Registration
No. 333-_______________
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
S-8
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
MARATHON
PATENT GROUP, INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or other jurisdiction of incorporation or organization)
01-0949984
I.R.S.
Employer Identification Number
6794
(Primary
Standard Industrial Code Classification Number)
1180
North Town Center Drive, Suite 100
Las
Vegas, NV 89144
702-945-2773
(Address,
including zip code, and telephone number, including area code of registrant’s principal executive offices)
Copies
to:
Mr.
Merrick Okamoto
Chief
Executive Officer
Marathon
Patent Group, Inc.
1180
North Town Center Drive, Suite 100
Las
Vegas, NV 89144
702-945-2773
(Address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
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Jolie
Kahn, Esq.
12
E. 49th Street, 11th floor
New
York, NY 10017
Telephone:
(516) 217-6379
Facsimile:
(866) 705-3071
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Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
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Smaller
reporting company [X]
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Emerging
Growth Company [ ]
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(Do
not check if a smaller reporting company)
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
CALCULATION
OF REGISTRATION FEE
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Title of Securities to be Registered
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Amount to be registered(1) (2)
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Proposed maximum offering price per share(3)
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Proposed maximum aggregate offering price(3)
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Amount of Registration Fee(4)
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Common Stock, no par value
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2,745,639 shares
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$
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0.89
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$
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2,443,619
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$
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317.81
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(1)
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Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement also
covers an indeterminate amount of interests to be offered or sold in connection with any stock split, stock dividend or similar
transaction, or anti-dilution or other adjustment pursuant to the employee benefit plan described herein.
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(2)
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Includes
2,500,000 shares available for issuance under the Registrant’s current 2018 Equity Incentive Plan, which are available
for issuance under the current Plan, of which shares are being offered for resale by the Selling Stockholders listed in Part
II, below.
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(3)
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In
accordance with Rule 457(n) under the Securities Act, the maximum offering price per share and the proposed maximum aggregate
offering price are estimated based on the average of the $0.92 (high) and $0.85 (low) sale price of the Registrant’s
Common Stock, no par value, as reported on the Nasdaq Capital Market on June 29, 2020, which date is within five business
days prior to filing this Registration Statement.
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(4)
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Estimated
solely for the purpose of calculating the registration fee in accordance with Rule 457(h) under the Securities Act based on
the average of the high and low trading prices of a share of common stock of the registrant on the Nasdaq Capital Market on
June 26, 2020.
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EXPLANATORY
NOTE
This
registration statement on Form S-8 (this “Registration Statement”) registers shares of common stock, no par value,
(the “Shares”) of Marathon Patent Group, Inc. (“Marathon,” the “Registrant,” the “Company,”
“we,” “us” or “our”) including:
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(i)
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2,745,639
Shares of our common stock to be issued upon conversion
of RSUs that have been issued and that may be granted pursuant to the 2018 Marathon Patent Group, Inc. Equity Incentive Plan
(the “2018 Plan”).
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This
Registration Statement also includes a reoffer prospectus (the “Reoffer Prospectus”) prepared in accordance with General
Instruction C of Form S-8 and in accordance with the requirements of Part I of Form S-3. The Reoffer Prospectus may be used in
connection with the reoffer and resale of our securities registered hereunder by the Selling Stockholders identified in the Reoffer
Prospectus (the “Selling Stockholders”), some of whom may be considered “affiliates” of the Company, as
defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”). The number of Shares included
in the Reoffer Prospectus represents the total number of Shares held by the Selling Stockholders, as well as the those that may
be acquired by the Selling Stockholders pursuant to restricted stock unit awards made to the Selling Stockholders by the Registrant,
and does not necessarily represent a present intention to sell any or all such Shares by the Selling Stockholders.
PART
I
INFORMATION
REQUIRED IN THE SECTION 10(A) PROSPECTUS
This
Registration Statement relates to two separate prospectuses.
Section
10(a) Prospectus: Items 1 and 2, from this page, and the documents incorporated by reference pursuant to Part II, Item 3 of
this prospectus, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.
Reoffer
Prospectus: The material that follows Item 2, beginning on Page 1 through Page 10, up to but not including Part II of this
Registration Statement, beginning on Page II-1, of which the Reoffer Prospectus is a part, constitutes a “Reoffer Prospectus,”
prepared in accordance with the requirements of Part I of Form S-3 under the Securities Act. Pursuant to General Instruction C
of Form S-8, the Reoffer Prospectus may be used for reoffers or resales of Shares which are deemed to be “control securities”
or “restricted securities” under the Securities Act that have been acquired by the Selling Stockholders named in the
Reoffer Prospectus.
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Item
1.
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Plan
Information.
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The
Company will provide each recipient (the “Recipients”) of a grant under the 2018 Plan with documents that contain
information related to the 2018 Plan, and other information including, but not limited to, the disclosure required by Item 1 of
Form S-8, which information is not required to be and is not being filed as a part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424 under the Securities Act. The foregoing information and the documents incorporated
by reference in response to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act. A Section 10(a) prospectus will be given to each Recipient who receives
Shares covered by this Registration Statement, in accordance with Rule 428(b)(1) under the Securities Act.
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Item
2.
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Registrant
Information and Employee Plan Annual Information.
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We
will provide to each Recipient a written statement advising of the availability of documents incorporated by reference in Item
3 of Part II of this Registration Statement (which documents are incorporated by reference in this Section 10(a) prospectus) and
of documents required to be delivered pursuant to Rule 428(b) under the Securities Act without charge and upon written or oral
request by contacting:
Merrick
Okamoto
Chief
Executive Officer
Marathon Patent Group, Inc.
1180 North Town Center Drive, Suite 100
Las
Vegas, NV 89144
702-945-2773
REOFFER
PROSPECTUS
Marathon Patent Group, Inc.
1180 North Town Center Drive, Suite 100
Las
Vegas, NV 89144
702-945-2773
2,745,639
Shares of Common Stock
This
Reoffer Prospectus relates to 2,745,639 shares of our common stock, no par value (the “Shares”), that may be
offered and resold from time to time by the selling stockholders identified in this Reoffer Prospectus (the “Selling Stockholders”)
for their own account. Some of the Selling Stockholders are “affiliates” of the Company, as defined by Rule 405 under
the Securities Act of 1933, as amended (the “Securities Act”).
The
Selling Stockholders were issued grants of stock, which they hold of their own account, as well as restricted stock, restricted
stock units, options, and other convertible rights (the “Stock Rights”) which were convertible, upon vesting and settlement
by the Company, into Shares pursuant to the 2018 Plan. The Company will issue Shares under the Registration Statement of
which this Reoffer Prospectus forms a part to the Selling Stockholders in settlement of the Stock Rights held by the Selling Stockholders
on a one-for-one basis pursuant to the 2018 Plan and the term of their individual award agreements.
It
is anticipated that the Selling Stockholders will offer the Shares issued to them for sale at prevailing prices on The NASDAQ
Capital Market on the date of sale; however, the Selling Stockholders may also sell the Shares issued to them in various
other types of transactions, such as, for example, sales in negotiated transactions through underwriters. For a description of
the various methods by which the Selling Stockholders may offer and sell their Shares described in this Reoffer Prospectus, see
the section entitled “Plan of Distribution” of this Reoffer Prospectus. We will receive no part of the proceeds from
sales made under this Reoffer Prospectus. The Selling Stockholders will bear all sales commissions and similar expenses. Any other
expenses incurred by us in connection with the registration and offering will be borne by us and will not borne by the Selling
Stockholders.
Some
of the Shares issued pursuant to the 2018 Plan in settlement of awards granted to the Selling Stockholders will be “control
securities” under the Securities Act before their sale under this Reoffer Prospectus. This Reoffer Prospectus has been prepared
for the purposes of registering the Shares (including the Shares issuable upon settlement of the Stock Rights) under the Securities
Act to allow for future sales by the Selling Stockholders on a continuous or delayed basis to the public without restriction.
The
Selling Stockholders and any brokers executing selling orders on their behalf may be deemed to be “underwriters” within
the meaning of the Securities Act, in which event commissions received by such brokers may be deemed to be underwriting commissions
under the Securities Act.
Our
common stock is traded on The NASDAQ Capital Market under the symbol “MARA”. On June 29, 2020, the closing price of
our common stock on such market was $0.89 per share.
Our
business and an investment in our securities involve a high degree of risk. Before making any investment in our securities, you
should read and carefully consider risks described in the “Risk Factors” section beginning on page 4 of this Reoffer
Prospectus, as well as those disclosed in our most recent annual report on Form 10-K, as amended.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS REOFFER PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this Reoffer Prospectus is June 30, 2020.
TABLE
OF CONTENTS
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS REOFFER PROSPECTUS. WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU
WITH INFORMATION THAT IS DIFFERENT FROM THAT CONTAINED IN THIS REOFFER PROSPECTUS. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. WE TAKE NO RESPONSIBILITY FOR, AND CAN PROVIDE NO ASSURANCE AS TO THE RELIABILITY OF,
ANY OTHER INFORMATION THAT OTHERS MAY GIVE YOU. YOU SHOULD ASSUME THAT THE INFORMATION CONTAINED IN THIS REOFFER PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS REOFFER PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS REOFFER PROSPECTUS OR OF ANY
SALE OF OUR COMMON STOCK. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
WE ARE NOT MAKING AN OFFER OF ANY SECURITIES PURSUANT TO THIS PROSPECTUS. THE SELLING STOCKHOLDERS ARE OFFERING TO SELL AND SEEKING
OFFERS TO BUY THESE SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
PROSPECTUS
SUMMARY
The
following summary highlights selected information contained in this Reoffer Prospectus. This summary does not contain all the
information you should consider before investing in the securities. Before making an investment decision, you should read the
entire Reoffer Prospectus carefully, including the section entitled “Risk Factors” before deciding to invest in our
common stock. In this Reoffer Prospectus, unless otherwise noted, “Marathon,” “Company,” “we,”
“us,” and “our” refer to Marathon Patent Group, Inc.
ABOUT
MARATHON PATENT GROUP
We
were incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. On December 7, 2011, we changed
our name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium
minerals business. In June 2012, we discontinued our minerals business and began to invest in real estate properties in Southern
California. In October 2012, we discontinued our real estate business when our former CEO joined the firm and we commenced our
IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. On November 1, 2017,
we entered into a merger agreement with Global Bit Ventures, Inc. (“GBV”), which is focused on mining digital assets.
We purchased cryptocurrency mining machines and established a data center in Canada to mine digital assets. We intend to expand
its activities in the mining of new digital assets, while at the same time harvesting the value of our remaining IP assets.
On
June 28, 2018, our Board has determined that it is in the best interests of the Company and our shareholders to allow the Amended
Merger Agreement with GBV to expire on its current termination date of June 28, 2018 without further negotiation or extension.
The Board approved to issue 3,000,000 shares of our common stock to GBV as a termination fee for us canceling the proposed merger
between the two companies.
All
share and per share values for all periods presented in the accompanying consolidated financial statements have been retroactively
adjusted to reflect the 1:4 Reverse Split which occurred on April 8, 2019.
Mathematically
Controlled Supply
The
method for creating new bitcoins is mathematically controlled in a manner so that the supply of bitcoins grows at a limited rate
pursuant to a pre-set schedule. The number of bitcoins awarded for solving a new block is automatically halved every 210,000 blocks.
Thus, the current fixed reward for solving a new block is 12.5 bitcoins per block and the reward decreased by half to become 6.25
bitcoins around May 10, 2020 (based on estimates of the rate of block solution calculated by BitcoinClock.com). This deliberately
controlled rate of bitcoin creation means that the number of bitcoins in existence will never exceed 21 million and that bitcoins
cannot be devalued through excessive production unless the Bitcoin Network’s source code (and the underlying protocol for
bitcoin issuance) is altered. The Company monitors the Blockchain network and, as of June 5, 2020, based on the information we
collected from our network access 18.2 million bitcoins have been mined.
Digital
Asset Mining
We
intend to power and secure blockchains by verifying blockchain transactions using custom hardware and software. We are currently
using our hardware to mine bitcoin (“BTC”) and expect to mine BTC and ether (“ETH”), and potentially other
cryptocurrencies. Bitcoin and ether rely on different technologies based on the blockchain. Wherein bitcoin is a digital currency
and ether is generally associated with smart contracts and digital tokens, we will be compensated in either BTC or ETH based on
the mining transactions we perform for each, which is how we will earn revenue.
Blockchains
are decentralized digital ledgers that record and enable secure peer-to-peer transactions without third party intermediaries.
Blockchains enable the existence of digital assets by allowing participants to confirm transactions without the need for a central
certifying authority. When a participant requests a transaction, a peer-to-peer network consisting of computers, known as nodes,
validate the transaction and the user’s status using known algorithms. After the transaction is verified, it is combined
with other transactions to create a new block of data for the ledger. The new block is added to the existing blockchain in a way
that is permanent and unalterable, and the transaction is complete.
Digital
assets (also known as cryptocurrency) are a medium of exchange that uses encryption techniques to control the creation of monetary
units and to verify the transfer of funds. Many consumers use digital assets because it offers cheaper and faster peer-to-peer
payment options without the need to provide personal details. Every single transaction and the ownership of every single digital
asset in circulation is recorded in the blockchain. Miners use powerful computers that tally the transactions to run the blockchain.
These miners update each time a transaction is made and ensure the authenticity of information. The miners receive a transaction
fee for their service in the form of a portion of the new digital “coins” that are issued.
On September 30, 2019, the Company consummated the purchase of 6000
S-9 Bitmain 13.5 TH/s Bitcoin Antminers (“Miners”) from SelectGreen Blockchain Ltd. (the “Seller”), a British
Columbia corporation, for which the purchase price was $4,086,250 or 2,335,000 shares of its common stock at a price of $1.75 per
share. As a result of an exchange cap requirement imposed in conjunction with the Company’s Listing of Additional Shares
application filed with Nasdaq to the transaction, the Company issued 1,276,442 shares of its common stock which represented $2,233,773
of the $4,086,250 (constituting 19.9% of the issued and outstanding shares on the date of the Asset Purchase Agreement) and upon
the receipt of shareholder approval, at the Annual Shareholders Meeting to be held on November 15, 2019, the Company can issue
the balance of the 1,058,558 unregistered common stock shares. The shareholders did approve the issuance of the additional shares
at the Annual Shareholders Meeting. The Company issued an additional 474,808 at $0.90 per share on December 27, 2019. On March
30, 2020, the Seller agreed to reduce the total number of shares to be issued to 2,101,500 shares, and the balance of 350,250 shares
was issued at a price of $0.49 per share. There was no mining payable outstanding as of March 31, 2020.
As
of April 6, 2020, the Company received notice from the Nasdaq Capital Market (the “Capital Market”) that the Company
has failed to maintain a minimum closing bid price of $1.00 per share of its Common Stock over the last consecutive 30 business
days based upon the closing bid price for its common stock as required by Rule 5550(a)(2). However, the Rules also provide the
Company a compliance period of 180 calendar days in which to regain compliance during which time it must maintain a minimum closing
bid price of at least $1.00 per share for a minimum period of 10 consecutive business days, which must be completed by October
5, 2020. On April 20, 2020, the Company received a further notice from the Nasdaq Capital Market that the Company’s time
to maintain a minimum closing bid price of at least $1.00 per share for a minimum period of 10 consecutive business days has been
extended from October 5, 2020 to December 17, 2020.
On
May 5, 2020, the Compensation Committee of the Board of Directors held a meeting and approved bonuses and stock option grants
for Directors and Officers for their contributions to the growth of Marathon Patent Group, Inc., for the year ended December 31,
2019. Total awards to be granted amounted to 1,164,000 restricted stock units at a price of $0.43 per unit with a term of one
year, vesting quarterly in equal amounts, and cash award of $105,000 to Merrick Okamoto and $54,000 to David Lieberman. In addition,
the Compensation Committee agreed to cancel 1,537,500 existing stock options for Directors, Officers and outside legal counsel,
and replace them with new restricted stock units at a price of $0.43 per unit with a term of one year, vesting quarterly in equal
amounts.
On
May 11, 2020, the Company announced the purchase of 700 M30S+ (80 TH) miners. On May 12, 2020, the Company announced the purchase
660 Bitmain S19 Pro Miners and on June 11, 2020, the Company announced the purchase of an additional 500 of the latest generation
Bitmain S19 Pro Miners, bringing the Company’s total Hashrate to approximately 240 PH/s when fully deployed.
On
May 19, 2020, the Company amended its note, originally dated August 31, 2017, with Bi-Coastal Consulting Defined Benefit Plan
to reduce the conversion price to $0.60 per share. The current principal balance of the Note was $999,105.60 and accrued the interest
was $215,411.30. The Company agreed to the reduction in the conversion price from $0.80 to $0.60 to incentivize the Note holder
to convert the Note to common stock. As the Note has been fully converted to common stock, the Company has no Long-Term debt.
Competition
Subject
to raising additional capital, our digital asset initiatives will compete with other industry participants that focus on investing
in and securing the Blockchains of bitcoin and other digital assets. Market and financial conditions, and other conditions beyond
the Company’s control, may make it more attractive to invest in other entities, or to invest in bitcoin or digital assets
directly. Companies have raised substantial capital this year seeking to enter the digital assets business. Our lack of capital
is a competitive disadvantage.
Patent
Enforcement Litigation
As
of June 26, 2020, we were not involved in any active patent enforcement litigation.
Employees
As
of June 26, 2020, we had 3 full-time employees. We believe our employee relations to be good.
Corporate
Information
We
were incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. On December 7, 2011, we changed
our name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium
minerals business. In June 2012, we discontinued our minerals business and began to invest in real estate properties in Southern
California. In October 2012, we discontinued our real estate business when our former CEO joined the firm and we commenced our
IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. The address and phone
number of our principal office is 1180 North Town Center Drive, Suite 100, Las Vegas, NV 89144; 702-945-2773. Our corporate website
is www.marathonpg.com. Our website and the information contained in, or accessible through, our website will not be deemed
to be incorporated by reference into this prospectus and does not constitute part of this prospectus.
THE
OFFERING
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Shares of common stock outstanding prior to this offering
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21,780,663
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(1)
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Shares being offered by the Selling Stockholders
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2,745,639
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(2)
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Shares of common stock to be outstanding after the offering
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24,476,302
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(1)(2)
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(1)
As of June 30, 2020.
(2)
Assumes the settlement of all restricted stock unit grants and options awarded to the Selling Stockholders in shares of our common
stock on a one for one basis and the subsequent sale by the Selling Stockholders of all of the shares of our common stock issued
to them by the Company and registered for resale to the public under the Registration Statement accompanying this Reoffer Prospectus.
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Use
of proceeds
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We
will not receive any proceeds from the sale of the shares of common stock offered in this Reoffer Prospectus.
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Risk
Factors
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The
purchase of our common stock involves a high degree of risk. You should carefully review and consider “Risk Factors”
beginning on page 4 of this Reoffer Prospectus.
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NASDAQ
Symbol
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MARA
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RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Before making an investment decision, you should consider carefully the risks,
uncertainties and other factors described under “Risk Factors” in our most recent Annual Report on Form 10-K for the
year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”) on March 24, 2020, as
supplemented and updated by subsequent Quarterly Reports on Form 10-Q, together with the financial or other information contained
or incorporated by reference in such reports, and Current Reports on Form 8-K that we have filed or will file with the SEC, which
are incorporated by reference into this Reoffer Prospectus.
Our
business, affairs, prospects, assets, financial condition, results of operations and cash flows could be materially and adversely
affected by these risks. For more information about our SEC filings, please see the section entitled “Where You Can Find
More Information” on page 11 of this Reoffer Prospectus.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements in this Reoffer Prospectus may be forward-looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor created thereby. All statements other
than statements of historical fact are statements that could be deemed forward-looking statements. These statements relate to
future events or the Company’s future performance and include statements regarding expectations, beliefs, plans, intentions
and strategies of the Company. In some cases, forward-looking statements can be identified by terminology such as “may,”
“will,” “could,” “would,” “should,” “expect,” “plan,”
“anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential”
or other comparable terminology. These forward-looking statements are made based on management’s expectations and beliefs
concerning future events affecting the Company as of the date of the filing of this Reoffer Prospectus and are subject to uncertainties
and factors relating to operations and the business environment, all of which are difficult to predict and many of which are beyond
management’s control. Accordingly, you should not place undue reliance on these forward-looking statements, as actual results,
performance and achievements could differ materially from those expressed in, or implied by, these forward-looking statements
due to a variety of risks, uncertainties and other factors, including, but not limited to, the following:
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our
history of operating losses and our ability to achieve or sustain profitability;
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our
recent shift to an entirely new business and our ability to succeed in this new business;
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intense
competition;
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our
ability to raise additional capital needed to finance our business;
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general
economic conditions in the U.S. and globally including those caused by the COVID-19 pandemic;
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our
ability to maintain the value and reputation of our brand;
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our
ability to attract and retain senior management and other qualified personnel;
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cryptocurrency-related
risks, including regulatory changes or actions and uncertainty regarding acceptance and/or widespread use of virtual currency;
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risks
relating to our virtual currency mining operations, including among others, risks associated with the need for significant
electrical power, cybersecurity risks and risk of increased world-wide competition for a fixed number of bitcoin reward levels;
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our
dependence in large part upon the value of virtual currencies, especially bitcoin, which have historically been subject to
significant volatility in their market prices;
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risks
relating to our planned establishment of a virtual currency exchange, including, among others, regulatory requirements and
challenges and security threats;
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our
ability to protect our intellectual property rights;
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volatility
in the trading price of our common stock;
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our
ability to maintain the Nasdaq listing of our common stock;
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our
investments in other virtual currency and blockchain focused companies may not be realizable; and
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the
risks and, uncertainties discussed in Part II. Item 1A. “Risk Factors” included in this Reoffer Prospectus and
Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, filed
with the SEC on March 24, 2020, as supplemented and updated by subsequent Quarterly Reports on Form 10-Q together with the
financial or other information contained or incorporated by reference in such reports, and Current Reports on Form 8-K that
we have filed or will file with the SEC, which are incorporated by reference into this Reoffer Prospectus.
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Accordingly,
you should read this Reoffer Prospectus completely and with the understanding that our actual future results may be materially
different from what we expect. Additional risks and uncertainties not known to us or that we currently believe not to be material
may adversely impact our business, financial condition, results of operations and cash flows. Should any risks or uncertainties
develop into actual events, these developments could have a material adverse effect on our business, financial condition, results
of operations and cash flows. The forward-looking statements contained in this Reoffer Prospectus speak only as of the date of
filing of this Reoffer Prospectus and, unless otherwise required by applicable securities laws, the Company disclaims any intention
or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
USE
OF PROCEEDS
The
Shares offered by the Selling Stockholders pursuant to this Reoffer Prospectus are being registered for the account of the Selling
Stockholders named in this Reoffer Prospectus. As a result, all proceeds from the sales of the Shares will go to the Selling Stockholders
and we will not receive any proceeds from the resale of the Shares by the Selling Stockholders.
DETERMINATION
OF OFFERING PRICE
The
Selling Stockholders may sell their Shares pursuant to this Reoffer Prospectus from time-to-time at prices and at terms according
to the then prevailing market price for shares of our Shares, or in negotiated transactions.
SELLING
STOCKHOLDERS
The
table below sets forth, as of June 30, 2020, (i) the number of Shares held of record or beneficially owned by the Selling Stockholders
as of such date (as determined below) and (ii) the number of Shares that may be sold or otherwise disposed of under this Reoffer
Prospectus by each Selling Stockholder (including those Shares which may be issued in settlement of those Stock Rights held by
the Selling Stockholders). Beneficial ownership includes Shares plus any securities held by the holder exercisable for or convertible
into Shares within sixty (60) days after June 30, 2020, in accordance with Rule 13d-3(d)(1) under the Exchange Act. On June 30,
2020, the Company amended its 2018 Plan to retroactively cover the 245,639 share increase over the 2,500,000 shares originally
reserved for issuance thereunder (as a result of the 1:4 reverse stock split effected by the Company on April 8, 2019) pursuant
to Section 12(a) which permits nonmaterial increases without stockholder approval). The inclusion of any Shares in this table
does not constitute an admission of beneficial ownership by the Selling Stockholders named below. We do not know when or in what
amounts a Selling Stockholder may sell or otherwise dispose of the Shares covered hereby. The Selling Stockholders identified
below may have sold, transferred or otherwise disposed of some or all of their Shares in transactions exempt from or not subject
to the registration requirements of the Securities Act since the date on which the information in the following table was provided
to us. Information concerning the Selling Stockholders may change from time to time and, we will, as appropriate, supplement this
Reoffer Prospectus in order to reflect grants under the 2018 Plan and/or to update the list of Selling Stockholders and the number
of Shares being offered. The Selling Stockholders may not sell or otherwise dispose of any or all of the Shares offered pursuant
to this Reoffer Prospectus and they may sell or otherwise dispose of shares covered hereby in transactions exempt from the registration
requirements of the Securities Act. Because the Selling Stockholders may sell or otherwise dispose of some, all or none of the
Shares covered hereby, and because there are currently no agreements, arrangements or understandings with respect to the sale
of any of the Shares, we cannot estimate the number of the Shares that will be held by the Selling Stockholders after completion
of the offering contemplated by this Reoffer Prospectus. However, for purposes of the following table, we have assumed that all
of the Shares covered hereby are sold by the Selling Stockholders pursuant to this Reoffer Prospectus. We will not receive any
proceeds from the resale of the Shares by the Selling Stockholders.
All
Selling Stockholders named are current officers or directors or advisors of the Company. All of the Selling Stockholders received
their Shares being offered pursuant to this Reoffer Prospectus in return for services rendered to the Company. Unless otherwise
indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their
Shares, except to the extent authority is shared by their spouses under applicable law. Unless otherwise indicated below, to our
knowledge, no persons named in the table are a broker-dealer or affiliate of a broker-dealer. Unless otherwise indicated, each
Selling Shareholder’s mailing address is: c/o Marathon Patent Group, Inc., 1180 North Town Center Drive, Suite 100, Las
Vegas, NV 89144
|
Name
|
|
Number of Shares
Beneficially Owned Prior to Offering
|
|
|
Percentage of Common Stock Beneficially Owned Before Resale(1)**
|
|
|
Shares Offered in this Offering(2)(3)
|
|
|
Number of Shares Beneficially Owned After this Offering(1)
|
|
Percentage
of Shares
Beneficially
Owned After this Offering**
|
|
|
Merrick Okamoto(4)
|
|
|
501,817
|
|
|
|
1.88
|
%
|
|
|
1,819,767
|
|
|
|
46,875
|
|
*
|
|
|
David Lieberman(5)
|
|
|
107,631
|
|
|
|
*
|
|
|
|
393,023
|
|
|
|
9,375
|
|
*
|
|
|
James Crawford(6)
|
|
|
61,337
|
|
|
|
*
|
|
|
|
245,349
|
|
|
|
-
|
|
*
|
|
|
Fred Thiel(7)
|
|
|
15,625
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
-
|
|
*
|
|
|
Michael Berg(8)
|
|
|
21,875
|
|
|
|
|
|
|
|
87,500
|
|
|
|
-
|
|
*
|
|
|
Michael Rudolph(9)
|
|
|
21,875
|
|
|
|
*
|
|
|
|
87,500
|
|
|
|
-
|
|
*
|
|
|
Jolie Kahn, Esq.(10)
|
|
|
12,500
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
-
|
|
*
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
2,745,639
|
|
|
|
|
|
|
|
*Less
than 1%
**
Based upon 24,802,116 shares of Shares issued and outstanding as of June 30, 2020.
(1)
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with
respect to securities. Shares of Common Stock underlying options currently exercisable, or exercisable, or restricted stock units
that vest, within 60 days after June 30, 2020, (as used in this section, the “Determination Date”), are deemed outstanding
for purposes of computing the beneficial ownership of the person holding such options and/or restricted stock units but are not
deemed outstanding for computing the beneficial ownership of any other person. Except where we had knowledge of such ownership,
the number presented in this column may not include shares held in street name or through other entities over which the selling
stockholder has voting and dispositive power.
(2)
Assumes the exercise and sale of all Shares issues in the settlement of all RSUs held by the Selling Stockholders although it
is the current intent of the Selling Stockholders to only sell shares in an amount necessary to cover tax liability for shares
issued as RSUs vest.
(3)
Includes shares for shares being issued upon vesting of all RSUs, which vest in equal quarterly amounts, on June 30, 2020, September
30, 2020, December 31, 2020 and March 31, 2021.
(4)
Includes 25% vested of the 1,819,767 RSUs granted, which vest as of June 30, 2020 and 46,875 shares owned.
(5)
Includes 25% vested of the 393,023 RSUs granted, which vest as of June 30, 2020 and 9,375 shares owned.
(6)
Includes 25% vested of the 245,349 RSUs granted, which vest as of June 30, 2020.
(7)
Includes 25% vested of the 62,500 RSUs granted, which vest as of June 30, 2020.
(8)
Includes 25% vested of the 87,500 RSUs granted, which vest as of June 30, 2020.
(9)
Includes 25% vested of the 87,500 RSUs granted, which vest as of June 30, 2020.
(10)
Includes 25% vested of the 50,000 RSUs granted, which vest as of June 30, 2020.
PLAN
OF DISTRIBUTION
Timing
of Sales
The
Selling Stockholders may offer and sell the Shares covered by this Reoffer Prospectus at various times while the Registration
Statement to which this Reoffer Prospectus relates remain effective. The Selling Stockholders will act independently of the Company
with respect to the timing, manner and size of each sale.
No
Known Agreements to Resell the Shares
To
our knowledge, no Selling Stockholder has any agreement or understanding, directly or indirectly, with any person to resell the
Shares covered by this Reoffer Prospectus, except that each Selling Stockholder may sell sufficient shares to cover the tax liability
associated with the vesting of any Shares pursuant to RSUs granted to it.
Offering
Price
The
sales price offered by the Selling Stockholders to the public may be:
|
|
1.
|
the market price prevailing at the time of sale;
|
|
|
2.
|
a price related to such prevailing market price;
|
|
|
3.
|
a price negotiated by such Selling Stockholder in a
negotiated sale; or
|
|
|
4.
|
such other price as the Selling Stockholders determine
from time to time.
|
Manner
of Sale
The
Shares may be sold by whatever permissible means selected by the Selling Stockholders, including by one or more of the following
methods:
|
|
1.
|
a
block trade in which the broker-dealer so engaged will attempt to sell the Shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
|
|
|
2.
|
purchases
by a broker-dealer as principal and resale by that broker-dealer for its account pursuant to this Reoffer Prospectus;
|
|
|
3.
|
ordinary
brokerage transactions in which the broker solicits purchasers;
|
|
|
4.
|
directly
to purchasers at prevailing market prices or in negotiated sales;
|
|
|
5.
|
through
options, swaps or derivatives;
|
|
|
6.
|
in
transactions to cover short sales;
|
|
|
7.
|
privately
negotiated transactions; or
|
|
|
8.
|
on
a combination of any of the above methods.
|
The
Selling Stockholders may sell their Shares directly to purchasers or they may use brokers, dealers, underwriters or agents to
sell their Shares. Brokers or dealers engaged by the Selling Stockholders may arrange for other brokers or dealers to participate
in such sales. Brokers or dealers may receive commissions, discounts or concessions from the Selling Stockholders, or, if any
such broker-dealer acts as agent for the purchaser of the Shares, from the purchaser in amounts to be negotiated immediately prior
to the sale. The compensation received by brokers or dealers may, but is not expected to, exceed that which is customary for the
types of transactions involved. The Company will bear none of the costs associated with such broker-dealer relationships on behalf
of the Selling Stockholders, except with regard to those costs we may incur from time to time to update this Reoffer Prospectus,
if required.
Broker-dealers
may agree with a Selling Stockholder to sell a specified number of their Shares at a stipulated price per Share, and, to the extent
the broker-dealer is unable to do so acting as agent for a Selling Stockholder, to purchase as principal any unsold Shares at
the price required to fulfill the broker-dealer commitment to the Selling Stockholder.
Broker-dealers
who acquire stock as principal may thereafter resell the Shares they acquire from time to time in transactions, which may involve
block transactions and sales to and through other broker-dealers, including transactions of the nature described above, on The
NASDAQ Capital Market or otherwise at prices and on terms then prevailing at the time of sale, at prices related to the then-current
market price or in negotiated transactions. In connection with resales of the Shares, broker-dealers may pay to or receive from
the purchasers of Shares commissions as described above. If our Selling Stockholders enter into such arrangements with brokers-dealers
as described above, we will file a post-effective amendment to this registration statement disclosing such arrangements, including
the names of any broker-dealers acting as underwriters, and will update this Reoffer Prospectus, as required.
The
Selling Stockholders and any broker-dealers or agents that participate with the Selling Stockholders in the sale of the Shares
may be deemed to be “underwriters” within the meaning of the Securities Act. In that event, any commissions received
by broker-dealers or agents and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
We
will make copies of this Reoffer Prospectus available to the Selling Stockholders for the purpose of satisfying the Reoffer Prospectus
delivery requirements of the Securities Act and we have notified the Selling Stockholders of the need to deliver a copy of this
Reoffer Prospectus in connection with any sale of the Shares pursuant to this Registration Statement.
Sales
Pursuant to Rule 144
Any
Shares covered by this Reoffer Prospectus which qualifies for sale pursuant to Rule 144 under the Securities Act may be sold in
compliance with Rule 144 rather than pursuant to this Reoffer Prospectus.
Regulation
M
Each
Selling Stockholder will be subject to the applicable provisions of the Exchange Act and the associated rules and regulations
under the Exchange Act, including Regulation M. The anti-market manipulation rules of Regulation M may limit the timing of purchases
and sales of the Shares by the Selling Stockholders. Regulation M may also restrict the ability of any person engaged in the distribution
of the Shares pursuant to this Reoffer Prospectus to engage in passive market-making activities with respect to such Shares. Passive
market-making involves transactions in which a market maker acts as both the underwriter and as a purchaser of the Shares in the
secondary market. All of the foregoing may limit the marketability of the Shares offered pursuant to this Reoffer Prospectus by
the Selling Stockholders and may also limit the ability of any person to engage in market-making activities with respect to such
Shares.
Accordingly,
during such times as a Selling Stockholder may be deemed to be engaged in a distribution of the Shares, and therefore be considered
to be an underwriter, the Selling Stockholder must comply with applicable law and, among other things:
|
|
1.
|
may
not engage in any stabilization activities in connection with our Securities;
|
|
|
2.
|
may not cover short sales by purchasing Shares while the distribution is taking place; and
|
|
|
3.
|
may
not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than
as permitted under the Exchange Act.
|
Once
sold under the Registration Statement of which this Reoffer Prospectus forms a part, the Shares will be freely tradable by any
person other than our affiliates (including affiliates of our affiliates).
State
Securities Laws
Under
the securities laws of some states, the Shares may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the Shares may not be sold unless the Shares have been registered or qualified for sale in the state
or an exemption from registration or qualification is available and is complied with. If a Selling Stockholder intends to offer
our Shares in such a jurisdiction, the Selling Stockholder must do so in compliance with applicable law.
Expenses
of Registration
We
are bearing all costs relating to the registration of the Shares. These expenses are estimated to be $15,000 including, but not
limited to, legal, accounting, printing and mailing fees. The Selling Stockholders, however, will pay any commissions or other
fees payable to brokers or dealers in connection with any sale of the Shares.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby has been passed upon for us by Jolie Kahn, Esq. as stated in its opinion,
which is incorporated by reference herein. Additional legal matters may be passed upon for us or any underwriters, dealers or
agents, by counsel that we will name in the applicable Reoffer Prospectus supplement.
EXPERTS
The
consolidated financial statements of Marathon Patent Group, Inc. and its consolidated subsidiaries as of December 31,
2019 and 2018 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the period
in the two years ended December 31, 2019 have been audited by the Company’s independent registered public accounting
firm, RBSM, LLP, as stated in their report, which is incorporated herein by reference. Such financial statements have been incorporated
herein by reference in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
INTERESTS
OF EXPERTS
No
expert or counsel named in this Reoffer Prospectus as having prepared or certified any part of this Reoffer Prospectus or having
given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration
or offering of the Shares was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial
interest, directly or indirectly, in the registrant or any of its parents or subsidiaries except that our counsel, Jolie Kahn,
Esq., owns 50,000 restricted stock units, which vest on a quarterly basis, commencing June 30, 2020, with 12,500 restricted units
vesting into 12,500 shares on the date of this prospectus.
MATERIAL
CHANGES
There
have been no material changes in our affairs since the end of our last fiscal year on December 31, 2019, other than those changes
that have been described in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC. See the
section below under the heading, “Where You Can Find More Information.”
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
Securities and Exchange Commission permits us to “incorporate by reference” the information contained in documents
we file with the Securities and Exchange Commission, which means that we can disclose important information to you by referring
you to those documents rather than by including them in this Reoffer Prospectus. Information that is incorporated by reference
herein is considered to be part of this Reoffer Prospectus and you should read it with the same care that you read this Reoffer
Prospectus. Information that we file later with the Securities and Exchange Commission will automatically update and supersede
the information that is either contained, or incorporated by reference, in this Reoffer Prospectus, and will be considered to
be a part of this Reoffer Prospectus from the date those documents are filed. We have filed with the Securities and Exchange Commission,
and incorporate by reference in this Reoffer Prospectus the following filed with the SEC:
|
|
●
|
Annual
Report on Form 10-K for the year ended December 31, 2019 filed on March 24, 2020 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, filed on May 14, 2020;
|
|
|
|
|
|
|
●
|
Our
Definitive Proxy Statement on Schedule 14A and accompanying additional proxy materials filed with the SEC on October 15, 2019;
|
|
|
|
|
|
|
●
|
Current
Reports on Form 8-K (excluding any reports or portions thereof that are deemed to be furnished and not filed) filed on April
9, 2020, April 22, 2020 and May 20, 2020; and
|
|
|
|
|
|
|
●
|
Our
registration statement on Form 8-A filed on April 12, 2012 and July 22, 2014.
|
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms
of Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of effectiveness Registration Statement
and after the date of this Reoffer Prospectus but prior to the termination of the offering of the securities covered by this Reoffer
Prospectus. We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and not
file in accordance with Securities and Exchange Commission rules.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at 702-945-2773 or by writing to
us at the following address: Marathon Patent Group, Inc., Attn: Merrick Okamoto, CEO, 1180 North Town Center Drive, Suite 100,
Las Vegas, NV 89144.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
As
permitted by the Nevada Business Corporation Law, we have adopted provisions in our restated certificate of incorporation and
restated by-laws that limit or eliminate the personal liability of our directors and certain executive officers and employees
of the Company. We also maintain general liability insurance that covers certain liabilities of our directors and officers arising
out of claims based on acts or omissions in their capacities as directors or officers, including liabilities under the Securities
Act. These limitations of liability do not alter director liability under the federal securities laws and do not affect the availability
of equitable remedies such as an injunction or rescission.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and Marathon controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and special reports, along with other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file at the SEC’s
Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may also obtain this information from the SEC at the address
listed above or from the SEC’s internet site, SEC.gov. Please call the SEC at 1-800-SEC-0330 for further information on
the Public Reference Room. Our SEC filings are also available on our website, https://ir.Marathonblockchain.com/under the heading
“Investors.” The information on this website is expressly not incorporated by reference into, and does not constitute
a part of, this Reoffer Prospectus.
REOFFER
PROSPECTUS
MARATHON PATENT GROUP, INC.
1180
North Town Center Drive, Suite 100
Las
Vegas, NV 89144
702-945-2773
2,745,639
SHARES OF COMMON STOCK
June
30, 2020
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
ITEM
3. INCORPORATION OF DOCUMENTS BY REFERENCE
The
Securities and Exchange Commission permits us to “incorporate by reference” the information contained in documents
we file with the Securities and Exchange Commission, which means that we can disclose important information to you by referring
you to those documents rather than by including them in this Registration Statement and the accompanying prospectus. Information
that is incorporated by reference herein is considered to be part of this Registration Statement and you should read it with the
same care that you read this Reoffer Prospectus. Information that we file later with the Securities and Exchange Commission will
automatically update and supersede the information that is either contained, or incorporated by reference, in this Registration
Statement, and will be considered to be a part of this Registration Statement from the date those documents are filed. We have
filed with the Securities and Exchange Commission, and incorporate by reference herein the following documents filed with the
SEC:
|
|
●
|
Annual
Report on Form 10-K for the year ended December 31, 2019 filed on March 24, 2020 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, filed on May 14, 2020;
|
|
|
|
|
|
|
●
|
Our
Definitive Proxy Statement on Schedule 14A and accompanying additional proxy materials filed with the SEC on October 15, 2019;
|
|
|
|
|
|
|
●
|
Current
Reports on Form 8-K (excluding any reports or portions thereof that are deemed to be furnished and not filed) filed on April
9, 2020, April 22, 2020 and May 20, 2020; and
|
|
|
|
|
|
|
●
|
Our
registration statement on Form 8-A filed on April 12, 2012 and July 22, 2014.
|
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms
of Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of effectiveness of this Registration Statement
and after the date of the prospectus accompanying it but prior to the termination of the offering of the securities covered by
such prospectuses. We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish
and not file in accordance with Securities and Exchange Commission rules.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at 702-945-2773 or by writing to
us at the following address: Marathon Patent Group, Inc., Attn: Merrick Okamoto, CEO, 1180 North Town Center Drive, Suite 100,
Las Vegas, NV 89144.
ITEM
4. DESCRIPTION OF SECURITIES
Not
applicable.
ITEM
5. INTERESTS OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this Registration Statement as having prepared or certified any part of this Registration Statement
or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with
the registration or offering of the Shares was employed on a contingency basis or had, or is to receive, in connection with the
offering, a substantial interest, directly or indirectly, in the registrant or any of its parents or subsidiaries, except that
our counsel, Jolie Kahn, Esq., owns 50,000 restricted stock units, which vest on a quarterly basis, commencing June 30, 2020,
with 12,500 restricted units vesting into 12,500 shares on the date of this prospectus.
ITEM
6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada
Revised Statutes Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director
or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed
to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe
his/her conduct was unlawful.
Under
Nevada Revised Statutes Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing
that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director
did not meet the standards.
Our
Articles of Incorporation provide that our officers and directors shall be indemnified and held harmless to the fullest extent
legally permissible under the laws of the State of Nevada against all expenses, liability and loss (including attorneys’
fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by them in connection with
any civil, criminal, administrative or investigative action, suit or proceeding related to their service as an officer or director.
Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. We must pay
the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as they are incurred
and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled
to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors or officers
may have or hereafter acquire.
Our
Articles of Incorporation provide that we may adopt bylaws to provide at all times the fullest indemnification permitted by the
laws of the State of Nevada, and may purchase and maintain insurance on behalf of any of officers and directors. The indemnification
provided in our Articles of Incorporation shall continue as to a person who has ceased to be a director, officer, employee or
agent, and shall inure to the benefit of the heirs, executors and administrators of such person.
Our
Bylaws provide that a director or officer shall have no personal liability to us or our stockholders for damages for breach of
fiduciary duty as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions
which involve intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of Nevada
Revised Statutes Section 78.300.
ITEM
7. EXEMPTION FROM REGISTRATION CLAIMED
Not
applicable.
ITEM
8. EXHIBITS
|
Exhibit
Number
|
|
Description
of Document
|
|
3.1
|
|
Amended and Restated Articles of Incorporation of the Company dated November 25, 2011. (1)
|
|
3.2
|
|
Certificate of Amendment to Articles of Incorporation dated February 15, 2013. (2)
|
|
3.3
|
|
Certificate of Amendment to Amended and Restated Articles of Incorporation dated July 18, 2013 (3)
|
|
3.4
|
|
Certificate of Amendment to Articles of Incorporation dated October 25, 2017. (4)
|
|
3.5
|
|
Amended and Restated Bylaws of the Company dated November 25, 2011. (5)
|
|
3.6
|
|
Certificate of Amendment to Articles of Incorporation dated April 8, 2019 (10)
|
|
4.1
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock. (6)
|
|
4.2
|
|
Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of 0% Series E Convertible Preferred Stock. (7)
|
|
4.3
|
|
Certificate of Correction to Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of 0% Series E Convertible Preferred Stock. (8)
|
|
4.4
|
|
Form of proposed Certificate of Designation of Preferences, Rights and Limitations of 0% Series E-1 Convertible Preferred Stock. (9)
|
|
4.5
|
|
2018 Equity Incentive Plan, as amended*
|
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5.1
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Opinion of Jolie Kahn, Esq.*
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23.1
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Consent of RBSM LLP*
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23.2
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Consent of Jolie Kahn, Esq. (contained in Exhibit 5.1)
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(1)
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Previously
filed as Exhibit 3.1 to Current Report on Form 8-K filed December 9, 2011 and incorporated herein by reference.
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(2)
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Previously
filed as Exhibit 3.1 to Current Report on Form 8-K filed February 20, 2013 and incorporated herein by reference.
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(3)
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Previously
filed as Exhibit 3.1 to Current Report on Form 8-K filed July 19, 2013 and incorporated herein by reference.
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(4)
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Previously
filed as Exhibit 3.4 to Registration Statement on Form S-4 filed January 24, 2018 and incorporated herein by reference.
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(5)
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Previously
filed as Exhibit 3.2 to Current Report on Form 8-K filed December 9, 2011 and incorporated herein by reference
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(6)
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Previously
filed as Exhibit 3.2 to Current Report on Form 8-K filed May 7, 2014 and incorporated herein by reference.
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(7)
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Previously
filed as Exhibit 4.1 to Current Report on Form 8-K filed December 1, 2017 and incorporated herein by reference.
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(8)
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Previously
filed as Exhibit 4.1 to Current Report on Form 8-K filed December 22, 2017 and incorporated herein by reference.
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(9)
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Previously
filed as Exhibit 4.4 to Registration Statement on Form S-4 filed January 24, 2018 and incorporated herein by reference.
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(10)
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Previously
filed as Exhibit 3.1 to Current Report on Form 8-K filed on April 8, 2019 and incorporated herein by reference.
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*Filed
herewith.
ITEM
9. UNDERTAKINGS
(a)
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided,
however, Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form
S-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed
with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) that are incorporated by reference in the registration statement, or is contained
in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
or
(5)
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the
registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
(d)
The registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, and State of Nevada, on the 30th day of June,
2020.
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MARATHON
PATENT GROUP, INC.
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By:
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/s/
Merrick Okamoto
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Name:
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Merrick
Okamoto
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Title:
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Chief
Executive Officer and President and Director
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By:
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/s/
David Lieberman
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Name:
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David
Lieberman
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Title:
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Chief
Financial Officer and Director
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Pursuant
to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities
and on the dates indicated.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/
Merrick Okamoto
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Chief
Executive Officer and Executive Chairman and Director
(Principal Executive Officer)
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June
30, 2020
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Merrick
Okamoto
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/s/
David Lieberman
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Chief
Financial Officer and Director (Principal Financial and Accounting Officer)
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June
30, 2020
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David
Lieberman
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/s/
Fred Thiel
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Director
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June
30, 2020
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Fred
Thiel
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/s/
Michael Rudolph
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Director
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June
30, 2020
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Michael
Rudolph
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/s/
Michael Berg
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Director
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June
30, 2020
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Michael
Berg
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EXHIBIT
4.5
MARATHON
PATENT GROUP, INC.
AMENDED
2018 EQUITY INCENTIVE PLAN
1.
Purpose of the Plan.
This
2018 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employ of and as directors,
officers, consultants, advisors and employees to Marathon Patent Group, Inc., a Nevada corporation (the “Company”),
and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as
amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants,
advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active
interest of such persons in the development and financial success of the Company and its Subsidiaries.
It
is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning
of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan
shall be nonqualified stock options (the “Nonqualified Options”). Incentive Options and Nonqualified Options
are hereinafter referred to collectively as “Options.”
The
Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs
(c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation
of Section 16(b) of the Exchange Act. Further, the Plan is intended to satisfy the performance-based compensation exception to
the limitation on the Company’s tax deductions imposed by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended. In all cases, the terms, provisions, conditions and limitations of the Plan shall
be construed and interpreted consistent with the Company’s intent as stated in this Section 1.
2.
Administration of the Plan.
The
Board of Directors of the Company (the “Board”) shall appoint and maintain as administrator of the Plan a Committee
(the “Committee”) consisting of two or more directors who are (i) “Independent Directors” (as such
term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee Directors” (as such term is defined
in Rule 16b-3) and (iii) “Outside Directors” (as such term is defined in Section 162(m) of the Code), which shall
serve at the pleasure of the Board. The Committee, subject to Sections 3, 5 and 6 hereof, shall have full power and authority
to designate recipients of Options, restricted stock (“Restricted Stock”), preferred stock which may or may
not be convertible (“Preferred Stock”), restricted share units (“RSUs”), and warrants which
may qualify as Incentive Warrants or Non-Qualified Warrants (as such terms are defined herein, collectively, “Warrants”),
and to determine the terms and conditions of the respective agreements (which need not be identical) and to interpret the provisions
and supervise the administration of the Plan. The Committee shall have the authority, without limitation, to designate which Options
granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify
as an Incentive Option, it shall constitute a separate Nonqualified Option.
In
lieu of grants of Options and Restricted Stock, the Committee has the full power to and authority under the Plan to designate
Participants to receive shares of the Company’s Preferred Stock. Further, to the extent that the Committee shall determine
that the issuance of Options, Restricted Stock, RSUs or Warrants to a Participant (as defined below) could cause the beneficial
ownership by such Participant or its affiliates to exceed more than 9.99% of the total outstanding shares of Common Stock of the
Company upon the exercise of the Option or Warrant or the vesting of the Restricted Stock or RSU, as applicable, the Committee
shall also have the full power and authority under the Plan to designate Participants to receive shares of the Company’s
preferred stock in either a series of preferred that has already been authorized and designated by the Board or in a new series
of preferred that shall be authorized and designated by the Board in accordance with the Company’s Amended and Restated
Articles of Incorporation. The Committee shall determine the terms and conditions of the issuance of any Preferred Stock issued
pursuant to the Plan (which terms and conditions may include standard equity blockers, conditions to issuance and the conversion
price of the Preferred Stock) and any related agreements (which need not be identical) with respect to the issuance of the Preferred
Stock and to interpret the provisions and supervise the administration of the Plan with respect to the issuance of any Preferred
Stock.
Subject
to the provisions of the Plan, the Committee shall interpret the Plan and all Options, Restricted Stock, RSUs, Preferred Stock
and Warrants (collectively, the “Securities”) granted under the Plan, shall make such rules as it deems necessary
for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of
the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Securities
granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any
Securities. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any
decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made
by a majority of the Committee at a meeting duly held for such purpose. Subject to the provisions of the Plan, any action taken
or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties.
In
the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition
under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the Board
otherwise determines to administer the Plan, then the Plan shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the Board, and any such grant, award or other acquisition
may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however,
that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated
officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by
the Committee.
3.
Designation of Optionees and Grantees.
The
persons eligible for participation in the Plan as recipients of Options (the “Optionees”), Restricted Stock,
Preferred Stock, RSUs or Warrants (the “Grantees” and together with Optionees, the “Participants”)
shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that
Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining
the number of shares to be covered by each Option or Warrant or award of Restricted Stock, Preferred Stock or RSU granted to Participants,
the Committee may consider any factors it deems relevant, including, without limitation, the office or position held by the Participant
or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution
to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential.
A Participant who has been granted an Option, Restricted Stock, Preferred Stock, RSU or Warrant, hereunder, may be granted additional
Options, Restricted Stock, Preferred Stock, RSUs or Warrants, if the Committee shall so determine.
4.
Stock Reserved for the Plan.
Subject
to adjustment as provided in Section 8 hereof, a total of 2,745,639 shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), shall be subject to the Plan. The shares of Common Stock subject to
the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company,
and such number of shares of Common Stock shall be and is hereby reserved for such purpose. Any of such shares of Common Stock
that may remain unissued and that are not subject to outstanding Options, Preferred Stock or Warrants at the termination of the
Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan, the Company shall at all times
reserve a sufficient number of shares of Common Stock to meet the requirements of the Plan. Should any Securities expire or be
canceled prior to its exercise, satisfaction of conditions or vesting in full, as applicable, or should the number of shares of
Common Stock to be delivered upon the exercise or vesting in full of an Option or Warrant or award of Restricted Stock or RSU
or conversion of Preferred Stock be reduced for any reason, the shares of Common Stock theretofore subject to such Option, Warrant,
Restricted Stock, RSU or Preferred Stock, as applicable, may be subject to future Options, Warrants, Restricted Stock, RSUs or
Preferred Stock under the Plan, except where such reissuance is inconsistent with the provisions of Section 162(m) of the Code
where qualification as performance-based compensation under Section 162(m) of the Code is intended.
5A.
Terms and Conditions of Options.
Options
granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a)
Option Price. The purchase price of each share of Common Stock purchasable under an Incentive Option shall be determined
by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share
of Common Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the
time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Common Stock shall be
at least 110% of the Fair Market Value per share of Common Stock on the date of grant. The purchase price of each share of Common
Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Common Stock
on the date the Option is granted. The exercise price for each Option shall be subject to adjustment as provided in Section 8
below. “Fair Market Value” means the closing price on the final trading day immediately prior to the grant
date of the Common Stock on the NASDAQ Capital Market LLC or other principal securities exchange or OTC Bulletin Board on which
shares of Common Stock are listed (if the shares of Common Stock are so listed), or, if not so listed, the mean between the closing
bid and asked prices of publicly traded shares of Common Stock in the over the counter market, or, if such bid and asked prices
shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by
the Committee in a manner consistent with the provisions of the Code. Anything in this Section 5A(a) to the contrary notwithstanding,
in no event shall the purchase price of a share of Common Stock be less than the minimum price permitted under the rules and policies
of any national securities exchange on which the shares of Common Stock are listed.
(b)
Option Term. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten
years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such
Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting
power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five
years after the date such Incentive Option is granted.
(c)
Exercisability. Subject to Section 5A(j) hereof, Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at the time of grant; provided, however, that in the
absence of any Option vesting periods designated by the Committee at the time of grant, Options shall vest and become exercisable
as to one-third of the total number of shares subject to the Option on each of the first, second and third anniversaries of the
date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by
Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity
of the exemption provided under Rule 16b-3(d)(3).
Upon
the occurrence of a “Change in Control” (as hereinafter defined), the Committee may accelerate the vesting and exercisability
of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion. In its sole discretion, the
Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within
a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each
share of Common Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately
prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one
or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee
shall determine in its sole discretion.
For
purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change
in Control shall be deemed to have occurred if:
(i)
a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately
prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii)
the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the
stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or
its Subsidiaries, and their affiliates;
(iii)
the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless
as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of
the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates;
or
(iv)
a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving
or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior
to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and
their affiliates.
Notwithstanding
the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then,
with respect to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement.
For
purposes of this Section 5A(c), ownership of voting securities shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries;
(B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries;
(C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.
(d)
Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the
option period, by giving written notice to the Company specifying the number of shares of Common Stock to be purchased, accompanied
by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Committee.
As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may be made at the election
of the Optionee (i) in the form of Common Stock owned by the Optionee (based on the Fair Market Value of the Common Stock which
is not the subject of any pledge or security interest, (ii) in the form of shares of Common Stock or Preferred Stock withheld
by the Company from the shares of Common Stock otherwise to be received with such withheld shares of Common Stock having a Fair
Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined
by applying the principles set forth in Section 5A(a), provided that the combined value of all cash and cash equivalents and the
Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to
(ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Common Stock received
upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other rights of a stockholder with respect
to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise
and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to
the withholding of taxes.
(e)
Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime
or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Committee,
in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a
member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations
order. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process,
any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(f)
Termination by Death. Unless otherwise determined by the Committee, if any Optionee’s employment with or service
to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable
(or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or
by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or,
if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term
of such Option as provided under the Plan, whichever period is shorter.
(g)
Termination by Reason of Disability. Unless otherwise determined by the Committee, if any Optionee’s employment with
or service to the Company or any Subsidiary terminates by reason of Disability (as defined below), then any Option held by such
Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such
accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the
date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section
14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such
death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such
Option, whichever period is shorter. “Disability” shall mean an Optionee’s total and permanent disability; provided,
that if Disability is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to
such Optionee, Disability shall have the meaning ascribed to it in such employment agreement
(h)
Termination by Reason of Retirement. Unless otherwise determined by the Committee, if any Optionee’s employment with
or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below),
any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or
on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days
after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however,
that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such
death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such
Option, whichever period is shorter.
For
purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company
or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if
no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the
Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or
if no such pension plan, age 55.
(i)
Other Terminations. Unless otherwise determined by the Committee upon grant, if any Optionee’s employment with or
service to the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or
Early Retirement or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option
that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days
after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the
balance of such Option’s term, which ever period is shorter. The transfer of an Optionee from the employ of or service to
the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed
to constitute a termination of employment or service for purposes of the Plan.
(i)
In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or
such Subsidiary for “cause” any unexercised portion of any Option shall immediately terminate in its entirety. For
purposes hereof, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, “Cause”
shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented
by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to
the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of
willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided,
however, that it is specifically understood that “Cause” shall not include any act of commission or omission
in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the
case may be, or upon the advice of counsel to the Company. Notwithstanding the foregoing, if Cause is defined in an employment
agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Cause shall have the meaning ascribed
to it in such employment agreement.
(ii)
In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause”
or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised
by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee.
Such Option may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee
(or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise
expires by its terms; whichever period is shorter, at which time the Option shall terminate; provided, however,
if the Optionee dies before the Options terminate and are no longer exercisable, the terms and provisions of Section 5A(f) shall
control. For purposes of this Section 5A(i), and unless otherwise defined in an employment agreement between the Company and the
relevant Optionee, Good Reason shall exist upon the occurrence of the following:
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(A)
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the
assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to
the assignment;
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(B)
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a
Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation
with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control,
including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and
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(C)
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the
failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior
to such failure.
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Notwithstanding
the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with
respect to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement.
(j)
Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is
granted, of Common Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year
under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000.
5B.
Terms and Conditions of Warrants.
Warrants
may be issued under the Plan in the form of (a) warrants which qualify as Incentive Options (“Incentive Warrants”)
or (b) warrants that do not qualify as incentive stock options (“Non-Qualified Warrants”). Warrants issued
under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent
with the terms of the Plan, as the Committee shall deem desirable:
(a)
Warrant Grants. The Committee may grant Warrants to purchase shares of Common Stock from the Company, to such key persons,
and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Committee shall
determine, subject to the provisions of the Plan. The term “Incentive Warrant” means a Warrant that is intended to
qualify for special federal income tax treatment pursuant to Sections 421 and 422 of the Code as now constituted or subsequently
amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement. Any Warrant
that is not specifically designated as an Incentive Warrant shall under no circumstances be considered an Incentive Warrant. Any
Warrant that is not an Incentive Warrant is referred to herein as a “Non-Qualified Warrant.” The Committee may grant
Incentive Warrants only to employees, and any grants of Warrants to any other key persons shall only be Non-Qualified Warrants.
(b)
Warrant Exercise Price. Each Award Agreement with respect to a Warrant shall set forth the amount (the “Warrant
Exercise Price”) payable by the Grantee to the Company upon exercise of the Warrant evidenced thereby. The Warrant Exercise
Price per share shall be determined by the Committee; provided, however, that with respect to an Grantee who, at
the time an Incentive Warrant is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Common Stock shall be
at least 110% of the Fair Market Value per share of Common Stock on the date of issuance. The purchase price of each share of
Common Stock purchasable under a Non-Qualified Warrant shall not be less than 100% of the Fair Market Value of such share of Common
Stock on the date such Warrant is issued. The exercise price for each Warrant shall be subject to adjustment as provided in Section
8 below.
(c)
Term. Subject to Section 5B(i) hereof, the term of each Warrant shall be fixed by the Committee, but no Warrant shall be
exercisable more than ten (10) years after the date such Warrant is issued.
(d)
Exercisability. Subject to Section 5B(i) hereof, Warrants shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at the time of issuance; provided, however, that in
the absence of any Warrant vesting periods designated by the Committee at the time of issuance, Warrants shall vest and become
exercisable as to one-third of the total number of shares subject to the Warrant on each of the first, second and third anniversaries
of the date of issuance; and, provided further, that no Warrants shall be exercisable until such time as any vesting limitation
required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued
validity of the exemption provided under Rule 16b-3(d)(3).
Upon
the occurrence of a “Change in Control” (as defined in Section 5A(c) hereof), the Committee may accelerate the vesting
and exercisability of outstanding Warrants, in whole or in part, as determined by the Committee in its sole discretion. In its
sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Warrant shall
terminate within a specified number of days after notice to the Grantee thereunder, and each such Grantee shall receive, with
respect to each share of Common Stock subject to such Warrant, an amount equal to the excess of the Fair Market Value of such
shares immediately prior to such Change in Control over the exercise price per share of such Warrant; such amount shall be payable
in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof,
as the Committee shall determine in its sole discretion.
For
purposes of this Section 5B(d), ownership of voting securities shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in Section 5A(c) hereof.
(e)
Method of Exercise. Warrants to the extent then exercisable may be exercised in whole or in part from time to time as to
all or part of the shares as to which such award is then exercisable, by giving written notice to the Company specifying the number
of shares of Common Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such
other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, at or after issuance,
payment in full or in part may be made at the election of the Grantee (i) in the form of Common Stock owned by the Grantee (based
on the Fair Market Value of the Common Stock which is not the subject of any pledge or security interest), (ii) in the form of
shares of Common Stock or Preferred Stock withheld by the Company from the shares of Common Stock otherwise to be received with
such withheld shares of Common Stock having a Fair Market Value equal to the Warrant Exercise Price of the Warrant, or (iii) by
a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5B(b), provided
that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is
at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying
disposition of all or a portion of the Common Stock received upon exercise of an Incentive Warrant. A Grantee shall have the right
to dividends and other rights of a stockholder with respect to shares of Common Stock purchased upon exercise of a Warrant at
such time as the Grantee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied
such conditions that may be imposed by the Company with respect to the withholding of taxes.
(f)
Non-transferability of Warrants. Warrants are not transferable and may be exercised solely by the Grantee during his lifetime
or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Committee,
in its sole discretion, may permit a transfer of a Non-Qualified Warrant to (i) a trust for the benefit of the Grantee, (ii) a
member of the Grantee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order.
Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any
Warrant contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(g)
Termination. Unless otherwise determined by the Committee at or after issuance, Warrants
issued to the Grantee that have not vested shall be forfeited upon termination of the Grantee in accordance with Section
5A(f), (g), (h) and (i), as applicable. The Committee may provide (on or after issuance) that restrictions or forfeiture conditions
relating to the Warrants will be waived in whole or in part in the event of termination resulting from specified causes, and the
Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to the Warrants.
(h)
Special Rules for Incentive Warrants. No Warrant that remains exercisable for more than three months following a Grantee’s
termination of employment for any reason other than death (including death within three months after termination of employment
or within one year after a termination of employment due to disability) or disability, or for more than one year following a Grantee’s
termination of employment as the result of his becoming disabled, may be treated as an Incentive Warrant.
(i)
Limitations of Incentive Warrants.
(i)
Exercisability Limitation. The aggregate Fair Market Value, determined as of the date the Incentive Warrant is issued,
of Common Stock for which Incentive Warrants are exercisable for the first time by any Grantee during any calendar year under
the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000.
(ii)
10% Owners. Notwithstanding the provisions of this Section 5B(d), an Incentive Warrant may not be issued under the Plan
to an individual who, at the time the Warrant is issued, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or its Subsidiary (as such ownership may be determined for purposes of Section 422(b) (6)
of the Code), unless (i) at the time such Incentive Warrant is issued the Warrant Exercise Price is at least 110% of the Fair
Market Value of the shares subject thereto and (ii) the Incentive Warrant by its terms is not exercisable after the expiration
of five (5) years from the date it is issuance.
6A.
Terms and Conditions of Restricted Stock.
Restricted
Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following
conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting
of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a)
Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award
within the period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash,
or by check or such other instrument as may be acceptable to the Committee. After acceptance and issuance of a certificate or
certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject
to the non-transferability and forfeiture restrictions described in Section 6(d) below.
(b)
Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares
of Common Stock associated with the award promptly after the Grantee accepts such award.
(c)
Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted
Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Committee at the time
of grant.
(d)
Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of
the Restricted Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Committee
has specified such restrictions have lapsed. Unless otherwise provided by the Committee at or after grant, distributions in the
form of dividends or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the
same restrictions as such shares of Restricted Stock.
(e)
Change of Control. Upon the occurrence of a Change in Control as defined in Section 5A(c), the Committee may accelerate
the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Committee, in its sole discretion.
(f)
Termination of Employment. Unless otherwise determined by the Committee at or after grant, in the event the Grantee ceases
to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded
to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock
power. The Committee may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted
Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in
other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.
6B.
Terms and Conditions of Preferred Stock.
In
lieu of grants of Options, Warrants, Restricted Stock and RSUs, to the extent that the Committee shall determine that the issuance
of Options, Warrants, Restricted Stock or RSUs to a Participant could cause the beneficial ownership by such Participant or its
affiliates to exceed more than 9.99% of the total outstanding shares of Common Stock of the Company upon the exercise of the Option
or Warrant or the vesting of the Restricted Stock or RSU, as applicable, Preferred Stock may be granted under this Plan aside
from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional
terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock or RSU upon a Change of
Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a)
Grantee rights. A Grantee shall have no rights to an award of Preferred Stock unless and until all of the following conditions
have been met (A) the Committee designates an award of Preferred Stock in a series of Preferred Stock that has already been authorized
and designated the Board, the Board passes a resolution authorizing and designating a new series of Preferred Stock on the terms
and conditions determined by the Committee, (B) if applicable, the Company files a Certificate of Designation with the Secretary
of State of the State of Nevada that sets forth the rights, preferences and other terms of any newly authorized and designated
series of the Preferred Stock, and (C) Grantee accepts the award within the period prescribed by the Committee and, if the Committee
shall deem desirable, executes an agreement that sets forth the terms and conditions of the issuance of the award of Preferred
Stock as may be acceptable to the Committee. After acceptance and issuance of a certificate or certificates, as provided for below,
the Grantee shall have the rights set forth in the applicable Certificate of Designation and any related agreement with respect
to the Preferred Stock award. The Preferred Stock shall also be subject to the non-transferability and forfeiture restrictions
described in Section 6B(d) below.
(b)
Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares
of Preferred Stock associated with the award promptly after the Grantee accepts such award. The Company shall issue in the Grantee’s
name a certificate or certificates for the shares of Common Stock underlying the Preferred Stock associated with the award promptly
after the Grantee converts the Preferred Stock in accordance with the terms and conditions set forth in the applicable Certificate
of Designation and related agreement, if any.
(c)
Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Preferred
Stock and/or the underlying Common Stock issuable upon the conversion of the Preferred Stock shall not be delivered to the Grantee
until such shares are free of any restrictions specified by the Committee at the time of grant.
(d)
Forfeitability, Non-transferability of Preferred Stock. Shares of Preferred Stock and any underlying shares of Common Stock
issuable upon the conversion of the Preferred Stock are forfeitable until the terms of the Preferred Stock grant have been satisfied.
Shares of Preferred Stock and any underlying shares of Common Stock issuable upon the conversion of the Preferred Stock are not
transferable until the date on which the Committee has specified such have lapsed. Unless otherwise provided by the Committee
at or after grant, distributions in the form of dividends or otherwise of additional shares or property in respect of shares of
Preferred Stock if the applicable Certificate of Designation provides for such distributions, shall be subject to the same restrictions
as such shares of Preferred Stock.
(e)
Change of Control. Upon the occurrence of a Change in Control as defined in Section 5A(c), the Committee may waive any
conditions and/or restrictions to the issuance of any contingent award of Preferred Stock, in whole or in part, as determined
by the Committee, in its sole discretion.
(f)
Termination of Employment or Consulting Agreement. Unless otherwise determined by the Committee at or after grant, in the
event the Grantee ceases to be, as applicable, an employee, a consultant or otherwise associated with the Company for any other
reason, all shares of Preferred Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and
the Company shall have the right to complete the blank stock power. The Committee may provide (on or after grant) that restrictions
or forfeiture conditions relating to shares of Preferred Stock will be waived in whole or in part in the event of termination
resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions
relating to Preferred Stock.
(g)
Maximum Percentage. Notwithstanding anything to the contrary set forth herein, the Company shall not effect any conversion
of Preferred Stock issued under the Plan, and no Participant shall have the right to convert any Preferred Stock, to the extent
that after giving effect to such conversion, the beneficial owner of such shares (together with such Participant’s affiliates)
would have acquired, through conversion of such Preferred Stock or otherwise, beneficial ownership of a number of shares of Common
Stock that exceeds 9.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately
after giving effect to such conversion. The Company shall not give effect to any voting rights of such Preferred Stock, and any
Participant shall not have the right to exercise voting rights with respect to any Preferred Stock pursuant hereto, to the extent
that giving effect to such voting rights would result in such Participant (together with its affiliates) being deemed to beneficially
own in excess of the Maximum Percentage of the number of shares of Common Stock outstanding immediately after giving effect to
such exercise, assuming such exercise as being equivalent to conversion. For purposes of the foregoing, the number of shares of
Common Stock beneficially owned by a Participant and its affiliates shall include the number of shares of Common Stock issuable
upon conversion of the Preferred Stock with respect to which the determination of such sentence is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted shares of Preferred
Stock beneficially owned by such Participant or any of its affiliates and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation, any notes or warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 6B(g) beneficially owned by such Participant or
any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 6B(g), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 6B(g), in determining the
number of outstanding shares of Common Stock, a Participant may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company’s most recent Form 10-K, Form 10-Q, or Form 8-K, as the case may be, (2) a more recent public announcement
by the Company, or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written request of any Participant, the Company shall within one (1) business
day following the receipt of such notice, confirm orally and in writing to any such Participant 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 the Preferred Stock, by such Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Participant
may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in
such notice; provided, that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder providing such written notice and
not to any other Holder. In the event that the Company cannot pay any portion of any dividend, distribution, grant or issuance
hereunder to a Participant solely by reason of this Section 6B(g) (such shares, the “Limited Shares”), notwithstanding
anything to the contrary contained herein, the Company shall not be required to pay cash in lieu of the payment that otherwise
would have been made in such Limited Shares, but shall hold any such Limited Shares in abeyance for such Holder until such time,
if ever, that the delivery of such Limited Shares shall not cause the Participant to exceed the Maximum Percentage, at which time
such Participant shall be delivered such Limited Shares to the extent as if there had been no such limitation. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section
6B(g) 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.
6C.
Terms and Conditions of Restricted Stock Units.
Restricted
Stock Units, or RSUs, may be granted under this Plan aside from, or in association with, any other award and shall be subject
to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration
of vesting of RSUs upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a)
Grantee rights. A Grantee shall have no rights to an award of RSUs unless and until Grantee accepts the award within the
period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash, or by check
or such other instrument as may be acceptable to the Committee. After acceptance and issuance of a certificate or certificates,
as provided for below, the Grantee shall have the rights of a stockholder with respect to the RSUs subject to the non-transferability
and forfeiture restrictions described in Section 6C(d) below.
(b)
Vesting. At the time of the grant of RSUs, the Committee may place restrictions on
RSUs that shall lapse, in whole or in part, upon the passage of time. Unless otherwise provided in an Award Agreement, upon the
vesting of a RSU, there shall be delivered to the Grantee, within 30 days of the date on which such Award (or any portion thereof)
vests, the number of shares of common stock equal to the number of RSUs becoming so vested.
(c)
Non-transferability of RSUs. Prior to the time that shares of common stock underlying
RSUs have been delivered to the Grantee, RSUs are not transferable and may be exercised solely by the Grantee during his
lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution.
The Committee, in its sole discretion, may permit a transfer of an RSU to (i) a trust for the benefit of the Grantee, (ii) a member
of the Grantee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order. Any
attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any RSU
contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(d)
Change of Control. Upon the occurrence of a Change in Control as defined in Section 5A(c), the Committee may accelerate
the vesting of outstanding RSUs, in whole or in part, as determined by the Committee, in its sole discretion.
(e)
Dividend Equivalents. To the extent provided in an Award Agreement, and subject to the requirements of Section 409A of
the Code, an award of RSUs may provide the Grantee with the right to receive dividend equivalent payments with respect to common
stock subject to such award, which payments may be settled in cash or common stock, as determined by the Committee. Any such settlements
and any crediting of dividend equivalents may, at the time of grant of the RSU, be made subject to the transfer restrictions,
forfeiture risks, vesting and conditions of the RSUs and subject to such other conditions, restrictions and contingencies as the
Committee shall establish at the time of grant of the RSU, including the reinvestment of such credited amounts in common stock
equivalents, provided that all such conditions, restrictions and contingencies shall comply with the requirements of Section 409A
of the Code.
(f)
Termination. Unless otherwise determined by the Committee at or after grant, RSUs
awarded to the Grantee that have not vested shall be forfeited upon termination of the Grantee in accordance with Section
5A(f), (g), (h) and (i), as applicable. The Committee may provide (on or after grant) that restrictions or forfeiture conditions
relating to the RSUs will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee
may in other cases waive in whole or in part restrictions or forfeiture conditions relating to the RSUs.
7.
Term of Plan.
No
Securities shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan,
but Options and Warrants and awards of Restricted Stock and/or Preferred Stock and/or RSUs theretofore granted may extend beyond
that date.
8.
Capital Change of the Company.
In
the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure
affecting the Common Stock of the Company, the Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and (A) in the number and price of shares subject to outstanding Options or
Warrants granted or issued under the Plan, to the end that after such event each Optionee’s or Grantee’s proportionate
interest shall be maintained (to the extent possible) as immediately before the occurrence of such event and (B) in the number
and conversion price of shares subject to outstanding Preferred Stock granted under the Plan, to the end that after such event
each Participant’s (who has received a grant of Preferred Stock) proportionate interest shall be maintained (to the extent
possible) as immediately before the occurrence of such event. The Committee shall, to the extent feasible, make such other adjustments
as may be required under the tax laws so that any Incentive Options or Incentive Warrants previously granted or issued shall not
be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments shall also be made in the case of
outstanding Restricted Stock or RSUs granted under the Plan.
The
adjustments described above will be made only to the extent consistent with continued qualification of the Option or Warrant under
Section 422 of the Code (in the case of an Incentive Option or Incentive Warrant) and Section 409A of the Code.
9.
Purchase for Investment/Conditions.
Unless
the Securities, and shares of Common Stock underlying such Securities, covered by the Plan have been registered under the Securities
Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary,
each person exercising or receiving Securities under the Plan may be required by the Company to give a representation in writing
that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof. The Committee may impose any additional or further restrictions on awards of Securities
as shall be determined by the Committee at the time of award.
10.
Taxes.
(a)
The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Securities
granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.
(b)
If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the
Code (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee
shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority
of Code Section 83(b).
(c)
If any Grantee shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Option or
Incentive Warrant under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions),
such Grantee shall notify the Company of such disposition within ten (10) days hereof.
11.
Effective Date of Plan.
The
Plan shall be effective on July 31, 2018; provided, however, that the Plan must subsequently be approved by majority vote of the
Company’s shareholders in accordance with the rules and regulations of the NASDAQ Stock Market LLC no later than July 31,
2019.
12.
Amendment and Termination.
The
Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant
under Securities theretofore granted without the Participant’s consent, and except that no amendment shall be made which,
without the approval of the shareholders of the Company would:
(a)
materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;
(b)
materially increase the benefits accruing to the Participants under the Plan;
(c)
materially modify the requirements as to eligibility for participation in the Plan;
(d)
decrease the exercise price of an Incentive Option or Incentive Warrant to less than 100% of the Fair Market Value per share of
Common Stock on the date of grant or issuance thereof or the exercise price of a Nonqualified Option or Non-Qualified Warrant
to less than 100% of the Fair Market Value per share of Common Stock on the date of grant or issuance thereof;
(e)
extend the term of any Option or Warrant beyond that provided for in Section 5A(b) and Section 5B(c), respectively;
(f)
except as otherwise provided in Sections 5A(d), 5B(e) and 8 hereof, reduce the exercise price of outstanding Options or Warrants
or effect repricing through cancellations and re-grants of new Options or Warrants;
(g)
increase the number of shares of Common Stock to be issued or issuable under the Plan to an amount that is equal to or in excess
of 19.99% of the number of shares of Common Stock outstanding before the issuance of the stock or securities; or
(h)
otherwise require stockholder approval pursuant to the rules and regulations of the NASDAQ Stock Market LLC.
Subject
to the forgoing, the Committee may amend the terms of any Option or Warrant theretofore granted, prospectively or retrospectively,
but no such amendment shall impair the rights of any Optionee or Grantee without the Optionee’s or Grantee’s consent.
It
is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations
and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Committee
shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly. The Plan and any grant
of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may
be necessary or appropriate to comply with the Section 409A Rules.
13.
Government Regulations.
The
Plan, and the grant and exercise or conversion, as applicable, of Securities hereunder, and the obligation of the Company to issue
and deliver shares under such Securities shall be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.
14.
General Provisions.
(a)
Certificates. All certificates for shares of Common Stock or Preferred Stock delivered under the Plan shall be subject
to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal
or state securities law, any stock exchange or interdealer quotation system upon which the Common Stock is then listed or traded
and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(b)
Employment Matters. Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant
who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is
a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any
way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of
its directors or the retention of any of its consultants or advisors at any time.
(c)
Limitation of Liability. No member of the Committee, or any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect
to the Plan, and all members of the Committee and each and any officer or employee of the Company acting on their behalf shall,
to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination
or interpretation.
(d)
Registration of Stock. Notwithstanding any other provision in the Plan, no Option or Warrant may be exercised unless and
until the Common Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state
securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company
shall not be under any obligation to register under applicable federal or state securities laws any Common Stock to be issued
upon the exercise of an Option or Warrant granted or issued hereunder in order to permit the exercise of an Option or Warrant
and the issuance and sale of the Common Stock subject to such Option or Warrant, although the Company may in its sole discretion
register such Common Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption
from registration, the Common Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive
legend restricting the transfer or pledge of the Common Stock represented thereby, and the Committee may also give appropriate
stop transfer instructions with respect to such Common Stock to the Company’s transfer agent.
15.
Non-Uniform Determinations.
The
Committee’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive
awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements
evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible
to receive, awards under the Plan, whether or not such Participants are similarly situated.
16.
Governing Law.
The
validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance
with the internal laws of the State of Nevada, without giving effect to principles of conflicts of laws, and applicable federal
law.
17.
Additional Issuance Restrictions.
If
the Company has not obtained the approval of its stockholders in accordance with NASDAQ Listing Rule 5635(d), then the Company
may not issue any Securities under this Plan that would upon the issuance of any Securities or upon the exercise on conversion
of such Securities, as applicable, into shares of the Company’s Common Stock, when aggregated with any other shares of Common
Stock (i) held by a Participant, (ii) underlying any convertible security held by a Participant, and (iii) issuable upon prior
exercise of any convertible security held by a Participant, would exceed 19.99% shares of the Company’s Common Stock, subject
to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of the adoption of this Plan (such number of shares, the “Issuable Maximum”).
The Participant shall be entitled to a portion of the Issuable Maximum as reasonably determined by the Committee so as not to
violate NASDAQ Listing Rule 5635(d). In addition, the Participant may allocate its pro-rata portion of the Issuable Maximum among
Securities held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Participant no longer
holds any Securities and the amount of shares issued to such Participant pursuant to its Securities was less than such Participant’s
pro-rata share of the Issuable Maximum.
