrence of any event explicit stated herein to constitute a “Triggering Event”;

 

(iii) other than as specifically set forth in another clause of this definition, the Corporation or any of its subsidiaries breaches any material representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or material condition of any Transaction Document, except, in the case of a breach of a material covenant or other material term or material condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or

 

(iv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Corporation as to whether any Triggering Event has or has not occurred.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate this 31 st day of March 2019.

 

  By  
  Name: Miles Jennings
  Title: Chief Executive Officer

 

[SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS
AND LIMITATIONS OF SERIES D CONVERTIBLE PREFERRED STOCK]

 

 

 

 

EXHIBIT I

 

TRULI TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Amended and Restated Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of Truli Technologies, Inc. (the “ Amended and Restated Certificate of Designations ”). In accordance with and pursuant to the Amended and Restated Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $0.0001 par value per share (the “ Preferred Shares ”), of Truli Technologies, Inc., a Delaware corporation (the “ Corporation ”), indicated below into shares of common stock, $0.0001 par value per share (the “ Common Stock ”), of the Corporation, as of the date specified below.

 

  Date of Conversion:  
     
  Aggregate number of Preferred Shares to be converted  
     
  Aggregate Stated Value of such Preferred Shares to be converted:  
     
  Aggregate accrued and unpaid dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such aggregate dividends to be converted:  
     
  AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:  
     

Please confirm the following information:  
     
  Conversion Price:  
     
  Number of shares of Common Stock to be issued:    

 

Please issue the Common Stock into which the applicable Preferred Shares are being converted 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:  

 

Date: _____________ __,  
       
   
Name of Registered Holder  
       
By:       
  Name:    
  Title:    
       
  Tax ID:                      
  Facsimile:    
       
E-mail Address:  

 

 

 

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and acknowledged and agreed to by ________________________.

 

  TRULI TECHNOLOGIES, INC.
       
  By:                     
    Name:                        
    Title:  

 

 

 

 

Exhibit 10.3

 

AMENDMENT NO. 1

to

License Agreement

 

This Amendment No. 1 (this “ Amendment ”) to the License Agreement (the “ Agreement ”), dated as of March 31, 2019 (the “ Effective Date ”), is by and among Recruiter.com, Inc., a Delaware corporation (“ Recruiter ”), VocaWorks, Inc., a New Jersey corporation (“ Sub ”) and Truli Technologies, Inc., a Delaware corporation (“ Parent ”). Recruiter, Sub and Parent may be referred to herein collectively as the “ Parties ” or individually as a “ Party .”

 

WHEREAS , Recruiter, Parent and Sub entered into that certain License Agreement, effective as of October 30, 2017 (the “ Agreement ”); and

 

WHEREAS , in connection with that certain Agreement and Plan of Merger to be entered into by and among Parent, Recruiter and Truli Acquisition Co., Inc.., a Delaware corporation and wholly-owned subsidiary of Parent, the Parties desire to amend the Agreement to revise the requirements regarding the payment of license fees under the Agreement.

 

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

 

1.     Article 4, License Fees, shall be deleted in its entirety and the Parties shall have no further obligations under such Article 4.

 

2.     This Amendment shall become effective on March __, 2019, or such later date as Parties hereto shall mutually agree in writing, subject to the closing of the transactions contemplated by that certain Agreement and Plan of Merger to be entered into by and among Parent, Recruiter and Truli Acquisition Co., Inc.., a Delaware corporation and wholly-owned subsidiary of Parent.

 

3.     In the event of any conflict between the Agreement and this Amendment, the terms as contained in this Amendment shall control. Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement shall remain in full force and effect and are hereby ratified and confirmed by the Parties. Without limiting the generality of the foregoing, the amendments contained herein will not be construed as an amendment to or waiver of any other provision of the Agreement.

 

4.     This Amendment may be executed in one or more counterparts, each of which shall be deemed to be one and the same agreement. Facsimile signatures shall be treated in all respects and for all purposes as originals.

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF , the parties hereto have executed this Amendment as of the date first written above.

 

  RECRUITER.COM, INC.
     
  By /s/ Michael Woloshin
    Name: Michael Woloshin
    Title: CEO, President

 

  TRULI TECHNOLOGIES, INC.
     
  By /s/ Evan Sohn
    Name: Evan Sohn
    Title: Consultant

 

  VOCAWORKS, INC.
     
  By /s/ Miles Jennings
    Name: Miles Jennings
    Title: President

 

[Signature Page to Amendment No.1 to License Agreement]

 

 

 

Exhibit 99.1

 

Truli Technologies Merges with Recruiter.com, Inc. and Acquires Assets of Genesys Talent, LLC

 

Truli Technologies, Inc . (“Truli” or the “Company”) (OTC:TRLI), a development stage technology company specializing in recruitment software, today announced the closing of a private placement financing and the successful completion of a merger transaction and an asset purchase. Truli has acquired Recruiter.com, Inc. (“Recruiter.com”), a recruitment technology platform, in a subsidiary merger transaction whereby Recruiter.com became a wholly-owned subsidiary of Truli. Simultaneously with the completion of the merger, Truli purchased certain specialized recruiting assets of Genesys Talent, LLC (“Genesys”). Genesys will continue to own and develop its disruptive candidate sourcing and engagement technology, MatchList. Going forward, the Company intends to effect a name change from Truli Technologies, Inc. to Recruiter.com Group, Inc.

 

In connection with the merger and the asset purchase, Rick Roberts, who had previously served as President of Genesys, was appointed President of the Recruiting Solutions division of the Company, and Ashley Saddul, who had previously served as the Chief Technology Officer of Recruiter.com, was appointed the Chief Technology Officer of the Company.

 

Miles Jennings will continue as the Chief Executive Officer of the Company. Michael Woloshin, the founder and former CEO of Recruiter.com, will act as the Company’s independent business development consultant.

 

In addition, the Company increased the size of its Board of Directors and Evan Sohn, who had previously served as the special consultant to Truli in connection with the merger, was appointed to the Board of Directors as Executive Chairman. The Board of Directors has also appointed Tim O’Rourke, designated by Genesys in connection with the asset purchase, as a director of the Company.

 

“Completing these two acquisitions is a major achievement and step forward for the Company,” said Miles Jennings, CEO of Truli. “Recruiter’s exceptional brand and exciting technology platform will help the Company scale up quickly and capitalize on the massive demand for professional hiring. We’re also very excited to add Rick Roberts as President of the Recruiting Solutions division, Tim O’Rourke to our Board of Directors, the experienced team from Genesys Talent, and their roster of enterprise clients.”

 

1

 

 

Rick Roberts comes to the Company from Genesys Talent, with over 20 years of achievements driving corporate performance by expertly aligning team development and revenue goals with corporate objectives. Prior to leading Genesys Talent as President, he was President of the Willis Group, Regional Vice President of Modis, a division of Adecco, and Director at Ibase Consulting. Tim O’Rourke, Managing Director of ICON Information Consultants, a top provider of human capital solutions, consulting, payroll and professional services, and a shareholder of Genesys Talent, will join Truli’s Board of Directors. ICON has earned recognition as the largest women-owned business in the Houston area, with hundreds of millions of dollars in yearly revenue.

 

“Recruiter.com is one of the best-known recruitment brands with an impressive technology offering. We are excited to join forces and look forward to addressing the immediate need for qualified mid to senior level candidates,” said Rick Roberts. “We are confident that our vision of a centralized recruiting platform will drive tremendous growth and value for our clients and shareholders.”

 

Michael Woloshin commented: “Following the merger with Truli, Recruiter.com is on its way to becoming a powerful recruiting industry leader. I look forward to seeing its continued development and growth in the months and years ahead.”

 

About Truli Technologies:

 

Truli Technologies, Inc. focuses on the development and acquisition of technology that solves industry challenges through connection, automation, and engagement. The Company’s wholly-owned subsidiary, VocaWorks, is an on-demand, cloud-based, online and mobile hiring platform being built to connect technology professionals with emerging growth companies looking for talent. VocaWorks is disrupting the traditional staffing industry through a platform that matches opportunistic employees with the world’s most innovative technology companies. With one-tap notifications, user profiles, and full project tracking, VocaWorks brings a new level of engagement and simplicity to the recruitment and onboarding of talented consultants for project-based hiring needs. For more information, please visit www.trulitechnologies.com or www.vocaworks.com.

 

About Recruiter.com:

 

Recruiter.com is a leading platform connecting recruiters and employers. We pair enterprises with the most extensive network of recruiters to drive the hiring of top talent faster and smarter. We offer recruiters SHRM certified recruitment training and independent earning opportunity. Recruiter.com was voted “Top Tech Company to Watch” by the CT Tech Council, cited as one of the “Top 35 Most Influential Career Sites” by Forbes, and listed by Inc. as one of the “9 Best Websites for Finding Top Talent.” Visit https://www.recruiter.com.

 

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About Genesys Talent:

 

With decades of recruiting process and technology experience under their belts, the founders of Genesys Talent set out to change the way job seekers connect with the organizations that need them. To create an exceptional, high-value experience for both sides of the recruiting equation, Genesys Talent focuses primarily on technology, online marketplaces, and the wholesale reinvention of existing recruiting methods when necessary. By taking a constructively critical look at what works and what doesn’t in the recruiting space, Genesys Talent has built enhanced processes in a cloud-based technology that brings together workers and employers while unleashing a whole new spectrum of opportunities to reimagine talent. Visit https://genesystalent.com/matchlist or follow Genesys Talent on Twitter: @GenesysTalent

 

Cautionary Statement Regarding Forward-Looking Statements:

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including future growth of the Company’s technology business and expected competitive position, the delivery of shareholder value, expected services from the founder of Recruiter.com and the change of the Company’s name. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about the future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include continued demand for professional hiring, the condition of the equity markets in general and for microcap companies in particular, a lack of growth in the U.S. market for technology-enabled recruitment services and the Company’s inability to successfully integrate Recruiter and the assets acquired from Genesys into the Company and the Risk Factors contained within our filings with the Securities and Exchange Commission including our annual report on Form 10-K for the year ended March 31, 2018. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

  

Company Contact

 

Miles Jennings

miles@recruiter.com

Truli Technologies, Inc.

Phone: (866) 862-2979

 

 

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