UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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| (IRS Employer Identification No.) |
(Address of principal executive offices)(zip code)
Registrant’s telephone number, including area code: (
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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| The (The NASDAQ Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On August 16, 2024, Golden Matrix Group, Inc. (the “Company”, “we” and “us”), entered into a Share Exchange Agreement (the “Exchange Agreement”), with Classics Holdings Co. Pty Ltd., an Australian proprietary limited company (“Classics”), and NJF Exercise Physiologists Pty Ltd (“NJF”) and Think Tank Enterprises Pty Ltd (“Think Tank”, and collectively with NJF, the “Shareholders”), the shareholders of Classics.
Classics, through its wholly-owned subsidiary, Classics for a Cause Pty Ltd (“Classics for a Cause”), is an independent online trade promotions company in Australia, which operates a well-established business-to-consumer (B2C) platform that offers paid members access to a wide range of discounts from retailers across Australia. Classics for a Cause rewards its members with free entries into promotional giveaways, which feature luxury and classic motor vehicles, exotic motor vehicles, caravans, jet skis, boats, and exclusive holiday experiences.
Pursuant to the Exchange Agreement, the Shareholders agreed to exchange 80% of the outstanding capital stock of Classics (the “Exchange” and the “Classics Stock”) with the Company in consideration for cash and stock of the Company. Specifically, in consideration for the Classics Stock, we agreed to pay the Shareholders, pro rata with their ownership of Classics:
(i) 810,390 shares of the Company’s common stock at Closing (defined below)(the “Closing Shares”);
(ii) 6,780,000 Australian dollars (AU$) at Closing (approximately $4,407,000 United States dollars (“US$”);
(iii) AU$33,808 representing 80% of the agreed value of the net assets of Classics on the effective date as set forth herein (approximately US$21,975);
(iv) up to an additional AU$500,000 (approximately US$325,000)(the “Holdback Cash”); and
(v) the right to certain earnout payments as discussed below.
The parties agree that each share of Company common stock issued to the Shareholders pursuant to the Exchange Agreement would be deemed to have a value of AU$3.85 per share (the “AU$ Agreed Value”) and US$2.51 (the “US$ Agreed Value”).
The Closing Shares are subject to a true-up in the event the closing sales price of the Company’s common stock on the Nasdaq Capital Market on the date that is 180 days following the closing date (or if such date is not a business day, the last closing price of the Company’s common stock prior to such day) is less than the closing price of the Company’s common stock on the Nasdaq Capital Market on the closing date (or if such date is not a business day, the last closing price of the Company’s common stock prior to such day), the Shareholders are due additional compensation from the Company in an amount equal to the difference between the two closing prices, multiplied by the total Closing Shares (the “True-Up Amount”). At the Company’s option, the True-Up Amount can be paid in cash or shares of common stock of the Company (“True-Up Shares”), or any combination thereof. If shares of common stock are issued in connection with the satisfaction of the True-Up Amount they are to be valued based on the US$ Agreed Value.
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The Holdback Cash is to be released to the Shareholders, if (and only if) the Company determines, within six (6) months after the Closing Date (defined below) that the Shareholders have not defaulted in, or breached, any of their obligations, covenants or representations under the Exchange Agreement and/or under the Shareholders Agreement (defined below).
The Shareholders may also earn additional cash and stock consideration (“Earnout Shares”) based on Classics’ total net profit (as calculated as set forth in the Exchange Agreement) from the Closing Date until June 30, 2025 (the “Earnout Period”), pursuant to the schedule below:
Net Profit For the Earnout Period | Earnout Cash | Earnout Shares |
Under AU$2,500,000.00 | AU$0 | 0 |
Between AU$2,500,000.00 and AU$3,000,000.00 | AU$910,000 | 100,996 |
Between AU$3,000,000.01 and AU$3,500,000.00 | AU$1,820,000 | 201,992 |
Over AU$3,500,000.01 | AU$2,184,000 | 242,391 |
Notwithstanding the above, earnout consideration is only due to the Shareholders, if the Company determines on June 30, 2025, that the Shareholders have not defaulted in, or breached, any of their obligations, covenants or representations under the Exchange Agreement and/or under the Shareholders Agreement.
Pursuant to the Exchange Agreement, each of the Shareholders agreed that for a period of two years following the Closing, except through Classics or Classics for a Cause, that neither would compete against the Company in Australia, the United Kingdom or the United States, in connection with any product or service offered by, researched by, or developed by, the Company, Classics or Classics for a Cause, at any time during the two years prior to the applicable date of determination, in the betting and gambling industry.
Think Tank also agreed that it would not sell or otherwise transfer any shares of the Company which it receives pursuant to the terms of the Exchange Agreement for a period of one year following the Closing Date, except pursuant to certain limited exceptions.
The Exchange Agreement includes representations and warranties, indemnification obligations, and confidentiality obligations of the parties, customary with a transaction of the size and type as the Exchange Agreement.
The closing of the transactions contemplated by the Exchange Agreement (the “Closing”) is subject to customary closing conditions including the satisfactory outcome of due diligence by the Company; and the entry into the Shareholders Agreement.
The Company anticipates the closing of the Exchange occurring next week, if not sooner, the date of such closing, as applicable, the “Closing Date”. The effective date of the Exchange will be August 1, 2024.
The closing of the Exchange is required to occur prior to August 21, 2024. The Exchange Agreement can be terminated at any time prior to closing, with the mutual consent of the Company and Classics; by a non-breaching party after thirty days’ notice of the breach of the agreement to the breaching party, and failure to cure such breach within 30 days (which under certain circumstances can be extended for an additional 15 days); by a party if the closing has not occurred prior to such required closing date (subject to certain requirements); by the Company or a simple majority of the Shareholders, in the event certain requirements to closing become incapable of fulfillment and have not been waived by such party; by a party (including the Shareholders, with consent of a simple majority of the Shareholders), if there (i) is any actual or threatened action or proceeding before any court or any governmental body which seeks to restrain, prohibit, or invalidate the transactions contemplated by the Exchange Agreement which makes it inadvisable to proceed with the Exchange; or (ii) any of the transactions contemplated by the Exchange Agreement are disapproved by any regulatory authority whose approval is required to consummate such transactions or if there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the Exchange.
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The Shareholders agreed to only operate Classics in the ordinary course of business prior to Closing.
The Exchange Agreement also required that the Shareholders and the Company enter into a Shareholders Agreement (the “Shareholders Agreement”), which (a) prohibits the sale or transfer of any shares of Classics without the consent of shareholders who collectively own and can vote more than 50% of all shares of Classics (a “Majority In Interest”, i.e., the Company following the Closing), subject to certain customary exceptions to affiliates of the shareholder who agree to be bound by the Shareholders Agreement; (b) provides the Company with a buyout right beginning on the Closing Date and ending on the two year anniversary of the Closing Date, exercisable upon written notice from the Company to the Shareholders, which provides the Company the right to purchase all, but not less than all, of the shares of Classics then held by the Shareholders (i.e., the 20% of Classics retained by such Shareholders following the Closing) for an aggregate purchase price equal to 20% of the product of (i) Classics’ then most recent three-month trailing net profits, multiplied by (ii) the Buyout Multiplier (defined below), multiplied by (iii) four (the “Buyout Price”), which is payable 70% in cash and 30% in shares of Company common stock (“Buyout Shares”), valued at the greater of (1) the 30 day volume weighted average stock price; and (2) $1.75 per share (the “Buyout”); (c) provides each shareholder of Classics, except as otherwise agreed by a Majority In Interest or subject to certain customary permitted transfer rights, a right of first refusal to purchase any shares of Classics which any shareholder desires to transfer, at the price that they are offered to be transferred or (i) the value of the applicable shares mutually agreed upon between the applicable offering shareholder (or his or her representative, as applicable), if any, and Classics, or all of the remaining shareholders, as applicable, or (ii) if the applicable parties cannot agree, the value of such shares as determined in good faith by a Majority In Interest; (d) includes drag along rights, requiring minority shareholders to be dragged along in any change of control transaction; (e) provides for certain buyout rights in the event of the death or incapacity of an individual shareholder; and (f) provides that certain transactions involving Classics can only be affected with approval of a Majority In Interest.
“Buyout Multiplier” means a whole number from 5 to 7, calculated as provided in the table below, with such Buyout Multiplier being the number in the “Buyout Multiplier” column below which corresponds to the actual calculation of the three month trailing net profits of Classics (as calculated as set forth in the Shareholders Agreement) for the applicable period, based on the “Three-Month Trailing Net Profit” column below:
Three-Month Trailing Net Profit | Buyout Multiplier |
Less than AU$3,000,000.00 | 5 |
Between AU$3,000,000.01 and AU$4,500,000.00 | 6 |
More than AU$4,500,000.00 | 7 |
The Shareholders Agreement also provides for the business and affairs of Classics and Classics for a Cause to be governed by a board of directors consisting of at least three persons. The number of members on the board may be increased (but not decreased) with the consent of a Majority In Interest. The initial directors of Classics will be (1) Thomas Bailey, a representative of one of the Shareholders, (2) Anthony Brian Goodman, the Company’s Chief Executive Officer and Director, and (3) Brett Goodman, an employee of the Company and Mr. Anthony Brian Goodman’s son.
The Shareholders Agreement remains in full force and effect until Classics and a Majority In Interest, agree in writing to its termination or until the first to occur of (i) offering of shares of Classics pursuant to a registration statement effective under applicable law; (ii) the purchase by one shareholder of all the issued and outstanding shares of Classics; or (iii) the dissolution, bankruptcy or receivership of Classics.
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The representations, warranties and covenants of each party set forth in the Exchange Agreement have been made only for the purposes of, and were and are solely for the benefit of the parties to, the Exchange Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Exchange Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact.
The foregoing description of the Exchange Agreement and Shareholders Agreement above, is subject to, and qualified in its entirety by, the Exchange Agreement and Shareholders Agreement, attached as Exhibit 2.1 and Exhibit 10.1, hereto, respectively, which are incorporated into this Item 1.01 by reference in their entirety.
Item 3.02 Unregistered Sales of Equity Securities.
The offer and sale of the 810,390 Closing Shares, the True-Up Shares, to the extent due and issued, the Earnout Shares, to the extent due and issued, and to the extent that the Company desires to affect a Buyout in the future, the Buyout Shares, are intended to be exempt from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), since the foregoing offer, sales and planned issuances were/will not involve a public offering, the recipients have confirmed that they are “accredited investors”, and the recipients will acquire the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by us or our representatives. The securities are subject to transfer restrictions, and the certificates evidencing the securities will contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.
Item 8.01. Other Events.
On August 20, 2024, the Company published a press release announcing the entry into the Exchange Agreement. A copy of the press release is included herewith as Exhibit 99.1 and the information in the press release is incorporated by reference into this Item 8.01.
Forward- Looking Statements
This Current Report on Form 8-K and Exhibit 99.1 hereto contains forward-looking statements that are made pursuant to the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act, as amended. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties, many of which are beyond our control, that may cause actual results or events to differ materially from those projected. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our Annual Reports on Form 10-K and in our other filings with the SEC, including, without limitation, our reports on Forms 8-K and 10-Q, all of which can be obtained on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management’s current estimates, projections, expectations and beliefs. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
| Description of Exhibit |
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Furnished herewith.
# Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or Exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that Golden Matrix Group, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or Exhibit so furnished.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
| GOLDEN MATRIX GROUP, INC. |
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Date: August 20, 2024 | By: | /s/ Anthony Brian Goodman |
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| Anthony Brian Goodman |
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| Chief Executive Officer |
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EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
BY AND BETWEEN
GOLDEN MATRIX GROUP, INC.,
A NEVADA CORPORATION,
CLASSICS HOLDINGS CO. PTY LTD.,
AN AUSTRALIAN PROPRIETARY LIMITED COMPANY,
AND
THE SHAREHOLDERS OF
CLASSICS HOLDINGS CO. PTY LTD.
ABN 665 490 219
DATED AUGUST 16, 2024
TABLE OF CONTENTS
| ARTICLE I. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CLASSICS AND THE CLASSICS SHAREHOLDERS |
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| 1.1. | Organization. |
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| 1.2. | Capitalization. |
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| 1.3. | Subsidiaries and Predecessor Corporations. |
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| 1.4. | Other Information. |
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| 1.5. | Options, Warrants, Convertible Securities. |
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| 1.6. | Absence of Certain Changes or Events. |
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| 1.7. | Classics and Related Matters. |
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| 1.8. | Litigation and Proceedings. |
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| 1.9. | Contracts. |
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| 1.10. | Material Contract Defaults. |
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| 1.11. | No Conflict With Other Instruments. |
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| 1.12. | Governmental Authorizations. |
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| 1.13. | Compliance With Laws and Regulations. |
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| 1.14. | Approval of Agreement. |
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| 1.15. | Material Transactions or Affiliations. |
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| 1.16. | The Classics Schedules. |
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| 1.17. | Valid Obligation. |
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| 1.18. | Acquisition of the Company Securities. |
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| 1.19. | Exemption from Registration. |
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| 1.20. | Representations, Acknowledgments and Warranties of the Classics Shareholders. |
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| 1.21. | Real Property. |
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| 1.22. | Data Room; Information Supplied. |
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| 1.23. | Advertising. |
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| 1.24. | Intellectual Property. |
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| 1.25. | Compliance With Laws. |
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| 1.26. | Environmental Matters. |
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| 1.27. | Insurance Coverage. |
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| 1.28. | Customer, Supplier and Employee Relations. |
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| 1.29. | Product and Service Matters. |
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| 1.30. | Compliance with Laws. |
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| 1.31. | Insider Trading. |
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| 1.32. | Closing Date Releases. |
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| 1.33. | Solvency. |
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| 1.34. | Acknowledgements. |
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| 1.35. | No Other Representations or Warranties. |
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| 1.36. | No Untrue Representation or Warranty. |
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| ARTICLE II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY |
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| 2.1. | Organization. |
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| 2.1. | Trading Status. |
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| 2.2. | Capitalization. |
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| 2.3. | No Conflict or Violation; Default; Confirmations. |
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| 2.4. | Litigation and Proceedings. |
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| 2.5. | Approval of Agreement. |
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| 2.6. | Valid Obligation. |
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| 2.7. | No Other Representations or Warranties. |
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| 2.8. | No Untrue Representation or Warranty. |
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| ARTICLE III. PLAN OF EXCHANGE |
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| 3.1. | The Exchange. |
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| 3.2. | Holdback. |
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| 3.3. | Potential For Earnout Consideration. |
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| 3.4. | Closing. |
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| 3.5. | Tradability of Company Securities. |
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| 3.6. | Termination. |
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| 3.7. | Effect of Termination. |
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| ARTICLE IV. SPECIAL COVENANTS |
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| 4.1. | Access to Properties and Records. |
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| 4.2. | Delivery of Books and Records and Bank Accounts. |
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| 4.3. | Third Party Consents and Certificates. |
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| 4.4. | Actions Prior to Closing. |
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| 4.5. | Post-Closing Conditions. |
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| ARTICLE V. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY |
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| 5.1. | Ownership of Classics. |
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| 5.2. | Accuracy of Representations and Performance of Covenants. |
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| 5.3. | Officer’s Certificate. |
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| 5.4. | No Material Adverse Change. |
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| 5.5. | Approval by Classics. |
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| 5.6. | No Governmental Prohibition. |
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| 5.7. | Consents. |
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| 5.8. | Due Diligence. |
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| 5.9. | Other Closing Conditions. |
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| ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF CLASSICS AND THE CLASSICS SHAREHOLDERS |
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| 6.1. | Accuracy of Representations and Performance of Covenants. |
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| 6.2. | Officer’s Certificate. |
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| 6.3. | No Material Adverse Change. |
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| 6.4. | No Governmental Prohibition. |
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| 6.5. | Consents. |
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| 6.6. | Other Closing Conditions. |
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| ARTICLE VII. INDEMNIFICATION |
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| 7.1. | Indemnification by the Classics Shareholders. |
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| 7.2. | Indemnification by the Company. |
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| 7.3. | Survival of Representations, Warranties and Covenants. |
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| 7.4. | Notice and Opportunity to Defend. |
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| 7.5. | Remedies Exclusive. |
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| 7.6. | Emergency Relief. |
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| 7.7. | Right to Set Off. |
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| ARTICLE VIII. CONFIDENTIALITY |
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| 8.1. | Confidentiality. |
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| 8.2. | Enforceability. |
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| ARTICLE IX. DEFINITIONS |
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| 9.1. | Certain Definitions. |
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| 9.2. | Other Definitional Provisions. |
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| ARTICLE X. MISCELLANEOUS |
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| 10.1. | Broker/Finder’s Fee. |
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| 10.2. | Equitable Adjustments. |
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| 10.3. | Governing Law and Jurisdiction. |
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| 10.4. | Notices. |
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| 10.5. | Attorneys’ Fees. |
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| 10.6. | Confidentiality. |
| 44 |
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| 10.7. | Publicity. |
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| 10.8. | Schedules and Exhibits. |
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| 10.9. | Schedules; Knowledge. |
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| 10.10. | Third Party Beneficiaries. |
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| 10.11. | Expenses. |
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| 10.12. | Entire Agreement. |
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| 10.13. | Survival; Termination. |
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| 10.14. | Counterparts. |
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| 10.15. | Amendment or Waiver. |
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| 10.16. | Best Efforts. |
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| 10.17. | Remedies. |
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| 10.18. | Severability. |
| 46 |
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| 10.19. | Independent Nature of Classics’ Shareholders Obligations and Rights. |
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| 10.20. | No Presumption from Drafting. |
| 46 |
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| 10.21. | Review and Construction of Documents. |
| 46 |
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| 10.22. | Headings; Gender. |
| 47 |
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| 10.23. | Transaction Expenses. |
| 47 |
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| 10.24. | Cooperation Following the Closing. |
| 47 |
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| 10.25. | Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. |
| 47 |
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is entered into as of this sixteenth day of August 2024, by and among Golden Matrix Group, Inc., a Nevada corporation (the “Company”) and Classics Holdings Co. Pty Ltd., an Australian proprietary limited company ABN 665 490 219 (“Classics”), and the person(s) executing this Agreement listed on the signature page hereto under the heading “Classics Shareholders” (referred to as the “Classics Shareholders”), each a “Party” and collectively the “Parties,” upon the following premises:
PREMISES
WHEREAS, the Classics Shareholders own outstanding ordinary shares of Classics (the “Classics Stock”), totaling one-hundred percent (100%) of the issued and outstanding ordinary shares of Classics;
WHEREAS, the Company is a publicly-held corporation organized under the laws of the State of Nevada, whose common stock trades on the Nasdaq Capital Market under the symbol “GMGI”;
WHEREAS, Classics is a private proprietary limited company organized under the laws of Australia;
WHEREAS, Classics holds 100 shares of Classics for A Cause Pty Ltd. ABN number 636 124 162 (“CFAC”), representing 100% ownership of CFAC;
WHEREAS, the Company desires to acquire 80% of the issued and outstanding securities of Classics in exchange for unissued shares of the Company’s restricted common stock and cash (the “Exchange Offer” or the “Exchange”), so that Classics will become an 80% owned subsidiary of the Company; and
WHEREAS, the Classics Shareholders desire to exchange 80% of their ordinary shares in Classics in exchange for cash and shares of authorized but unissued shares of common stock of the Company, and other consideration, as set forth below.
CERTAIN CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN ARTICLE IX.
AGREEMENT
NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
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ARTICLE I.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CLASSICS AND THE CLASSICS SHAREHOLDERS
As an inducement to and to obtain the reliance of the Company, except as set forth on the Classics Schedules (as hereinafter defined, which shall contain any exceptions or qualifications to the representations and warranties are set forth below), Classics and the Classics Shareholders each jointly and severally represent and warrant as follows (which shall be re-confirmed at Closing):
1.1. Organization. Classics is a limited company duly organized, validly existing, and in good standing under the laws of Australia. Classics For a Cause is a limited company duly organized, validly existing, and in good standing under the laws of Australia. The Classics Parties have the corporate power and are duly authorized, qualified, franchised, and licensed under all applicable Laws, regulations, ordinances, and orders of public authorities to own all of their properties and assets and to carry on their business in all material respects as it is now being conducted, including qualifications to do business as a foreign corporation in the states or countries in which the character and location of the assets owned by them or the nature of the business transacted by them requires qualification, except where failure to be so qualified would not have a material adverse effect on their business. Included in the Classics Schedules are complete and correct copies of the Governing Documents of the Classics Parties as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the Classics Parties’ Governing Documents. Classics has taken all actions required by Law, its Governing Documents, or otherwise to authorize the execution and delivery of this Agreement. Classics has full power, authority, and legal right and has taken all action required by Law, its Governing Documents and otherwise to consummate the transactions herein contemplated.
1.2. Capitalization.
2.2.1 All issued and outstanding stock of the Classics Parties is legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person and were issued in accordance with all Australian securities laws. Prior to giving effect to the transactions contemplated by this Agreement, the Classics Shareholders are the legal and beneficial owners of all of the issued and outstanding equity of Classics, as set forth on Schedule 1.2.1, all of which equity interests are owned free and clear of any Liens (other than those imposed under applicable securities laws). The Classics Stock to be delivered by the Classics Shareholders to the Company at the Closing constitutes 80% of the issued and outstanding equity of Classics. Classics owns 100% of Classics For a Cause. All of the outstanding equity of the Classics Parties were not issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the Classics Parties’ Governing Documents or any contract to which any Classics Parties is a party or by which it or its securities are bound. None of the Classics Parties hold any equity interests in its treasury. None of the outstanding equity of the Classics Parties were issued in violation of any applicable securities Laws. There are no convertible securities of the Classics Parties. There are no preemptive rights or rights of first refusal or first offer with respect to the Classics Parties’ equity securities, nor are there any contracts, commitments, arrangements or restrictions to which the Classics Parties or, to the Knowledge of the Classics Shareholders, any of their equity holders are a party or bound relating to any equity securities or convertible securities of the Classics Parties, whether or not outstanding. There are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Classics Parties. There are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of the Classics Parties’ equity. There are no outstanding contractual obligations of the Classics Parties to repurchase, redeem or otherwise acquire any equity of the Classics Parties. There are no declared or accrued but unpaid dividends with respect to any equity of the Classics Parties.
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1.3. Subsidiaries and Predecessor Corporations. Classics does not have any predecessor corporation(s) or subsidiaries other than as set forth on Schedule 1.3 (collectively, the “Subsidiaries”, which term includes Classics For a Cause), which schedule includes the ownership of each subsidiary owned by Classics.
1.4. Other Information.
1.4.1 Classics and its Subsidiaries have no liabilities with respect to the payment of any federal, provincial, state, county, local or other Taxes (including any deficiencies, interest or penalties), except for Taxes accrued but not yet due and payable or as provided in the Classics Schedules.
1.4.2 Classics and its Subsidiaries have filed all federal, provincial, state or local income and/or franchise Tax returns required to be filed by it from inception to the date hereof. Each of such income Tax returns reflects the Taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.
1.4.3 The books and records of Classics and its Subsidiaries are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.
1.4.4 Classics and its Subsidiaries have no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise in excess of Twenty-Five Thousand Dollars (AU$25,000) except as disclosed in writing to the Company on Schedule 1.4.4, which liabilities in aggregate shall not exceed AU$50,000, including payables, on the Closing Date.
1.5. Options, Warrants, Convertible Securities. Other than as set forth on Schedule 1.5, there are no outstanding subscriptions, options, calls, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other antitakeover agreement, obligating Classics or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Classics or any of its Subsidiaries or obligating Classics or any of its Subsidiaries to grant, extend or enter into any such agreement or commitment and there are no outstanding stock appreciation rights or similar derivative securities or rights of Classics or any of its Subsidiaries.
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1.6. Absence of Certain Changes or Events. Except as set forth in this Agreement or the Classics Schedules provided, and as set forth in the Profit and Loss and Balance Sheets for both Classics Holdings Co. Pty Ltd ABN 665 490 219 and Classics for a Cause Pty Ltd ABN number 636 124 162 attached on Schedule 1.6:
1.6.1 There has not been (i) any material adverse change in the proposed business, operations, properties, assets, or condition of Classics or any of its Subsidiaries or (ii) any damage, destruction, or loss to Classics or any of its Subsidiaries (whether or not covered by insurance) materially and adversely affecting the business or financial condition of Classics or any of its Subsidiaries;
1.6.2 Neither Classics, nor any of its Subsidiaries have (i) amended its Governing Documents; (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to any shareholders or members or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of Classics and its Subsidiaries have; (iv) made any material change in its method of management, operation or accounting; (v) entered into any other material transaction other than sales in the ordinary course of its business; (vi) made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceeds Fifteen Thousand Dollars (AU$15,000); or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees;
1.6.3 Classics and its Subsidiaries have not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) in excess of AU$25,000 except as disclosed herein and except liabilities incurred in the ordinary course of business; (ii) paid or agreed to pay any material obligations or liability (absolute or contingent) other than current liabilities, and current liabilities incurred in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than Fifty Thousand Dollars (AU$50,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than Fifty Thousand Dollars (AU$50,000); or (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party if such amendment or termination is material, considering the business of Classics and its Subsidiaries , other than in the ordinary course of business; and
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1.6.4 To the best Knowledge of the Classics Shareholders, Classics and its Subsidiaries have not become subject to any Law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of Classics or its Subsidiaries.
1.7. Classics and Related Matters. No third party has any right to, and neither Classics, nor any of its Subsidiaries have received any notice of infringement of or conflict with asserted rights of others with respect to, any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names, or copyrights which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a materially adverse effect on the proposed business, operations, financial condition, income, or business prospects of Classics and its Subsidiaries or any material portion of its or their properties, assets, or rights.
1.8. Litigation and Proceedings. Other than as set forth on Schedule 1.8, there are no actions, suits, or proceedings pending or, to the Knowledge of the Classics Shareholders after reasonable investigation, threatened by or against Classics and its Subsidiaries or its or their properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. The Classics Shareholders do not have any Knowledge of any material default with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.
1.9. Contracts.
1.9.1 Except as disclosed on Schedule 1.9.1, there are no material contracts, agreements, franchises, license agreements, debt instruments or other commitments to which Classics and its Subsidiaries is or are a party or by which any of its or their assets, products, technology, or properties are bound other than those incurred in the ordinary course of business (as used in this Agreement, a “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which (i) will remain in effect for more than six (6) months after the date of this Agreement and (ii) involves obligations of at least Fifty Thousand Dollars (AU$50,000) unless otherwise disclosed pursuant to this Agreement);
1.9.2 All contracts, agreements, franchises, license agreements, and other commitments, if any, to which Classics and its Subsidiaries are a party and which are material to the operations or proposed operations of Classics or its Subsidiaries taken as a whole are valid and enforceable by Classics and its Subsidiaries in all material respects, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally;
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1.9.3 Neither Classics, nor any of its Subsidiaries, is a party to or bound by, and the properties of Classics and its Subsidiaries are not subject to, any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award which materially and adversely affects, the business operations, properties, assets, or condition of Classics and its Subsidiaries; and
1.9.4 Except as included or described in the Classics Schedules, neither Classics nor any of its Subsidiaries is a party to any oral or written (i) contract for the employment of any officer or employee which is not terminable on thirty (30) days, or less notice; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan; (iii) agreement, contract, or indenture relating to the borrowing of money; (iv) guaranty of any obligation, other than one on which Classics or its Subsidiaries is a primary obligor, for the borrowing of money or otherwise, excluding endorsements made for collection and other guaranties of obligations which, in the aggregate do not exceed more than one (1) year or providing for payments in excess of Fifty Thousand Dollars (AU$50,000) in the aggregate; (v) collective bargaining agreement; or (vi) agreement with any present or former officer or director of Classics or its Subsidiaries.
1.10. Material Contract Defaults. Classics and its Subsidiaries are not in default in any material respect under the terms of any outstanding material contract, agreement, lease, or other commitment which is material to the business, operations, properties, assets or condition of Classics and its Subsidiaries, and there is no event of default in any material respect under any such contract, agreement, lease, or other commitment in respect of which Classics or its Subsidiaries has not taken adequate steps to prevent such a default from occurring.
1.11. No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute an event of default under, or terminate, accelerate or modify the terms of any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which Classics or its Subsidiaries is a party or to which any of its or their properties or operations are subject as of the date of this Agreement and/or as of the Closing Date.
1.12. Governmental Authorizations. Except as set forth in the Classics Schedules, Classics and its Subsidiaries have all licenses, franchises, permits, and other governmental authorizations that are legally required to enable it and them to conduct its and their business in all material respects as conducted on the date hereof. Except for compliance with federal, provincial and state securities and corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other Governmental Body is required in connection with the execution and delivery by Classics and the Classics Shareholders of this Agreement and the consummation by Classics and the Classics Shareholders of the transactions contemplated hereby.
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1.13. Compliance With Laws and Regulations. Except as set forth in the Classics Schedules, to the best Knowledge of the Classics Shareholders, Classics and its Subsidiaries have complied with all applicable statutes and regulations of any federal, provincial, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of Classics and its Subsidiaries or except to the extent that noncompliance would not result in the occurrence of any material liability for Classics and its Subsidiaries.
1.14. Approval of Agreement. The Directors of Classics shall have authorized the execution and delivery of this Agreement by Classics and approved this Agreement and the transactions contemplated hereby.
1.15. Material Transactions or Affiliations. Set forth in the Classics Schedules is a description, if applicable, of every contract, agreement, or arrangement between Classics and its Subsidiaries and any predecessor and any person who was at the time of such contract, agreement, or arrangement an officer, director, or person owning of record, or known by any Classics Shareholders to own beneficially, five percent (5%) or more of the issued and outstanding securities of Classics and which is to be performed in whole or in part after the date hereof or which was entered into not more than three (3) years prior to the date hereof. Except as disclosed in the Classics Schedules or otherwise disclosed herein, no officer, director, or five percent (5%) shareholder of Classics has, or has had since formation, any known interest, direct or indirect, in any transaction with Classics or its Subsidiaries which was material to the business of Classics and its Subsidiaries. There are no commitments by Classics and its Subsidiaries, whether written or oral, to lend any funds, or to borrow any money from, or enter into any other transaction with, any such affiliated person.
1.16. The Classics Schedules. Classics has delivered to the Company the following schedules, if such schedules are applicable to the business of Classics and its Subsidiaries, which are collectively referred to, together with the various schedules described in this ARTICLE I, as the “Classics Schedules” and which consist of separate schedules dated as of the date of execution of this Agreement, all certified by the principal executive officer of Classics as complete, true, and correct as of the date of this Agreement in all material respects:
1.16.1 a schedule containing complete and correct copies of the Governing Documents of Classics and its Subsidiaries in effect as of the date of this Agreement;
1.16.2 a schedule containing any Resolutions of the Directors and shareholders of Classics and its Subsidiaries formation;
1.16.3 a schedule containing Minutes of meetings of the Directors and shareholders of Classics and its Subsidiaries since formation;
1.16.4 a schedule containing a list indicating the name and address of each shareholder of Classics and its Subsidiaries together with the amount of securities owned by him, her or it;
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1.16.5 a schedule listing any and all federal, provincial, state and local Tax identification numbers of Classics and its Subsidiaries and containing complete and correct copies of all federal, provincial, state and local Tax returns filed by Classics and its Subsidiaries;
1.16.6 a schedule setting forth any other information, together with any required copies of documents, required to be disclosed by Classics. Any fact known to be, or to the best Knowledge of the Classics Shareholders or after reasonable investigation, reasonably believed to be, contrary to any of the representations, covenants, and warranties made in ARTICLE I are required to be disclosed in the Classics Schedules pursuant to this Section 1.16; and
1.16.7 a schedule of any and all limitations or qualifications or exceptions to the representations, covenants and warranties of Classics and Classics Shareholders contained in ARTICLE I of this Agreement, if any.
Classics shall cause the Classics Schedules and the instruments and data delivered to the Company hereunder to be promptly updated after the date hereof up to and including the Closing Date.
1.17. Valid Obligation. This Agreement and all agreements and other documents executed by Classics and the Classics Shareholders in connection herewith constitute the valid and binding obligation of Classics and the Classics Shareholders, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.
1.18. Acquisition of the Company Securities. The Classics Shareholders are acquiring the Company Securities for their own account without the participation of any other person and with the intent of holding the Company Securities for investment and without the intent of participating, directly or indirectly, in a distribution of the Company Securities, or any portion thereof, and not with a view to, or for resale in connection with, any distribution of the Company Securities, or any portion thereof. The Classics Shareholders have read, understand and consulted with his, her or its legal counsel regarding the limitations and requirements of Section 5 of the Securities Act. The Classics Shareholders will offer, sell, pledge, convey or otherwise transfer the Company Securities, or any portion thereof, only if: (i) pursuant to an effective registration statement under the Securities Act and any and all applicable state securities or Blue Sky laws or in a transaction which is otherwise in compliance with the Securities Act and such laws; or (ii) pursuant to a valid exemption from registration.
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1.19. Exemption from Registration. The Exchange and the transactions contemplated thereby, meet an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, Rule 506(b) of Regulation D promulgated under the Securities Act and/or Regulation S of the Securities Act.
1.20. Representations, Acknowledgments and Warranties of the Classics Shareholders. Each of the Classics Shareholders (each a “Share Recipient”), represent, acknowledge and warrant the following to the Company, and agree that such representations, acknowledgments and warranties shall be automatically reconfirmed on the Closing Date:
1.20.1 The Share Recipient is the sole record and beneficial owner of the Company Shares owned by such Share Recipient as set forth on Schedule 1.2.1 (defined herein as the “Share Recipient Shares”) and has good and marketable title to all of the Share Recipient Shares, free and clear of any, claims, charges, options, rights of tenants or other Liens. The Share Recipient has sole managerial and dispositive authority with respect to the Share Recipient Shares and has not granted any person a proxy or option to buy the Share Recipient Shares that has not expired or been validly withdrawn. The sale and delivery of the Share Recipient Shares to the Company pursuant to this Agreement will vest in the Company the legal and valid title to the Share Recipient Shares acquired by the Company hereunder, free and clear of all security interests, adverse claims or other Liens of any character whatsoever.
1.20.2 The Share Recipient recognizes that the Company Securities have not been registered under the Securities Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Company Securities is registered under the Securities Act or unless an exemption from registration is available. The Share Recipient may not sell the Company Securities without registering them under the Securities Act and any applicable state securities laws unless exemptions from such registration requirements are available with respect to any such sale;
1.20.3 The Share Recipient is acquiring the Company Securities for its own account for long-term investment and not with a view toward resale, fractionalization or division, or distribution thereof, and it does not presently have any reason to anticipate any change in its circumstances, financial or otherwise, or particular occasion or event which would necessitate or require the sale or distribution of the Company Securities. No one other than the Share Recipient will have any beneficial interest in said securities. The Share Recipient agrees to set forth the terms of its ownership, record address and tax id number if applicable on the Form of Stock Registration Form, attached hereto as Exhibit 1 A;
1.20.4 The Share Recipient acknowledges that he, she or it:
(i) is an “accredited investor” as such term is defined in Rule 501 of Regulation D of the Securities Act of 1933, as amended and has completed and delivered concurrently with its execution hereof, as copy of the certification attached hereto as Exhibit B, and
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(ii) is aware of, has received and had an opportunity to review (A) the (i) Company’s Annual Report on Form 10-K for the year ended October 31, 2023; (ii) the Audited and Interim Financial statements of the MeridianBet Group and the pro forma financial statements associated therewith, filed by the Company with the SEC on June 4, 2024; and (iii) the Company’s Quarterly Report on Form 10-Q and current reports on Form 8-K (which filings can be accessed by going to https://www.sec.gov/edgar/search/, typing “Golden Matrix Group” in the “Search by keyword, ticker, company name, CIK number or individual’s name” field, and clicking the “Search” button), from January 1, 2024, to the date of such Share Recipient’s entry into this Agreement, in each case (i) through (iii), including the audited and unaudited financial statements, description of business, risk factors, results of operations, certain transactions and related business disclosures described therein (collectively the “Disclosure Documents”) and an independent investigation made by it of the Company; (B) has, prior to the date of this Agreement, been given an opportunity to review material contracts and documents of the Company and has had an opportunity to ask questions of and receive answers from the Company’s officers and Directors and has no pending questions as of the date of this Agreement; and (C) is not relying on any oral representation of the Company or any other person, nor any written representation or assurance from the Company; in connection with each Share Recipient’s acceptance of the Company Securities and investment decision in connection therewith. The Share Recipient acknowledges that due to its receipt of and review of the information described above, it has received similar information as would be included in a Registration Statement filed under the Securities Act;
1.20.5 The Share Recipient has such knowledge and experience in financial and business matters such that the Share Recipient is capable of evaluating the merits and risks of an investment in the Company Securities and of making an informed investment decision, and does not require a representative in evaluating the merits and risks of an investment in the Company Securities;
1.20.6 The Share Recipient has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Exchange and the Company, and all such questions have been answered to the full satisfaction of the Share Recipient;
1.20.7 The Share Recipient recognizes that an investment in the Company is a speculative venture and that the total amount of consideration tendered in connection with the Exchange Offer is placed at the risk of the business and may be completely lost. The ownership of the Company Securities as an investment involves special risks. The Share Recipient has had a reasonable opportunity to ask questions of and receive answers regarding the Company and to request additional relevant information from a person or persons acting on behalf of the Company regarding such information; and has no pending questions as of the date of this Agreement;
1.20.8 The Share Recipient realizes that the Company Securities cannot readily be sold as they will be restricted securities and therefore the Company Securities must not be accepted in the Exchange Offer unless such Share Recipient has liquid assets sufficient to assure that such purchase will cause no undue financial difficulties and such Share Recipient can provide for current needs and possible personal contingencies;
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1.20.9 The Share Recipient confirms and represents that it is able (i) to bear the economic risk of its investment, (ii) to hold the Company Securities for an indefinite period of time, and (iii) to afford a complete loss of its investment. The Share Recipient also represents that it has (i) adequate means of providing for its current needs and possible personal contingencies, and (ii) has no need for liquidity in this particular investment;
1.20.10 All information which the Share Recipient has provided to the Company concerning such Share Recipient’s financial position and knowledge of financial and business matters is correct and complete as of the date hereof, and if there should be any material change in such information prior to the Closing Date, the Share Recipient will immediately provide the Company with such information;
1.20.11 The Share Recipient has carefully considered and has, to the extent it believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Company Securities for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, have determined that the Company Securities are a suitable investment for him, her, or it;
1.20.12 The Share Recipient has not become aware of and has not been offered the Company Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to the Share Recipient’s Knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising;
1.20.13 The Share Recipient confirms and acknowledges that the Company is under no obligation to register or seek an exemption under any federal and/or state securities acts for any sale or transfer of the Company Securities by Share Recipients and the Share Recipient is solely responsible for determining the status, in its hands, of the Company Securities acquired in connection herewith and the availability, if required, of exemptions from registration for purposes of sale or transfer of the Company Securities; and
1.20.14 The Share Recipient confirms and acknowledges that no federal or state agency has made any finding or determination as to the fairness of the Company Securities for investment or any recommendation or endorsement of the Company Securities. The Company Securities have not been registered under the Securities Act or the securities laws of any State and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such state laws.
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1.21. Real Property. Classics and its Subsidiaries (i) own the Owned Real Property and (ii) lease the Leased Real Property set forth on Schedule 1.21.
1.22. Data Room; Information Supplied. All copies of and originals of all information, documents, financial statements, agreements and materials provided by the Classics Shareholders (including their Representatives) to the Company (the “Provided Materials”), or their Affiliates or Representatives as part of the due diligence process leading up to the Parties entry into this Agreement were and remain accurate and complete in all material respects when provided and as of the Closing Date.
1.23. Advertising. Classics and its Subsidiaries are in compliance in all material respects, and have been in compliance in all material respects since January 1, 2023, with all Laws applicable to the business of Classics and its Subsidiaries with respect to the advertising, marketing and communication services (“Regulated Product Marketing Services”); and (i) Classics and its Subsidiaries have not received and are not subject to any administrative or regulatory action, or other similar written or other notice, complaint or inquiry made by any regulatory body or Governmental Body asserting that any element of products or services is not in compliance with any applicable Laws, and, to the Knowledge of each Classics Shareholder and Classics, no violation is threatened.
1.24. Intellectual Property.
1.24.1 Classics and its Subsidiaries own all right, title and interest in the intellectual property assets set forth in Schedule 1.24.3, Schedule 1.24.4 and Schedule 1.24.7 and such ownership is free and clear of all Liens and Encumbrances, obligatory payments to others and the obligation to grant rights to others. Except as set forth on Schedule 1.24.1, Classics and its Subsidiaries own all right, title and interest in, or possesses adequate licenses or other valid rights to use (without the making of any payment to others or the obligation to grant rights to others in exchange), free and clear of all Liens and Encumbrances, all other Intellectual Property owned by Classics and its Subsidiaries or used in connection with the operation of its/their business as currently conducted, including without limitation the intellectual property set forth on Schedule 1.24.3, Schedule 1.24.4 and Schedule 1.24.7. Classics and its Subsidiaries have taken all necessary and desirable action to maintain each item of Intellectual Property that Classics and its Subsidiaries own or use with respect to its business. All maintenance fees of patents set forth in Schedule 1.24.3 which become due (without the payment of a surcharge) prior to the Closing shall be paid by Classics prior to the Closing.
1.24.2 Classics and its Subsidiaries have not interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of any other Person, and none of the directors and officers (and employees with responsibility for Intellectual Property matters) of Classics or its Subsidiaries have ever received any charge, complaint, claim, demand or notice from any Governmental Body or other Person alleging any such interference, infringement, misappropriation or conflict (including any claim that Classics or its Subsidiaries must license or refrain from using any Intellectual Property rights of any other Person). To Classics’ Knowledge, no Person has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of Classics and its Subsidiaries.
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1.24.3 Schedule 1.24.3 identifies (i) each patent or patent registration which has been issued to Classics and its Subsidiaries in the United States and all jurisdictions worldwide with respect to any item of Intellectual Property, and (ii) each patent application or application for patent registration which Classics and its Subsidiaries has filed with respect to any item of Intellectual Property anywhere in the world (together with any exceptions). Classics and its Subsidiaries have delivered to the Company correct and complete copies of all such patents, registrations and applications (as amended to date) and have made available to the Company correct and complete copies of all other written documentation evidencing prosecution (if applicable) of each such item of Intellectual Property (the “Patents”). Prior to Closing, Classics and its Subsidiaries shall deliver to designated counsel of the Company all files in the possession of Classics and its Subsidiaries and its attorneys relating to the prosecution and maintenance of assets set forth in Schedule 1.24.3 (the “Patent Documentation”).
1.24.4 Schedule 1.24.4 identifies each registered and unregistered trademark, including product names and domain names, used by Classics and its Subsidiaries in connection with its business. Classics and its Subsidiaries have delivered to the Company correct and complete copies of all written documentation evidencing ownership and use of each such product name and domain name as set forth on Schedule 1.24.4. Classics and its Subsidiaries own no trademark registrations or applications for registration in any jurisdiction and no such applications have been filed by Classics and its Subsidiaries, any Affiliate thereof or their predecessor-in-interest.
1.24.5 Classics and its Subsidiaries own no copyright registrations or applications in any jurisdiction and no such applications have been filed by Classics and its Subsidiaries, any Affiliate thereof or their predecessor-in-interest.
1.24.6 Neither Classics and its Subsidiaries nor any Affiliate thereof nor their predecessor-in-interest is a party to any license, agreement or other permission which Classics and its Subsidiaries has granted to any other Person with respect to any item of Intellectual Property in the United States and any jurisdictions worldwide and that no such licenses, agreements or other permissions exist.
1.24.7 Schedule 1.24.7 identifies trade secrets and confidential business information of Classics and its Subsidiaries.
1.24.8 With respect to each item of Intellectual Property required to be identified on Schedule 1.24.3, Schedule 1.24.4 and Schedule 1.24.7:
(i) except as set forth on Schedule 1.24.1, Classics and its Subsidiaries owns all right, title and interest in and to such item, free and clear of any Liens and Encumbrances;
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(ii) except as set forth in Schedule 1.24.1, Classics and its Subsidiaries are unaware of any transfers of ownership or title of Intellectual Property;
(iii) such item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge;
(iv) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to Classics’ or any Classics Shareholder’s Knowledge, threatened which challenges the legality, validity, enforceability, use or ownership of such item;
(v) no prior art or activity is known by Classics which would affect the validity or enforceability of the claimed subject matter set forth in Schedule 1.24.3, or the validity or enforceability of the trademarks set forth in Schedule 1.24.4;
(vi) Classics and its Subsidiaries have not agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to such item;
(vii) all licenses, agreements and other permissions pertaining to such item and all other rights to which Classics and its Subsidiaries are entitled with respect thereto are in compliance in all respects with all applicable Laws in all jurisdictions worldwide, including those pertaining to remittance of foreign exchange and Taxes; and
(viii) Classics and its Subsidiaries have not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of, or granted any Lien on such item; nor has Classics or its Subsidiaries granted any release, covenant not to sue or other non-assertion assurance to any Person with respect to such item which could reasonably be expected to have an adverse effect on the aggregate value of the Intellectual Property.
1.24.9 Classics represents that neither it, nor any Subsidiaries, use any computer software or Intellectual Property owned by any Person other than Classics pursuant to any license, sublicense, agreement or permission and that no such licenses, sublicenses, agreements or permissions exist.
1.24.10 To Classics’ Knowledge, the continued operation of its and its Subsidiaries’ business as currently conducted does not and will not interfere with, infringe upon, misappropriate or otherwise come into conflict with, any Intellectual Property rights of any Person.
1.24.11 Classics has no Knowledge of any new products, inventions, procedures, or methods of manufacturing or processing that any competitors or other Persons have developed which reasonably could be expected to supersede or make obsolete any product or process of Classics and its Subsidiaries.
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1.25. Compliance With Laws.
1.25.1 Classics and its Subsidiaries are not in violation of any laws, governmental orders, rules or regulations, whether federal, state or local Laws, to which it or any of its assets or properties are subject, which may have a material adverse effect on its business or operations. Except as set forth in Schedule 1.25.1, Classics and its Subsidiaries have not received notice of any violation of any Law, or any potential liability under any Law, relating to the operation of Classics and its Subsidiaries or their business or operations, and Classics is not aware of any such violation or potential liability.
1.25.2 Schedule 1.25.2 sets forth a list of each government or regulatory license, authorization, permit, franchise, consent and approval (the “Permits”) issued and held by or on behalf of Classics and its Subsidiaries or, required to be so issued and held in connection with their business or operations as currently conducted by Classics and its Subsidiaries. Except as disclosed in Schedule 1.25.2, Classics and its Subsidiaries are the authorized legal holder of the Permits, and each Permit is valid and in full force and effect. Classics and its Subsidiaries are not in default under, and no condition exists that with notice or lapse of time or both could constitute a default or could give rise to a right of termination, cancellation or acceleration under, any Permit held by Classics and its Subsidiaries.
1.25.3 No officer, director or greater than 20% shareholder of Classics is considered a ‘bad actor’ under, or subject to disqualification under, Rule 506(d) of the Securities Act or has been subject to any event which would require disclosure by Classics under Rule 506(e) of the Securities Act in any offering under Regulation D.
1.26. Environmental Matters.
1.26.1 The operations of Classics and its Subsidiaries are currently and have been in compliance in all material respects with all applicable Environmental Laws and all licenses and permits issued pursuant to Environmental Laws or otherwise (“Environmental Permits”);
1.26.2 Classics has no Knowledge of any required Environmental Permits required under all applicable Environmental Laws necessary to operate Classics and its Subsidiaries;
1.26.3 Classics and its Subsidiaries are not the subject of any outstanding written order or contract with any Governmental Body or other Person respecting any Environmental Laws or any Release or threatened Release of a hazardous material. “Release” means any actual or threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, migration or leaching into the indoor or outdoor environment, or into or out of any property;
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1.26.4 Classics and its Subsidiaries have not received any written communication alleging either that it may be in violation of any Environmental Law or Environmental Permit or that it may have any liability under any Environmental Law;
1.26.5 Classics and its Subsidiaries have not incurred, assumed or undertaken any contingent liability in connection with any Release of any hazardous materials into the indoor or outdoor environment (whether on-site or off-site) and there are no facts, circumstances or conditions relating to, arising out of or attributable to it that could give rise to material liability under Environmental Laws;
1.26.6 To the Knowledge of Classics and the Classics Shareholders, there is not located at any of the properties of Classics and its Subsidiaries any (i) underground storage tanks, (ii) asbestos or asbestos-containing material, (iii) equipment containing polychlorinated biphenyls, (iv) lead-based paint, or (v) mold;
1.26.7 No underground storage tanks and no amount of any substance that has been designated by any Governmental Body or by applicable federal, state or local legal requirement to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous substances pursuant to applicable Law (a “Hazardous Material”), but excluding office and janitorial supplies, are present, as a result of the deliberate actions of Classics or its Subsidiaries, or, to the Classics Shareholders Knowledge, as a result of any actions of any third party or otherwise, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that Classics or its Subsidiaries has at any time owned, operated, occupied or leased; and
1.26.8 Classics and its Subsidiaries have not transported, stored, used, manufactured, disposed of, released or exposed its employees or others to Hazardous Materials in violation of any legal requirement in effect on or before the date hereof, nor has Classics or its Subsidiaries disposed of, transported, sold, or manufactured any product containing a Hazardous Material (collectively, “Hazardous Material Activities”) in violation of any legal requirement promulgated by any Governmental Body in effect prior to or as of the date hereof to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.
1.27. Insurance Coverage. Schedule 1.27 contains a list of all of the insurance policies and fidelity bonds covering the assets, businesses, operations, employees, officers and agents of Classics and its Subsidiaries. There is no material claim by Classics or its Subsidiaries pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all of such policies and bonds have been paid, and Classics and its Subsidiaries have complied in all material respects with the terms and conditions of all of such policies and bonds. Such policies of insurance and bonds are in full force and effect. Neither Classics nor any of the Classics Shareholders have Knowledge of any threatened termination of, or premium increase with respect to, any of such policies or bonds.
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1.28. Customer, Supplier and Employee Relations. Schedule 1.28 includes a complete and correct list of (a) all customers of Classics and its Subsidiaries who have made aggregate purchases in excess of 5% of the total revenues of Classics in calendar year 2023 or 2024 to date, and (b) all suppliers from whom Classics and its Subsidiaries have purchased in excess of AU$25,000 in equipment or supplies in calendar year 2023 or 2024 to date. The relationships of Classics and its Subsidiaries with such customers and suppliers and the employees of Classics and its Subsidiaries are good commercial working relationships and, except as disclosed in Schedule 1.28, none of such customers, suppliers or employees has canceled, terminated or otherwise materially altered or notified Classics or its Subsidiaries of any intention to cancel, terminate or materially alter its relationship with Classics and its Subsidiaries since December 31, 2023 and there will not be any such change as a result of the transactions contemplated by this Agreement.
1.29. Product and Service Matters. Except as disclosed in Schedule 1.29, each product manufactured, sold, leased, delivered or installed or services performed by Classics and its Subsidiaries prior to the Closing has, in all respects, complied with and conformed to all applicable federal, state, local or foreign laws and regulations, contractual commitments and all applicable warranties of Classics and its Subsidiaries. Schedule 1.29 includes copies of the standard terms and conditions of sale, lease, delivery or installation for the products and services of Classics and its Subsidiaries (containing applicable guaranty, warranty, and indemnity provisions). Except as disclosed in Schedule 1.29, none of such products or services is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease.
1.30. Compliance with Laws.
Without limiting any of the representations of Classics or any Classics Shareholder under Section 1.13, Classics and each Classics Shareholder represents and warrants that:
(i) Compliance with Anti-Money Laundering Laws. The operations of Classics and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the USA Patriot Act of 2001 and the applicable money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Classics and its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the Knowledge of Classics or the Classics Shareholders, threatened. Classics has established and maintains procedures and controls that are reasonably designed to ensure that Classics and its Subsidiaries are in compliance in all material respects with any applicable FCPA, Anti-Money Laundering Laws or OFAC (defined below) Laws.
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(ii) No Conflicts with Sanctions Laws. Neither Classics nor its Subsidiaries, nor to Classics’ or each Classics Shareholder’s Knowledge any director, officer, employee, agent, Affiliate of the Classics and its Subsidiaries or other person acting on behalf of Classics and its Subsidiaries or their Affiliates is, or is directly or indirectly owned or controlled by, a Person that is currently subject to any sanctions administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Departments of State or Commerce and including, without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”) or any other relevant sanctions authority (collectively, “Sanctions”), nor are Classics or its Subsidiaries located, organized or resident in a country or territory that is the subject or target of a comprehensive embargo or Sanctions prohibiting trade with the country or territory, including, without limitation, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); no action of Classics and its Subsidiaries or the Classics Shareholders in connection with (i) the execution, delivery and performance of this Agreement, or (ii) any other transaction contemplated hereby or the fulfillment of the terms hereof or thereof, will result in the proceeds of the transactions contemplated hereby being used, or loaned, contributed or otherwise made available, directly or indirectly, to any subsidiary, joint venture partner or other person or entity, for the purpose of (i) unlawfully funding or facilitating any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) unlawfully funding or facilitating any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, Classics and its Subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.
(iii) Anti-Bribery. Neither Classics and its Subsidiaries nor any of the Classics Shareholders or their Affiliates, nor to the Knowledge of Classics or any Classics Shareholder any director, officer, agent, employee or other person associated with or acting on behalf of Classics and its Subsidiaries or any Affiliates thereof, has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee, to any employee or agent of a private entity with which Classics or its Subsidiaries do or seek to do business (a “Private Sector Counterparty”) or to foreign or domestic political parties or campaigns from corporate funds, (iii) violated or is in violation of any provision of any applicable Laws implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or any applicable provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010, or any other similar law of any other jurisdiction in which Classics and its Subsidiaries operate its businesses, including, in each case, the rules and regulations thereunder, (iv) taken, is currently taking or will take any action in furtherance of an offer, payment, gift or anything else of value, directly or indirectly, to any person while knowing that all or some portion of the money or value will be offered, given or promised to anyone to improperly influence official action, to improperly obtain or retain business or otherwise to secure any improper advantage or (v) otherwise made any bribe, rebate, payoff, influence payment, unlawful kickback or other unlawful payment. Classics and its Subsidiaries have instituted and have maintained, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with the laws referred to in (iii) above and with this representation and warranty; and none of the Classics and its Subsidiaries nor any of their Affiliates will directly or indirectly use the proceeds from the Exchange or lend, contribute or otherwise make available such proceeds to any Affiliate, joint venture partner or other Person for the purpose of financing or facilitating any activity that would violate the laws and regulations referred to in (iii) above.
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1.31. Insider Trading. The Classics Shareholders certify and confirm that they have not personally, nor through any third parties, purchased, nor caused to be purchased in the public marketplace any publicly-traded shares of the Company. The Classics Shareholders further certify and confirm that they have not communicated the nature of the transactions contemplated herein, are not aware of any disclosure of non-public information regarding the Company or the transactions contemplated herein, and are not a party to any insider trading in the Company’s securities. The Classics Shareholders further certify and confirm that they have not “tipped” any related parties nor third parties regarding the transactions contemplated herein, and/or advised any parties to purchase, sell or otherwise trade shares of the Company’s securities in the marketplace.
1.32. Closing Date Releases.
1.32.1 Effective on the Closing Date, each Classics Shareholder for itself and its successors and assigns, hereby releases, acquits and forever discharges Classics and its Subsidiaries and their respective Affiliates, officers, directors, employees and agents and its respective successors and assigns of and from any and all Claims, demands, liabilities, responsibilities, disputes, causes of action and obligations of every nature whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that the Classics Shareholder has, owns or holds as of the Closing Date, or has at any time previously had, owned or held against such parties, including, without limitation, all Liabilities created as a result of the, gross negligence and willful acts of Classics or its Subsidiaries or the negligence of any of Classics or its Subsidiaries or their employees and agents, or under a theory of strict liability, existing as of the Closing Date; provided, however, that such release shall not cover (a) any Claims against Classics or its Subsidiaries or any of their Affiliates (other than Classics and its Subsidiaries) unrelated in any way to Classics or its Subsidiaries; (b) any Claims arising under any agreement between such Classics Shareholder and Classics or its Subsidiaries, previously disclosed to the Company, to be continued after the Closing Date; or (c) any Claims arising under this Agreement. Notwithstanding the foregoing, the releases and other agreements set forth in this Section 1.32 shall not apply to or otherwise limit, restrict or affect the indemnification, exculpation and other obligations set forth in ARTICLE VII or in any other document or agreement.
1.32.2 As of the date of this Agreement, each Classics Shareholder hereby represents and warrants that such Classics Shareholder has not previously assigned or transferred, or purported to assign or transfer, to any Person or entity whatsoever all or any part of the Claims, demands, liabilities, responsibilities, disputes, causes of action or obligations released in Section 1.32.1. Each Classics Shareholder represents and warrants that the Classics Shareholder has read and understands all of the provisions of this Section 1.32.1 and that the Classics Shareholder has been represented by legal counsel of the Classics Shareholder’s own choosing in connection with the negotiation, execution and delivery of this Agreement.
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1.32.3 The release provided by the Classics Shareholders pursuant to Section 1.32.1 shall apply notwithstanding that the matter for which release is provided may relate to the ordinary, sole or contributory negligence, gross negligence, willful misconduct or violation of Law by a released party, including Classics and its Affiliates, officers, directors, employees and agents, and for liabilities based on theories of strict liability, and shall be applicable whether or not negligence of the released party is alleged or proven, it being the intention of the Parties to release the released party from and against its ordinary, sole and contributory negligence and gross negligence as well as liabilities based on the willful actions or omissions of the released party and Liabilities based on theories of strict liability.
1.33. Solvency. Based on the financial condition of Classics as of the date of this Agreement, (i) the fair saleable value of Classics and its Subsidiaries’ assets exceeds the amount that will be required to be paid on or in respect of Classics and its Subsidiaries’ existing debts and other liabilities (including known contingent liabilities) as they mature, and (ii) Classics and its Subsidiaries’ assets do not constitute unreasonably small capital to carry on each of their business as now conducted. As of the date hereof, Classics and its Subsidiaries do not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
1.34. Acknowledgements. By entering into this Agreement, the Classics Shareholders agree that the Holdback Termination Right set forth in Section 3.2 hereof is fair and reasonable, and is an integral part of this Agreement and that the Company would have not entered into this Agreement if the Classics Shareholders did not agree to the Holdback Termination Right. By entering into this Agreement, the Classics Shareholders agree that the Earnout Termination Right set forth in Section 3.3 hereof is fair and reasonable, and is an integral part of this Agreement and that the Company would have not entered into this Agreement if the Classics Shareholders did not agree to the Earnout Termination Right.
1.35. No Other Representations or Warranties. Except for the representations and warranties contained in this ARTICLE I or in any Classics Schedule, neither Classics, the Classics Shareholders nor any other Person makes any other express or implied representation or warranty on behalf of Classics, the Classics Shareholders, or any of their Affiliates or representatives to the Company.
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1.36. No Untrue Representation or Warranty. No representation or warranty contained in this Agreement or any attachment, schedule, exhibit, certificate or instrument furnished to the Company by Classics or the Classics Shareholders pursuant hereto, or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state any material fact necessary to make the statements contained herein or therein not misleading.
ARTICLE II.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of the Classics Shareholders, except as set forth in the schedules delivered by the Company in connection with its entry into this Agreement (the “Company Schedules”), the Company represents and warrants as follows (which shall be re-confirmed at Closing):
2.1. Organization. The Company is a corporation duly organized, validly existing, and in good standing under the laws of Nevada and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets, to carry on its business in all material respects as it is now being conducted and as contemplated after the Exchange, and except where failure to be so qualified would not have a material adverse effect on its business, there is no jurisdiction in which it is not qualified in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the Company’s Governing Documents. The Company has taken all action required by law, its Governing Documents, or otherwise to authorize the execution and delivery of this Agreement, and the Company has full power, authority, and legal right and has taken all action required by Law, its Governing Documents or otherwise to consummate the transactions herein contemplated.
2.1. Trading Status. The Company’s common stock trades on the Nasdaq Capital Market under the symbol “GMGI”. The Company has no Knowledge of any notices of non-compliance with the Nasdaq Capital Market’s continued listing requirements.
2.2. Capitalization. As of the date of this Agreement the authorized capital stock of the Company consists of 300,000,000 shares of common stock, US$0.00001 par value per share, of which 120,801,977 shares are issued and outstanding, and 20,000,000 shares of preferred stock, US$0.00001 par value per share (such shares, collectively, “Preferred Stock”), of which 1,000 shares are designated as Series B Voting Preferred Stock and of which 1,000 shares are issued and outstanding and of which 1,000 shares are designated as Series C Preferred Stock and of which 1,000 shares are issued and outstanding. The terms of the Company’s Preferred Stock are described in the Disclosure Documents.
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2.3. No Conflict or Violation; Default; Confirmations.
2.3.1 The execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, conflict with or result in a breach of or constitute a default under (a) or result in the termination or the acceleration of, or the creation in any Person of any right (whether or not with notice or lapse of time or both) to declare a default, accelerate, terminate, modify or cancel any indenture, contract, lease, sublease, license, mortgage, indenture, lease, loan agreement, note or other obligation or liability (each, a “Company Contract”) to which the Company is a party or by which it is bound, (b) any provision of the Governing Documents of the Company, (c) any judgment, order, decree, rule or regulation of any Governmental Body to which the Company or Company’s business is subject or (d) any applicable laws or regulations. There is no (with or without the lapse of time or the giving of notice or both) violation or default or, to the knowledge of the Company, threatened violation or default of or under any Company Contract.
2.3.2 To the Company’s Knowledge, it has complied with all applicable federal and state securities laws and regulations, including being current in all of its reporting obligations under federal securities laws and regulations.
2.3.3 No order suspending the effectiveness of any registration statement of the Company under the Securities Act or the Exchange Act has been issued by the SEC and, to the Company’s Knowledge, no proceedings for that purpose have been initiated or threatened by the SEC.
2.3.4 The Company is not the subject of, nor does any officer or director of the Company have any reason to believe that the Company or any of its officers, directors or Affiliates will be the subject of, any civil or criminal proceeding or investigation by any federal or state agency alleging a violation of securities laws.
2.3.5 No officer, director or greater than 20% shareholder of the Company is considered a ‘bad actor’ under, or subject to disqualification under, Rule 506(d) of the Securities Act or has been subject to any event which would require disclosure by the Company under Rule 506(e) of the Securities Act in any offering under Regulation D.
2.4. Litigation and Proceedings. There are no actions, suits, proceedings or investigations pending or, to the Knowledge of the Company after reasonable investigation, threatened by or against the Company or affecting the Company or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, except as set forth in the Disclosure Documents. The Company has no Knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality, or any circumstance which after reasonable investigation would result in the discovery of such default.
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2.5. Approval of Agreement. The Directors of the Company have authorized the execution and delivery of this Agreement by the Company and approved this Agreement and the transactions contemplated hereby.
2.6. Valid Obligation. This Agreement and all agreements and other documents executed by the Company in connection herewith constitute the valid and binding obligation of the Company, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.
2.7. No Other Representations or Warranties. Except for the representations and warranties contained in this ARTICLE II or in any Company Schedule neither the Company, nor any other Person, makes any other express or implied representation or warranty on behalf of the Company nor any of their Affiliates or representatives to Classics or the Classics Shareholder.
2.8. No Untrue Representation or Warranty. No representation or warranty contained in this Agreement or any attachment, schedule, exhibit, certificate or instrument furnished to Classics or the Classics Shareholder pursuant hereto, or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state any material fact necessary to make the statements contained herein or therein not misleading.
ARTICLE III.
PLAN OF EXCHANGE
3.1. The Exchange.
3.1.1 On the terms and subject to the conditions set forth in this Agreement, on the Closing Date (as defined below) and effective for all purposes as of the Effective Date, the Classics Shareholders shall accept the Exchange Offer described herein and shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the Classics Stock, in the aggregate constituting no less than Eighty Percent (80%) of the issued and outstanding securities of Classics to the Company at the Closing. The Exchange shall be effective for all purposes as of the Effective Date.
3.1.2 The Company shall accept the Exchange Offer, and shall, on the terms and conditions set forth in this Agreement, which shall be in consideration for Eighty Percent (80%) of the ownership interests of Classics:
(i) issue the Classics Shareholders, pro rata with their ownership of Classics, on the Closing Date 810,390 shares of the Company’s common stock (the “Closing Shares”);
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(ii) pay the Classics Shareholders, pro rata with their ownership of Classics, on the Closing Date AU$6,780,000 (the “Closing Cash to Shareholders”),
(iii) pay the Classics Shareholders, pro rata with their ownership of Classics, on the Closing Date AU$33,808.40 representing 80% of agreed value of of the Nett Effective Date Assets.
(iv) together the Closing Shares in 3.1.2 (i), and the Closing Cash in 3.1.2 (ii) the “Closing Consideration”);
(v) pay the Classics Shareholders, pro rata with their ownership of Classics, within six (6) months from of the Closing Date, up to an additional AU$500,000 subject to the terms of Section 3.2 (the “Holdback Cash”);
(vi) issue the Classics Shareholders, pro rata with their ownership of Classics, on the Closing Date, up to an additional 201,992 shares of the Company’s common stock (the “Base Earnout Shares”), pursuant to the terms and conditions of Section 3.3, below; and
(vii) pay the Classics Shareholders, pro rata with their ownership of Classics, on the Closing Date, up to an additional AU$1,820,000 (the “Base Earnout Cash” and together with the Earnout Shares, the “Base Earnout Consideration”), pursuant to the terms and conditions of Section 3.3, below.
The Parties agree that the Company Securities shall each be deemed to have a value of AU$3.85 per share (the “AU$ Agreed Value”) and US$2.51 (the “US$ Agreed Value”).
3.2. Closing Shares True-Up. The Closing Shares shall be subject to a true-up as set forth in this Section 3.2. If the Last Closing Price on the hundred and eightieth (180th) day following the Closing Date (the “True-Up Date”), is less than the Last Closing Price on the Closing Date, then the Classics Shareholders shall be due from Company additional consideration (which shall be deemed an increase in the Closing Consideration), equal to (a) the total number of Closing Shares, multiplied by (b) the difference between (i) the Last Closing Price on the True-Up Date, and (ii) the Last Closing Price on the Closing Date (as applicable, (a) multiplied by (b), the “True-Up Amount”). At the option of the Company, the True-Up Amount may be paid in cash or additional shares of the Company’s common stock (“True-Up Shares”), or any combination thereof. The number of True-Up Shares shall equal the True-Up Amount (or such portion thereof that the Company desires to pay in shares of Company common stock), divided by the $US Agreed Value, rounded to the nearest whole share. In the event that the Last Closing Price on the True-Up Date is equal to or greater than the Last Closing Price on the Closing Date, no True-Up Amount shall be due to the Classics Shareholders and the Classics Shareholders shall have no rights under this Section 3.2. To the extent due pursuant to this Section 3.2, the True-Up Amount shall be paid within ten (10) Business Days of the True-Up Date. In the event the cash portion of the True-Up Amount is paid in AU$, the portion of the True-Up Amount paid in AU$ shall be converted from US$ to AU$ based on the exchange rate on the True-Up Date as determined in good faith by the Company.
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3.3. Holdback. The Holdback Cash shall be paid to the Classics Shareholders, subject to the terms of this Section 3.2, if (and only if) the Company determines, within six (6) months after the Closing Date that the Classics Shareholders have not defaulted in, or breached, any of their obligations, covenants or representations hereunder and/or under the Shareholders Agreement (the “Holdback Requirement”). If the Company determines that the Holdback Requirement has been met, then the Company shall so notify the Classics Shareholders in writing and shall wire the Holdback Cash, to the Classics Shareholders in accordance with wire instructions provided by the Classics Shareholders to the Company within ten (10) Business Days after notifying the Classics Shareholders of such determination. If the Company determines that the Holdback Requirement has not been met, then the Company shall have no further obligations under this Section 3.2, and such Holdback Cash shall be deemed forfeited by the Classics Shareholders and shall become the property of the Company (the “Holdback Termination Right”). The Company shall not be required to segregate or escrow the Holdback Cash and the Classics Shareholders shall not be due any interest or earnings on such Holdback Cash while held by the Company.
3.4. Potential For Earnout Consideration.
3.4.1 The Classics Shareholders shall be eligible to earn the Earnout Consideration, in accordance with the terms of this Section 3.3. The total Base Earnout Cash, if any, payable to the Classics Shareholders shall total the Base Earnout Cash, multiplied by the Earnout Consideration Percentage as set forth in the table below (the “Earnout Metrics”) and the total Base Earnout Shares, if any, issuable to the Classics Shareholders shall total the Base Earnout Shares, multiplied by the Earnout Consideration Percentage as set forth in the Earnout Metrics below, rounded up to the nearest whole share:
| Net Profit For the Earnout Period | Earnout Consideration Percentage | |
| Under AU$2,500,000.00 | 0% | |
| Between AU$2,500,000.00 and AU$3,000,000.00 | 50% | |
| Between AU$3,000,000.01 and AU$3,500,000.00 | 100% | |
| Over AU$3,500,000.01 | 120% |
For example, if total Net Profit for the Earnout Period is AU$3,200,000.00, the Earnout Consideration Percentage would be 100% and the Classics Shareholders would receive 100% of the Base Earnout Cash and 100% of the Base Earnout Shares. As shown in the table above, the Classics Shareholders have the right to earn more than 100% of the Base Earnout Cash (specifically up to 120% of the Base Earnout Cash) and more than 100% of the Base Earnout Shares (specifically up to 120% of the Base Earnout Shares) if certain of the Earnout Metrics are met. For the purposes of this Agreement, “Earnout Shares” means the Base Earnout Shares multiplied by the Earnout Consideration Percentage and “Earnout Cash” means the Base Earnout Cash multiplied by the Earnout Consideration Percentage, and collectively, the Earnout Shares and Earnout Cash are defined herein as the “Earnout Consideration”.
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3.4.2 For purposes of the determination of the Earnout Metrics and Earnout Consideration Percentage, “Net Profit for the Earnout Period” shall equal total Classics for a Cause Pty Ltd ABN number 636 124 162 Net Profit for the Earnout Period, as determined by the Company’s management in good faith, based on the books and records of Classics for a Cause Pty Ltd ABN number 636 124 162.
3.4.3 For purposes of the determination of the Earnout Metrics and Earnout Consideration Percentage, “Net Profit for the Earnout Period”. Debt Forgiveness shall not affect earnout calculations and in addition any adjustments required in terms of accrued income for GAAP purposes shall also not be included in the calculations. The determination will be conducted on trading of Classics for a Cause Pty Ltd ABN number 636 124 162 records written on a cash basis.
3.4.4 Notwithstanding the above, Earnout Consideration shall only be due to the Classics Shareholders, if the Company determines on the Net Profit Determination Date, that the Classics Shareholders have not defaulted in, or breached, any of their obligations, covenants or representations hereunder and/or under the Shareholders Agreement (the “Earnout Requirement”). If the Company determines that the Earnout Requirement has not been met, then the Company shall have no further obligations under this Section 3.3, and such Earnout Cash (including Base Earnout Cash) and Earnout Shares (including Base Earnout Shares) shall be deemed forfeited (the “Earnout Termination Right”).
3.4.5 If the Company determines that the Earnout Consideration is due under this Section 3.3, then the Company shall so notify the Classics Shareholders in writing and shall (a) wire the Earnout Cash; and (b) issue the Earnout Shares, to the Classics Shareholders in accordance with wire instructions provided by the Classics Shareholders to the Company within ten (10) Business Days after the Net Profit Determination Date.
3.4.6 The Classics Shareholders shall (and shall cause Classics to) provide to the Company full access to Classic’s books, bank accounts and bank statements, and other sources of information necessary, in the Company’s opinion, to make a determination as to the Net Profit For the Earnout Period.
3.4.7 During the Earnout Period, the Company agrees (i) to provide a commercially reasonable operating budget for Classics similar to the past practices of Classics and to operate Classics in a manner not intentionally designed to reduce the amount of revenue produced by Classics, but with due regard for practical business considerations, including with respect to profitability criteria, (ii) to provide products and services to customers and clients of Classics on terms, provisions, pricing, timeliness and quality of service comparable to that provided to the applicable historical standards of Classics generally, and (iii) to not divert sales generation efforts with clients and customers of Classics away from Classics and its sales channels with the sole intent of reducing the Classics Net Profit for the Earnout Period. The Classics Shareholders agree that the restrictions stated in this paragraph are limited by the reasonable business considerations of the Company with respect to the operation of Classics. Except for regular maintenance capital expenditures arising in the ordinary course of business, nothing herein shall constitute an obligation on the part of the Company to acquire any additional equipment or make any predetermined level of capital expenditures during the Earnout Period.
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3.5. Closing. The closing (“Closing”) of the transaction contemplated by this Agreement shall occur automatically, and without any further required action from any Party, upon the satisfaction of the Closing Conditions (described below) (the “Closing Date”) which date shall in no event be later than August 21, 2024 (the “Required Closing Date”), unless such date is extended in writing by the mutual consent of all Parties.
3.5.1 The following “Closing Conditions” shall have occurred, or have been waived by Classics and the Company in writing, prior to the Closing Date:
(i) The Directors of the Company shall have approved the transactions contemplated by this Agreement and the issuance of the Closing Shares, and Earnout Shares, to the extent applicable;
(ii) Classics Shareholders shall surrender the certificates evidencing Eighty Percent (80%) of the securities of Classics, duly endorsed with stock powers or notarized signatures of the holders thereof so as to make the Company the sole owner thereof;
(iii) Classics shall supply the Company with Minutes of the Directors of Classics approving and consenting to this Agreement and the transactions contemplated herein;
(iv) Classics (and its principals) shall have delivered documentation and agreements relating to and evidencing the assets of Classics and the Intellectual Property, to the Company, in such form as reasonably requested by the Company, and all corporate records (including minutes) of Classics and its subsidiaries, if any;
(v) The Parties shall have delivered all officers certificates, Schedules, exhibits and other documentation and information required pursuant to the terms and conditions of this Agreement;
(vi) The Classics Shareholders have delivered to the Company a copy of the Shareholders Agreement executed by each Classics Shareholder;
(vii) Classics shall have provided the Company a copy of a good standing certificate dated within 10 days of the Closing Date;
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(viii) The Company shall have paid the Classics Shareholders the Closing Cash to Shareholders and
(ix) The Company shall have complied with all of the requirements of ARTICLE VI, below and Classics shall have complied with all of the requirements of ARTICLE V, below.
3.5.2 Promptly following Closing, the Company and the Classics Shareholders shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered) any and all certificates, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the Parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.
3.6. Tradability of Company Securities. The Company Securities have not been registered under the Securities Act, nor registered under any state securities Law, and are “restricted securities” as that term is defined in Rule 144 under the Securities Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from registration under the Securities Act. The Company Securities will bear the following restrictive legend:
‘‘THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.’’
3.7. Termination.
3.7.1 The transactions contemplated hereby may be terminated or abandoned at any time prior to the Closing Date:
(i) by the mutual written consent of the Company and Classics;
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(ii) (x) by either a Simple Majority of the Classics Shareholders or the Company, if there has been a breach of any material representation, warranty, covenant, agreement, or undertaking made by the other Party in this Agreement, which breach, if curable, is not cured within thirty (30) calendar days after delivery by the non-breaching Party to the breaching Party of written notice, which shall specify the nature of such breach and the breaching Party’s intention to terminate this Agreement if such breach or failure is not cured (provided, however, that if the cure reasonably requires more than thirty (30) days to complete, then the breaching Party shall have an additional fifteen (15) days, provided it timely commences the cure and continues diligently prosecuting the cure to completion); provided further, however, that the non-breaching Party shall be obligated to elect to terminate within thirty (30) days of the end of the cure period (if applicable), or else it shall be required to close regardless of such breach;
(iii) by either the Company, or a Simple Majority of the Classics Shareholders, on written notice to the other Party if the Closing shall not have occurred on or prior to the Required Closing Date; provided, however, that the right to terminate this Agreement under this Section 3.6.1(iii) shall not be available to any Party whose breach of any provision of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Required Closing Date; provided, further, that notwithstanding the previous limitation, the Required Closing Date shall not be extended in perpetuity until such breach is cured, and the non-breaching Party shall be obligated to elect: (x) to close regardless of such breach following a reasonable period of time necessary to cure such breach, or (y) to terminate this Agreement on a date certain to not exceed 12 months from the date hereof, and upon any failure to make such election, this Agreement shall automatically terminate as of the date that is 12 months from the date hereof; or
(iv) by (1) Classics or (2) a Simple Majority of the Classics Shareholders, upon written notice to the Company if any of the conditions set forth in ARTICLE VI shall have become incapable of fulfillment and shall not have been waived by Classics and where applicable, the Classics Shareholders, or (2) by the Company on written notice to Classics if any of the conditions set forth in ARTICLE V shall have become incapable of fulfillment and shall not have been waived by the Company; provided that the right to terminate this Agreement pursuant to this Section 3.6.1(iv) shall not be available if the failure of the Party so requesting termination to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of such condition to be satisfied on or prior to such date.
3.7.2 This Agreement may be terminated by either the Directors of the Company, the Directors of Classics or a Simple Majority of the Classics Shareholders at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding before any court or any Governmental Body which shall seek to restrain, prohibit, or invalidate the transactions contemplated by this Agreement and which, in the judgment of such Directors or Classics Shareholders (as applicable), made in good faith and based upon the advice of its legal counsel, makes it inadvisable to proceed with the Exchange; or
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(ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions (which does not include the SEC) or in the judgment of such Directors or Classics Shareholders (as applicable), made in good faith and based on the advice of counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the Exchange.
In the event of termination pursuant to this paragraph, no obligation, right or liability shall arise hereunder, and each Party shall bear all of the expenses incurred by it in connection with the negotiation, drafting, and execution of this Agreement and the transactions herein contemplated.
3.8. Effect of Termination. In the event of the termination of this Agreement in accordance with Section 3.6, this Agreement shall become null and void and of no further force or effect except for ARTICLE VII and ARTICLE VIII which shall survive the termination of this Agreement for any reason. Termination of this Agreement shall not relieve a breaching Party from all breaches of this Agreement that occurred prior to such termination. In no event shall any Party be liable for punitive damages.
ARTICLE VI.
SPECIAL COVENANTS
4.1. Access to Properties and Records. The Company and Classics will each afford to the officers and authorized representatives of the other Parties reasonable access to the properties, books and records of the Company or Classics, as the case may be, in order that each may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of the Company or Classics, as the case may be, as the other shall from time to time reasonably request. Any such investigation and examination shall be conducted at reasonable times and under reasonable circumstances, and each Party hereto shall cooperate fully therein. No investigation by a Party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other Party under this Agreement. In order that each Party may investigate as it may wish the business affairs of the other, each Party shall furnish the other during such period with all of such information and copies of such documents concerning the affairs of it as the other Party may reasonably request, and cause its officers, employees, consultants, agents, accountants, and attorneys to cooperate fully in connection with such review and examination, and to make full disclosure to the other Parties all material facts affecting its financial condition, business operations, and the conduct of operations.
4.2. Delivery of Books and Records and Bank Accounts. At the Closing, Classics shall deliver to the Company copies of the corporate minute books, books of account, contracts, records, and all other books or documents including the bank accounts of Classics now in the possession of Classics or its representatives.
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4.3. Third Party Consents and Certificates. The Company and Classics agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.
4.4. Actions Prior to Closing.
4.4.1 From and after the date of this Agreement until the Closing Date and except as set forth in the Company Schedules or the Classics Schedules, or as permitted or contemplated by this Agreement, the Company and Classics, respectively (subject to paragraph (b) below), will each:
(i) carry on its business in substantially the same manner as it has heretofore;
(ii) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;
(iv) use good faith efforts to perform in all material respects all of its obligations under material contracts, leases, and instruments relating to or affecting its assets, properties, and business;
(v) use its good faith efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all obligations and duties imposed on it by all federal, provincial and state laws and all rules, regulations, and orders imposed by federal, provincial or state governmental authorities.
4.4.2 From and after the date of this Agreement until the Closing Date, Classics will not:
(i) make any changes in its Governing Documents;
(ii) take any action described in Section 1.6 (all except as permitted therein or as disclosed in Classics’ schedules);
(iii) enter into or amend any contract, agreement, or other instrument except in the ordinary course of business involving the sale of goods or services; and
(iv) sell any assets or discontinue any operations, sell or issue any shares evidencing capital stock (other than as contemplated in this Section 4.4), issue any convertible securities or conduct any similar transactions other than in the ordinary course of business.
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4.5. Post-Closing Conditions; Requirements.
4.5.1 Following the Closing, pursuant to the terms and conditions of Section 3.1.2, hereof, the Company shall issue the Closing Shares to the Classics Shareholders.
4.5.2 Following the Closing, the Classics Shareholders shall assist the Company, at Classics’ sole cost and expense, with the preparation of financial statements in accordance with US GAAP, pro forma financial information and such other interim financial information as required by Item 2.01 and/or Item 9.01 of Form 8-K and Regulation S-X of the Securities Act, in acceptable form to the Company, as applicable, to the extent deemed required by the Company and its advisors (the “Financial Statements”).
4.5.3 For good and valuable consideration, including the Closing Cash and the Closing Shares, which the Classics Shareholders acknowledge the sufficiency of, the Classics Shareholders each agree that for a period of two (2) years following the Closing (the “Non-Compete Period”), each Classics Shareholder (whether by itself, through its Affiliates, employers or employees or agents or otherwise, and whether on its own behalf or on behalf of any other Person) shall not, directly or indirectly, either as an employee, employer, consultant, agent, investor, principal, partner, stockholder (except as the holder of less than 10% of the issued and outstanding stock of a publicly held corporation), own, manage, operate, control, be employed by, act as an officer, director, agent or consultant for, or be in any other way connected with or provide services or products to or for, any Person in the business of manufacturing, selling, creating, renting, marketing, producing, undertaking, developing, supplying, or otherwise dealing with or in Restricted Services or Restricted Products in the Restricted Area, except in each case through the Company, Classics’ or their Subsidiaries (the “Non-Compete”). The Classics Shareholders each agree that but for agreeing to the terms of this Non-Compete, the Company would not have agreed to make the terms of this Agreement or the Exchange. For purposes of this Section 4.5.3 and this Agreement in general, the following terms shall have the following meanings:
(i) “Applicable Date of Determination” means the date or dates within the Non-Compete Period that any Classics Shareholder competes against, seeks to compete against, or is alleged to have competed against, the Companies, in violation of, or in compliance with, the terms of this Agreement.
(ii) “Restricted Area” means Australia, UK and USA
(iii) “Restricted Products” means any product or service, that the Company, Classics or any of their respective Subsidiaries and/or any of their respective Affiliates or subsidiaries is researching, developing, manufacturing, distributing, selling and/or providing at any time during the two years prior to the Applicable Date of Determination in the betting and gambling industry.
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(iv) “Restricted Services” means the manufacture, sale, or distribution of the Restricted Products and/or any other services that the Company, Classics or any of their respective Subsidiaries and/or any of their Affiliates is researching, developing, performing and/or providing at any time during the two years prior to the Applicable Date of Determination in the betting and gambling industry.
Every provision of this Section 4.5.3 is intended to be severable. If, in any jurisdiction, any term or provision of this Section 4.5.3 is determined to be invalid or unenforceable, (a) the remaining terms and provisions of this Section 4.5.3 shall be unimpaired, (b) any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such term or provision in any other jurisdiction, and (c) the invalid or unenforceable term or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. If any court shall determine that any covenant or restriction, by the length of time or any other restriction, or portion thereof, set forth in this Section 4.5.3 is unreasonable or unenforceable, the Parties, cooperating in good faith, shall reduce or modify such covenants or restrictions to those which it deems reasonable and enforceable under the circumstances (and if despite such good faith efforts the Parties are unable to mutually agree upon reduced or modified covenants or restrictions, the applicable court having jurisdiction thereof shall prescribe appropriately limited or modified covenants or restricted) and, as so reduced or modified, the Parties hereto agree that such covenants and restrictions shall remain in full force and effect as so modified. If a court determines that any provision of this Section 4.5.3 is invalid or against public policy and cannot be so reduced or modified so as to be made enforceable, the remaining provisions of this Section 4.5.3 shall not be affected thereby, and shall remain in full force and effect.
The covenants and undertakings contained in this Section 4.5.3 relate to matters which are of a special, unique and extraordinary character, and a violation of any of the terms of this Section 4.5.3 will cause irreparable injury to the Company, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated. Accordingly, the remedy at law for any breach of this Section 4.5.3 will be inadequate. Therefore, the Company will be entitled to seek an injunction, restraining order or other equitable relief from any court of competent jurisdiction, in the event of any breach of this Section 4.5.3, without the necessity of proving actual damages, posting any bond or surety. The rights and remedies provided by this Section 4.5.3 are cumulative and in addition to any other rights and remedies which the Company may have hereunder or at law or in equity.
4.5.4 Lock-Up.
(i) Think Tank Enterprises Pty Ltd, one of the Classics Shareholders (“Think Tank”), agrees that it will not, directly or indirectly, Transfer of any of the Company Securities until the one (1) year anniversary of the Closing Date, without the prior written approval of the Company (the “Lock-Up”).
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(ii) Notwithstanding the above, a Transfer of Company Securities as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of a family member (for purposes of this Agreement, “family member” means any relationship by blood, marriage or adoption, not more remote than first cousin); or transfers of Company Securities to a charity or educational institution; provided that in the case of any transfer pursuant to the foregoing clauses any such transfer shall not involve a disposition for value and each transferee shall agree to be bound by this Lock-Up in writing, pursuant to an acknowledgement acceptable to the Company.
(iii) Any attempted Transfer of Company Securities by Think Tank which is not in compliance with the Lock-Up or which is in violation of the terms of this Agreement shall be void ab initio.
(iv) In furtherance of the foregoing, the Company and its transfer agent are hereby authorized (i) to decline to make any transfer of securities if such transfer would constitute a violation or breach of the Lock-Up and (ii) to imprint on any certificate representing Company Securities beneficially owned by Think Tank (or any book-entry relating to such Company Securities) with a legend describing the restrictions contained herein.
8.5.5 The Classic Shareholders shall provide Brett Goodman and Anthony Goodman full access and full transactional ability on all bank accounts and merchant accounts held by Classics and Classics for a Cause within 7 days of Closing. Transactional ability on bank accounts will allow for any one person to transact independently.
ARTICLE V.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions, to the extent not waived by the Company in writing:
5.1. Ownership of Classics. Prior to the Closing Date, the Classics Shareholders shall have demonstrated to the Company, with evidence reasonably satisfactory to the Company, that the Classics Shareholders are the owners of One Hundred Percent (100%) of the outstanding securities of Classics.
5.2. Accuracy of Representations and Performance of Covenants. The representations and warranties made by Classics and the Classics Shareholders in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement). Classics and the Classics Shareholders shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Classics or the Classics Shareholders prior to or at the Closing. The Company shall be furnished with a certificate, signed by a duly authorized executive officer of Classics and dated the Closing Date, to the foregoing effect.
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5.3. Officer’s Certificate. The Company shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of Classics to the effect that no litigation, proceeding, investigation, or inquiry is pending, or to the best Knowledge of Classics threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the Classics Schedules, by or against Classics, which might result in any material adverse change in any of the assets, properties, business, or operations of Classics.
5.4. No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material change in the financial condition, business, or operations of Classics nor shall any event have occurred which, with the lapse of time or the giving of notice, is determined to be unacceptable by the Company in its reasonable discretion.
5.5. Approval by Classics. The Exchange shall have been approved, and securities delivered in accordance with Section 3.1, by Classics and the Classics Shareholders. The Directors of Classics shall have approved the transactions contemplated by this Agreement.
5.6. No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.
5.7. Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of the Company and Classics after the Closing Date on the basis as presently operated shall have been obtained.
5.8. Due Diligence. The Company shall have conducted due diligence on Classics and verified among other things, the rights and liabilities associated with the assets and operations of Classics (the “Due Diligence”), which Due Diligence shall be satisfactory to the Company in its sole and absolute discretion. In the event that the Due Diligence is unsatisfactory to the Company, the Company shall have the right to terminate this Agreement and the transactions contemplated hereby without any liability to the Company whatsoever. Classics agrees to afford to the officers and authorized representatives of the Company, reasonable access to the properties, books and records of Classics, as the case may be, in order that it may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of Classics and will furnish Company with such additional financial and operating data and other information as to the business, operations and assets of Classics as the Company shall from time to time reasonably request. Any such investigation and examination shall be conducted at reasonable times and under reasonable circumstances, and each Party hereto shall cooperate fully therein. No investigation by a Party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other Party under this Agreement.
5.9. Other Closing Conditions. The closing conditions set forth in Section 3.4.1 shall have occurred.
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ARTICLE VI.
CONDITIONS PRECEDENT TO OBLIGATIONS OF CLASSICS AND THE CLASSICS SHAREHOLDERS
The obligations of Classics and the Classics Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions, to the extent not waived by Classics and the Classics Shareholders, in writing:
6.1. Accuracy of Representations and Performance of Covenants. The representations and warranties made by the Company in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date. Additionally, the Company shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by the Company and shall have satisfied all conditions set forth herein prior to or at the Closing. Classics shall have been furnished with certificates, signed by duly authorized executive officers of the Company and dated the Closing Date, to the foregoing effect.
6.2. Officer’s Certificate. Classics shall have been furnished with a certificate dated the Closing Date and signed by the duly authorized executive officer of the Company, to the effect that no litigation, proceeding, investigation or inquiry is pending, or to the best Knowledge of the Company threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement or, to the extent not disclosed in the Company Schedules, by or against the Company, which might result in any material adverse change in any of the assets, properties or operations of the Company.
6.3. No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any change in the financial condition, business or operations of the Company nor shall any event have occurred which, with the lapse of time or the giving of notice, is determined to be reasonably unacceptable by Classics or the Classics Shareholders.
6.4. No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.
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6.5. Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of the Company and Classics after the Closing Date on the basis as presently operated shall have been obtained.
6.6. Other Closing Conditions. The closing conditions set forth in Section 3.4.1 shall have occurred.
ARTICLE VII.
INDEMNIFICATION
7.1. Indemnification by the Classics Shareholders. Subject to the provisions of this Article, the Classics Shareholders jointly and severally agree to indemnify, defend and hold the Company and its Affiliates, parents, stockholders, subsidiaries, officers, directors, employees, agents, successors and assigns (such indemnified persons are collectively hereinafter referred to as “the Company Indemnified Persons”), harmless from and against any and all loss, liability, damage or deficiency (including interest, penalties, judgments, costs of preparation and investigation, and attorneys’ fees) (collectively, “Losses”) that any of the Company Indemnified Person may suffer, sustain, incur or become subject to arising out of or due to: (a) the non-fulfillment of any covenant, undertaking, agreement or other obligation of Classics or the Classics Shareholders or any other Party (other than the Company) under this Agreement or any Schedule hereto; (b) any action taken by Classics or the Classics Shareholders prior to the Closing Date, or the operations of Classics prior to Closing; (c) any misstatement, breach of or inaccuracy of any representation of Classics or the Classics Shareholders in this Agreement; (d) the breach of any representation, warranty or covenant of Classics or the Classics Shareholders in this Agreement; or (e) any liabilities of Classics which are not disclosed to the Company at or prior to Closing and which the Company is required to satisfy subsequent to Closing (including all fees and expenses associated therewith); provided however, that Classics and the Classics Shareholders will not be liable under clause (d) of this Section 7.1 unless the aggregate amount of Losses exceeds AU$50,000 (the “Threshold”), in which event Classics or Classics Shareholders shall be liable for all Losses up to, including and exceeding the amount of the Threshold. “Losses” as used in this Article are not limited to matters asserted by third parties, but include Losses incurred or sustained in the absence of third party claims. Payment is not a condition precedent to recovery of indemnification for Losses.
7.2. Indemnification by the Company. Subject to the provisions of this Article, the Company agrees to indemnify, defend and hold the Classics Shareholders (the “Classics Indemnified Persons”), harmless from and against any and all Losses that any Classics Indemnified Person may suffer, sustain, incur or become subject to arising out of or due to: (a) the non-fulfillment of any covenant, undertaking, agreement or other obligation of the Company under this Agreement; (b) any action taken by Classics and/or the operations of Classics after the Closing; which, however, does not include any action that was caused by or as a fault of an action which originally occurred prior to the Closing Date or could be partially attributed as a Loss to the Company under Section 7.1 of this Agreement; (c) any misstatement, breach of or inaccuracy of any material representation of the Company in this Agreement; or (d) the breach of any representation, warranty or covenant of the Company in this Agreement provided however, that the Company will not be liable under clause (d) of this Section 7.2 unless the aggregate amount of Losses exceeds the Threshold, in which event the Company shall be liable for all Losses up to, including and exceeding the amount of the Threshold. The Company shall in no event be responsible for indemnifying or defending any affiliates, officers, directors, employees, agents, successors or assigns of Classics or the Classics Shareholders following the Closing for any matter whatsoever.
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7.3. Survival of Representations, Warranties and Covenants. The representations, warranties, covenants and other provisions of this Agreement which by their terms or by implication are to have continuing effect after the expiration or termination of this Agreement shall survive the Closing Date or the termination of this Agreement for any reason whatsoever, and shall remain in full force and effect.
7.4. Notice and Opportunity to Defend. If a Claim for Losses is to be made by any Company Indemnified Person or Classics Indemnified Person (any such indemnified person, hereinafter a “Claimant”) seeking indemnification hereunder, such Claimant shall notify the indemnifying party or parties (any such indemnifying party, a “Respondent”) promptly. If such event involves (a) any claim or (b) the commencement of any action or proceeding by a third person, Claimant shall give Respondent written notice of such claim or the commencement of such action or proceeding as provided above. Delay or failure to so notify Respondent shall only relieve Respondent of its obligation to the extent, if at all, that Respondent is prejudiced by reason of such delay or failure. Respondent shall have a period of 30 days within which to respond thereto. If Respondent accepts responsibility or does not respond within such 30 day period, then Respondent shall be obligated to compromise or defend, at its own expense and by counsel chosen by Respondent, which counsel shall be acceptable to such Company Indemnified Person or Classics Indemnified Person, as the case may be, such matter, and Respondent shall provide Claimant with such assurances as may be reasonably required by Claimant to assure that Respondent will assume and be responsible for the entire liability at issue. If Respondent fails to assume the defense of such matter within said 30 day period, Claimant will (upon delivering notice to such effect to Respondent) have the right to undertake, at Respondent’s cost and expense, the defense, compromise or settlement of such matter on behalf of such Claimant. The Claimant agrees to cooperate with Respondent and its counsel in the defense against any such asserted liability. In any event, Claimant shall have the right to participate at its own expense in the defense of such asserted liability. Any compromise of such asserted liability by Respondent shall require the prior written consent of Claimant, which consent will not be unreasonably withheld and in the event Claimant defends any such asserted liability, then any compromise of such asserted liability by Claimant shall require the prior written consent of Respondent, which consent shall not be unreasonably withheld.
7.5. Remedies Exclusive. The remedies conferred by this Article are intended to be exclusive of and shall supersede any other remedy available under law or at equity.
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7.6. Emergency Relief. Notwithstanding anything in this Article to the contrary, any Party may seek emergency relief from a court for any remedy that may be necessary to protect any rights or property of such Party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy.
7.7. Right to Set Off. In the event that the Company shall have a claim against any Classics Shareholder for which the Company has not been fully indemnified as contemplated above, the Company shall have the right to set off the amount of such claim against any Classics Shareholder, against any amounts due such Classics Shareholder hereunder, or any other agreement or understanding by and between the Company and any Classics Shareholder, including, but not limited to any Holdback Cash, Earnout Cash (including Base Earnout Cash), True-Up Amount or Earnout Shares (including Base Earnout Shares). For the purposes of such Set Off, the Holdback Cash and Earnout Cash (including Base Earnout Cash) will be valued at the AU$ Agreed Value and the Earnout Shares (including Base Earnout Shares) and the True-Up Amount will be valued at the US$ Agreed Value.
ARTICLE VIII.
CONFIDENTIALITY
8.1. Confidentiality. At all times after the Closing, the Classics Shareholders shall retain in strictest confidence, and shall not disclose to any third parties or use for their benefit (other than in order to fulfill the terms and conditions of this Agreement and the transactions contemplated by this Agreement) or for the benefit of others any confidential information comprising or related to the Company or any of the Company’s Affiliates, Classics, or Classics’ property, including, but not limited to, its Intellectual Property, including, without limitation, trade secrets, customer lists, marketing plans or strategies, product development techniques or plans, or technologies (collectively “Confidential Information”). Confidential Information shall not include information which (i) is or becomes part of the public domain without breach of this Agreement, (ii) was known to the receiving party on a non-confidential basis prior to disclosure by the other party (except in connection with information of Classics, which shall be considered Confidential Information for all purposes), (iii) is independently received by the receiving party without the use of confidential information, or (iv) is explicitly approved for release by written authorization of the disclosing party. In the event that the receiving party is legally required to disclose any confidential information, the receiving party shall promptly notify the disclosing party of such requirement and, if requested by the disclosing party, shall reasonably cooperate in the disclosing party’s efforts to prevent or limit such disclosure.
8.2. Enforceability.
8.2.1 It is the desire and intent of the Parties that the provisions of ARTICLE VIII shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any particular provision or portion of ARTICLE VIII shall be adjudicated to be invalid or unenforceable in any jurisdiction, ARTICLE VIII shall be deemed amended to delete therefrom such provision or portion adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of this Section8.2 in the particular jurisdiction in which such adjudication is made. Classics and each Classics Shareholder agrees that it would be difficult to measure the damages to Company and its affiliates from the breach by Classics or any Classics Shareholder of the provisions of ARTICLE VIII, that injury to the Company from such breach would be impossible to calculate, and that monetary damages would therefore be an inadequate remedy; accordingly, Classics and the Classics Shareholders agree that the Company shall be entitled, in addition to all other remedies it might have, to injunctions or other appropriate orders to restrain any such breach without showing or proving any actual damages.
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8.2.2 The undertakings and covenants of Classics and the Classics Shareholders contained in ARTICLE VIII are an integral part of the transactions set forth in this Agreement and the consideration paid by the Company pursuant to this Agreement shall be consideration to include consideration for such undertakings and covenants.
ARTICLE IX.
DEFINITIONS
9.1. Certain Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:
9.1.1 “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, and in the case of any natural Person shall include all relatives and family members of such Person. For purposes of this definition, a Person shall be deemed to control another Person if such first Person and/or any relatives or family members of such first Person directly or indirectly owns or holds five percent (5%) or more of the ownership interests in such other Person. In the case of Classics, each Classics Shareholder is considered an Affiliate of Classics.
9.1.2 “Agreement” means this Share Exchange Agreement, including all exhibits hereto, including, but not limited to the Shareholders Agreement.
9.1.3 “AU$” means Australian dollars.
9.1.4 “Business Day” means a day other than (i) a Saturday, (ii) a Sunday or (iii) a day on which commercial banks in the City of Brisbane, Australia, are authorized or required to be closed for business.
9.1.5 “Claim” means any claim (including any product liability, malpractice or errors or omission claim), demand, complaint, cause of action, investigation, inquiry, suit, action, hearing, notice of violation or legal, administrative, arbitrative or other Proceeding.
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9.1.6 “Classics For a Cause” means Classics For a Cause Pty Ltd., a limited company duly organized, validly existing, and in good standing under the laws of Australia.
9.1.7 “Classics Net Profit” means an amount (not less than zero) determined as of the end of any applicable period of determination, by subtracting (a) the sum of Classics’ direct expenses associated with such revenues, whether paid or accrued, based on the internally prepared financial statements of Classics, as reasonably acceptable to the Company, as of and for such applicable period, determined in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied, from (b) the sum of (A) any cash revenues of Classics for such applicable period of determination; and (B) the Company Offsetting Expenses.
9.1.8 “Classics Parties” means collectively Classics and its Subsidiaries, including Classics For a Cause.
9.1.9 “Closing Price” means the last sales price of the Company’s common stock on the applicable Trading Day on the Nasdaq Capital Market as reported by NASDAQ.com (or a comparable reporting service of national reputation)(collectively, “NASDAQ.com”), or if the foregoing does not apply, the last reported sales price of such security on the applicable Trading Day on a national exchange or in the over-the-counter market on the electronic bulletin board for such security as reported by NASDAQ.com, or, if no such price is reported for such security by NASDAQ.com on the applicable Trading Day, the average of the bid prices of all market makers for such security as reported in the “pink sheets” by OTC Markets.
9.1.10 “Company Offsetting Expenses” means those expenses of Classics which relate solely to the Company, and which in the reasonable determination of the Company would not be incurred by Classics if it wasn’t majority owned by the Company. For example only, the incremental costs associated with Classic’s compliance with PCAOB auditing requirements over those costs associated with a non-PCAOB auditing requirement shall be included in Company Offsetting Expenses.
9.1.11 “Company Securities” means collectively, the Closing Shares and the Earnout Shares, if any, and the True-Up Shares, if any.
9.1.12 “Directors” means the (i) Board of Directors of a corporation; (ii) the Managers of a limited liability company, if manager managed and the Members of a limited liability company, if member managed; or (iii) the General Partner of a partnership, as applicable, or in each case similar management personnel of the applicable entity, which are authorized to govern the entity and have authority to approve and adopt, among other things, this Agreement and the terms and conditions hereof.
9.1.13 “Earnout Period” means the period from the Closing Date until the Net Profit Determination Date.
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9.1.14 “EDGAR” means the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, which can be searched pursuant to the instructions in Section 1.20.4.
9.1.15 “Effective Date” means August 1, 2024.
9.1.16 “Encumbrance” means any charge, claim, community or other marital property interest, condition, equitable interest, Lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.
9.1.17 “Environmental Law(s)” means any foreign, federal, state or local statute, regulation, ordinance, or rule of common law as now or hereafter in effect in any way or any other legally binding requirement relating to the environment, natural resources or protection of human health and safety.
9.1.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
9.1.19 “FCPA” means the U.S. Foreign Corrupt Practices Act.
9.1.20 “Governing Documents” of an entity means the (i) articles or certificate of incorporation or association, certificate of formation, articles of organization or certificate of limited partnership or similar instrument under which an entity is formed; and (ii) the other documents or agreements, including bylaws, partnership agreements of partnerships, operating agreements of limited liability companies, or similar documents, adopted by the entity to govern the formation and internal affairs of the entity.
9.1.21 “Governmental Body” means any:
(i) nation, state, county, city, town, borough, village, district or other jurisdiction;
(ii) federal, state, local, municipal, foreign or other government;
(iii) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers);
(iv) multinational organization or body;
(v) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or
(vi) official of any of the foregoing.
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9.1.22 “Intellectual Property” means (i) all inventions, whether patentable or not patentable, all improvements thereto, and all patents, patent applications (including those listed on Schedule 1.24.3 and patent disclosures, together with all reissues, continuations, continuations-in-part, divisionals, revisions, utility models, extensions and reexaminations thereof, (ii) the websites, URLs, domain names, trade names and trademarks (including registered and unregistered trademarks, service marks and applications thereof used in the business of Classics) including those set forth in Schedule 1.24.3 together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (iii) all copyrightable works, all copyrights and all applications, registrations, renewals and derivatives in connection therewith, (iv) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, certifications, compositions, manufacturing and production processes and techniques, technical data, designs including advertising designs, logos, drawings, packaging, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals, (v) all other proprietary rights, and (vi) all copies and tangible embodiments thereof (in whatever form or medium).
9.1.23 “Knowledge” means that:
(i) A natural Person will be deemed to have Knowledge of a particular fact or other matter if such Person is actually aware of the fact or matter or should have been aware of such fact or other matter after reasonable inquiry.
(ii) A Person, other than a natural person, will be deemed to have Knowledge of a particular fact or other matter if any natural Person who is serving, or who has at any time served, as a director, officer, partner, employee, agent, executor or trustee of that Person (or in any similar capacity) has, or at any time had, Knowledge of that fact or other matter (as set forth in (i) above) or should have been aware of such fact or other matter after reasonable inquiry.
9.1.24 “Last Closing Price” means the Closing Price on the applicable date of determination, or if the applicable date of determination is not a Trading Day, the Closing Price on the last Trading Day prior to the date of determination.
9.1.25 “Law” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other requirement or rule of law (including but not limited to as related to revenue, labor, or ERISA) of any Governmental Body.
9.1.26 “Leased Real Property” means the parcels of real property of which Classics and/or its Subsidiaries are the lessee (together with all fixtures and improvements thereon).
9.1.27 “Liability” means with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.
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9.1.28 “Liens” means all liens, pledges, mortgages, security interests, claims, covenants, leases, subleases, charges, conditions, options, rights of first refusal, licenses, easements, servitudes, rights of way, encumbrances or any other restriction or limitation whatsoever.
9.1.29 “Net Profit Determination Date” means June 30, 2025.
9.1.30 “Owned Real Property” means the real property of which any Company is fee title owner (together with all fixtures and improvements thereon), if any.
9.1.31 “PCAOB” means U.S. Public Company Accounting Oversight Board.
9.1.32 “Person” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Body.
9.1.33 “SEC” means the United States Securities and Exchange Commission.
9.1.34 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
9.1.35 “Shareholders Agreement” means a Shareholders Agreement entered into between the Company and each of the Classics Shareholders on mutually acceptable terms, including providing the Company a buyout right as set forth therein.
9.1.36 “Simple Majority” means Classics Shareholders holding a majority of the Classics Stock immediately prior to the Closing Date.
9.1.37 “Trading Day” means any day on which the Company’s common stock is traded on the Nasdaq Capital Market, or, if the Nasdaq Capital Market is not the principal trading market for the Company’s common stock, then on the principal securities exchange or securities market on which the Company’s common stock is then traded; provided that “Trading Day” shall not include any day on which the Company’s common stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Company’s common stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).
9.1.38 “Representatives” means, with respect to a Person, such Person’s parents/owners/members/shareholders/partners, directors, managers, officers, employees, attorneys, accountants, representatives, financial advisors, lenders, consultants, and other agents.
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9.1.39 “Tax” means any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other contract.
9.1.40 “Transfer” means the direct or indirect, offer for sale, sale, pledge, hypothecation, transfer, assignment or other disposition of (or to enter into any transaction or device that is designed to, or could be expected to, result in the sale, pledge, hypothecation, transfer, assignment or other disposition at any time) (including, without limitation, by operation of law), or the entry into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of Company Securities, whether any such transaction is to be settled by delivery of Company Securities or other securities, in cash or otherwise.
9.1.41 “U.S.” means the United States of America.
9.1.42 “US$” means United States dollars.
9.2. Other Definitional Provisions. The Parties acknowledge, confirm and agree that:
9.2.1 The language in all parts of this Agreement shall be construed, in all cases, according to its fair meaning.
9.2.2 Each Party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement.
9.2.3 Terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.
9.2.4 References to any gender include the other genders.
9.2.5 The words “include,” “includes” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation”.
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9.2.6 The terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.
9.2.7 The terms “day” and “days” mean and refer to calendar day(s).
9.2.8 The terms “year” and “years” mean and refer to calendar year(s).
9.2.9 Unless otherwise set forth herein, references in this Agreement to (i) any document, instrument or agreement (including this Agreement) (A) includes and incorporates all exhibits, schedules and other attachments thereto, (B) includes all documents, instruments or agreements issued or executed in replacement thereof and (C) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time, and (ii) a particular Law means such Law as amended, modified, supplemented or succeeded, from time to time and in effect at any given time.
9.2.10 In the event of any conflict between the provisions of this Agreement and any such Exhibit or Schedule, the provisions of this Agreement shall control.
9.2.11 All Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this Agreement, unless otherwise specified.
ARTICLE X.
MISCELLANEOUS
10.1. Broker/Finder’s Fee. No broker’s or finder’s fee will be paid in connection with the transaction contemplated by this Agreement. The Company and the Classics Shareholders, each agree to indemnify the other against any claim by any third person for any commission, brokerage, or finder’s fee arising from the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.
10.2. Equitable Adjustments. All Company Securities shall be subject to equitable adjustment in accordance with dividends payable in stock on such Company Common Stock, stock splits, stock combinations, and other similar events affecting the Company Common Stock).
10.3. Governing Law and Jurisdiction. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of Nevada without giving effect to principles of conflicts of law thereunder. Each of the Parties hereby: (a) irrevocably submits to the non-exclusive personal jurisdiction of any Nevada court, over any claim arising out of or relating to this Agreement and irrevocably agrees that all such claims may be heard and determined in such Nevada court; and (b) irrevocably waives, to the fullest extent permitted by applicable Law, any objection it may now or hereafter have to the laying of venue in any proceeding brought in a Nevada court.
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10.4. Notices. All notices, approvals, consents, requests, and other communications hereunder shall be in writing and shall be delivered (i) by personal delivery, or (ii) by national overnight courier service, or (iii) by certified or registered mail, return receipt requested, or (iv) via facsimile transmission, with confirmed receipt, or (v) via email. Notice shall be effective upon receipt except for notice via fax (as discussed above) or email, which shall be effective only when the recipient, by return or reply email or notice delivered by other method provided for in this Section 10.4, acknowledges having received that email (with an automatic “read receipt” or similar notice not constituting an acknowledgement of an email receipt for purposes of this Section 10.4, but which acknowledgement of acceptance shall include cases where recipient ‘replies’ to such prior email, including the body of the prior email in such ‘reply’). Such notices shall be sent to the applicable Party or Parties at the addresses specified below, subject to notice of changes thereof from any Party with at least ten (10) Business Days’ notice to the other Parties. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver. Notices shall be sent:
if to the Company, to:
Golden Matrix Group, Inc.
Attn: Anthony Brian Goodman
3651 Lindell Road, Suite D131
Phone: (702) 318-7548
Email:
with a copy to (which shall not constitute notice hereunder):
The Loev Law Firm, PC
Attn: David M. Loev, Esq. or John S. Gillies, Esq.
6300 West Loop South, Suite 280
Bellaire, Texas 77401
Phone: (713) 524-4110
Email:
if to Classics, to:
Classics Holdings Co. Pty Ltd.
Attn: Thomas Bailey
32 Wright Place
Algester QLD 4115
Phone: 0476 108 710
Email:
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
with a copy to (which shall not constitute notice hereunder):
PT & Co Lawyers Pty Ltd
Attn: Peter Thelwell
22 Village High Crescent
Coomera QLD 4209
Phone: : +61 (0) 450 694 779
Email:
if to a Classics Shareholder, to:
The address for notice set forth on the signature page hereof
10.5. Attorneys’ Fees. In the event that any Party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing Party shall be reimbursed by the losing Party for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
10.6. Confidentiality. Each Party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another Party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other Party, and shall not use such data or information or disclose the same to others (which information shall include the existence of this Agreement and the transactions contemplated herein), except (i) to the extent such data or information is published, is a matter of public knowledge (through no fault or action of the Party holding such information on behalf of the other Party), or is required by a court of competent jurisdiction to be published; or (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. In the event of the termination of this Agreement, each Party shall return to the other Party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each Party will continue to comply with the confidentiality provisions set forth herein. Classics and the Classics Shareholders further agree and consent to the disclosure by the Company of any material information regarding Classics and the Classics Shareholders which the Company or its counsel deems necessary for disclosure in the Company’s public filings on EDGAR in connection with the Company’s current or periodic report filings. The Company shall use its best efforts to avoid the disclosure of any competitive pricing or specific customer information to the public.
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
10.7. Publicity. Prior to or after the Closing of the transaction contemplated herein, any announcement, or press or news release by Classics or the Classics Shareholders, managers, shareholders, employees, officers, or agents shall be reviewed and approved by the Company prior to its release, subject to any requirements of Law. The Company shall be allowed to make any announcements relating to this Agreement or the transactions contemplated herein, and shall be allowed to file this Agreement and any exhibits or related agreements as may be required pursuant to the Company’s public reporting obligations with the SEC, subject to prior approval by Classics, which approval shall not be unreasonably withheld, conditioned or delayed. Prior to the Closing and prior to the Closing Date, Classics shall make no announcements relating to this Agreement, the Company or the transactions contemplated herein without the prior written consent of the Company, which approval will not be unreasonably withheld.
10.8. Schedules and Exhibits. The Schedules and Exhibits are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full herein.
10.9. Schedules; Knowledge. Each Party is presumed to have full Knowledge of all information set forth in the other Party’s schedules delivered pursuant to this Agreement and Classics and the Classics Shareholders are deemed to have knowledge of the information set forth in the Company’s EDGAR filings.
10.10. Third Party Beneficiaries. This contract is strictly between the Company, Classics and the Classics Shareholders, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.
10.11. Expenses. The Company, the Classics Shareholders and Classics each hereto agree to pay their own costs and expenses incurred in negotiating this Agreement including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other transactions contemplated hereby, and those costs and expenses incurred in consummating the transactions described herein.
10.12. Entire Agreement. This Agreement represents the entire agreement between the Parties relating to the subject matter thereof and supersedes all prior agreements, letters of intent, term sheets, understandings and negotiations, written or oral, with respect to such subject matter.
10.13. Survival; Termination. The representations, warranties, and covenants of the respective Parties shall survive the Closing Date and the consummation of the transactions herein contemplated for a period of two (2) years, unless the terms of this Agreement provide for a longer period of survival.
10.14. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.
10.15. Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any Party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all Parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the Party or Parties for whose benefit the provision is intended.
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
10.16. Best Efforts. Subject to the terms and conditions herein provided, each Party shall use its reasonable best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable. Each Party also agrees that it shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein.
10.17. Remedies. The Parties agree that the covenants and obligations contained in this Agreement relate to special, unique and extraordinary matters and that a violation of any of the terms hereof or thereof would cause irreparable injury in an amount which would be impossible to estimate or determine and for which any remedy at law would be inadequate. As such, the Parties agree that if any Party fails or refuses to fulfill any of its obligations under this Agreement or to make any payment or deliver any instrument required hereunder or thereunder, then any other Party shall have the remedy of specific performance, which remedy shall be cumulative and nonexclusive and shall be in addition to any other rights and remedies otherwise available under any other contract or at law or in equity and to which such Party might be entitled.
10.18. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.
10.19. Independent Nature of Classics’ Shareholders Obligations and Rights. Except as expressly set forth herein, the obligations of each Classics Shareholder under this Agreement are several and not joint with the obligations of any other Classics Shareholder, and no Classics Shareholder shall be responsible in any way for the performance or non-performance of the obligations of any other Classics Shareholder under this Agreement. Nothing contained herein, and no action taken by any Classics Shareholder pursuant hereto, shall be deemed to constitute the Classics Shareholders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Classics Shareholders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement, and each Classics Shareholder has conducted its own diligence review. Each Classics Shareholder has been represented by its own separate legal counsel in its review and negotiation of this Agreement.
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
10.20. No Presumption from Drafting. This Agreement has been negotiated at arm’s-length between Persons knowledgeable in the matters set forth within this Agreement. Accordingly, given that all Parties have had the opportunity to draft, review and/or edit the language of this Agreement, no presumption for or against any Party arising out of drafting all or any part of this Agreement will be applied in any action relating to, connected with or involving this Agreement. In particular, any rule of law, legal decisions, or common law principles of similar effect that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to affect the intentions of the Parties.
10.21. Review and Construction of Documents. Each Party herein expressly represents and warrants to all other Parties hereto that (a) before executing this Agreement, said Party has fully informed itself of the terms, contents, conditions and effects of this Agreement; (b) said Party has relied solely and completely upon its own judgment in executing this Agreement; (c) said Party has had the opportunity to seek and has obtained the advice of its own legal, tax and business advisors before executing this Agreement; (d) said Party has acted voluntarily and of its own free will in executing this Agreement; and (e) this Agreement is the result of arm’s length negotiations conducted by and among the Parties and their respective counsel.
10.22. Headings; Gender. The paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement. All references in this Agreement as to gender shall be interpreted in the applicable gender of the Parties.
10.23. Transaction Expenses. Until Closing, in the event this Agreement is terminated prior to Closing and/or in the event the Exchange does not close, each Party shall be responsible for the payment of any and all of its own expenses, including without limitation the fees and expenses of counsel, accountants and other advisers, arising out of or relating directly or indirectly to the transactions contemplated by this Agreement (“Transaction Expenses”).
10.24. Cooperation Following the Closing. Following the Closing, each Party shall deliver to the other Party such further information and documents and shall execute and deliver to the other Party such further instruments and agreements as the other Party shall reasonably request to consummate or confirm the transactions provided for herein, to accomplish the purpose hereof or to assure to the other Party the benefits hereof.
10.25. Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail (including email) or as an electronic download (any such delivery, an “Electronic Delivery”) shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
[Remainder of page left intentionally blank. Signature pages follow.]
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written.
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| GOLDEN MATRIX GROUP, INC. |
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| By: | /s/ Anthony Brian Goodman |
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| Name: | Anthony Brian Goodman |
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| Title: | Chief Executive Officer |
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| “Classics” |
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| CLASSICS HOLDINGS CO. PTY LTD. |
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| By: | /s/ Nicholas Flanigan |
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| Name: | Nicholas Flanigan |
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| Title: | Director |
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[Signature Pages of Classics Shareholders Follow On Attached Pages]
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Share Exchange Agreement
Classics, Classics Shareholder and Golden Matrix Group
“CLASSICS SHAREHOLDERS”
| NJF Exercise Physiologists Pty Ltd |
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| ACN 147 139 222 |
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| By: | /s/ Nicholas Flanigan |
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| Name: | Nicholas Flanigan |
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| Title: | Director |
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| 75 Shares Owned
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| Address for notice:_32 Wright Place, Algester QLD 4115 |
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| Email for notice: |
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| Think Tank Enterprises Pty Ltd |
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| ACN 617 369 909 |
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| By: | /s/ Thomas Bailey |
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| Name: | Thomas Bailey |
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| Title: | Director |
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| 50 Shares Owned |
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| Address for notice:_32 Wright Place, Algester QLD 4115 |
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| Email for notice: |
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EXHIBIT A
FORM OF STOCK REGISTRATION FORM
(CHECK ONE):
_____ INDIVIDUAL OWNERSHIP (one signature required)
_____ TRUST (please include name of trust, name of trustee, and date trust was formed and copy of the Trust Agreement or other authorization)
_____ PARTNERSHIP (please include a copy of the Partnership Agreement authorizing signature)
_____ CORPORATION (please include a certified corporate resolution authorizing signature)
_____ LIMITED LIABILITY COMPANY (please include a certified corporate resolution authorizing signature)
________________________________________________________________________
Please print here the exact name (registration)
Such Shareholder desires to appear in the records of the Company
________________________________________________________________________
Please print here the exact address
Such Shareholder desires to appear in the records of the Company
Signature:
By: _________________________
Printed Name: ______________________
If on behalf of Entity:
Entity Name: ___________________
Signatory’s Position with Entity: ___________________
Beneficial Owner(s) of Securities To Be Owned by Entity: _____________________
Address: ____________________________________________________________
SS#/Tax Id Number: ______________________________
Telephone Number: ( ) - _____ - _______
Email:____________________
EXHIBIT B
CERTIFICATE OF ACCREDITED INVESTOR STATUS
By signing below, the undersigned confirms, acknowledges and agrees that he, she or it, is an “accredited investor,” as that term is defined in the Securities Act of 1933, as amended (the “Securities Act”). This Certificate of Accredited Investor Status forms a part of that certain Share Exchange Agreement dated on or around August [●], 2024, by and between Golden Matrix Group, Inc. (the “Company”), Classics Holdings Co. Pty Ltd. (“Classics”), and the shareholders of Classics (the “Exchange Agreement”). Capitalized terms used herein but not otherwise defined have the meanings given to such terms in the Exchange Agreement.
The undersigned has initialed the line below indicating the basis on which he, she or it is representing his, her or its status as an “accredited investor”. The representation and confirmation below shall be effective for all purposes as of the Closing Date, as defined in the Exchange Agreement (the “Applicable Date”) pursuant to the terms of the Purchase Agreement. The Company and its attorneys and representatives shall be able to rely on this Certificate of Accredited Investor Status for any and all purposes. The undersigned confirms, acknowledges and agrees that he, she or it, is an “accredited investor”, due to the fact that he, she or it is:
| _______ |
| a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, and such plan has total assets in excess of US$5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; | ||
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| a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; | ||
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| an organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000; |
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| a natural person whose individual net worth, or joint net worth with the undersigned’s spouse or spousal equivalent, at the time of this purchase exceeds US$1,000,000. For purposes of this item, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the Applicable Date, but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the Applicable Date; |
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| a natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with the undersigned’s spouse or spousal equivalent in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. “Income” for this purpose is computed by adding the following items to adjusted gross income for federal income tax purposes: (a) the amount of any tax-exempt interest income received; (b) the amount of losses claimed as a limited partner in a limited partnership; (c) any deduction claimed for depletion; (d) deductions for alimony paid; (e) deductible amounts contributed to an IRA or Keogh retirement plan; and (f) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the U.S. Internal Revenue Code; or |
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| an entity (other than a trust) in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards. |
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status on ____________, 2024.
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| (required for any stockholder that is a corporation, partnership, trust or other entity) | |
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| If joint ownership, both parties should sign above. |
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EXHIBIT 10.1
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this “Agreement”) is made this 16th day of August 2024, by and between NJF Exercise Physiologists Pty Ltd (ACN 147 139 222) and Think Tank Enterprises Pty Ltd (ACN 617 369 909), each an Australian proprietary limited company (collectively, the “Current Shareholders”), and Golden Matrix Group, Inc., a Nevada corporation(“Golden Matrix”) (collectively, Golden Matrix and the Current Shareholders, the “Initial Shareholders”, and together with each additional Shareholder of the Company who/which may be made party to this Agreement from time to time, by their execution of an Addendum (hereafter defined), collectively the “Shareholders” and each a “Shareholder”), each, as of the Effective Date (defined below), shareholders of Classics Holdings Co. Pty Ltd., an Australian proprietary Company (the “Company”), and the Company, each a “Party” and collectively the “Parties”.
As described in Section 21 below, this Agreement shall not become effective, or bind any party hereto, until the Effective Date.
Construction of Terms. As used in this Agreement, the terms “herein,” “herewith,” “hereof” and “hereunder” are references to this Agreement, taken as a whole; the term “includes” or “including” shall mean “including, without limitation;” the word “or” is not exclusive; and references to a “Section,” “subsection,” “clause,” “Exhibit,” “Appendix,” “Schedule,” “Annex” or “Attachment” shall mean a Section, subsection, clause, Exhibit, Appendix, Schedule, Annex or Attachment of this Agreement, as the case may be, unless in any such case the context requires otherwise. Exhibits, Appendices, Schedules, Annexes or Attachments to any document shall be deemed incorporated by reference in such document. All references to or definitions of any agreement, instrument or other document (a) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (b) except as otherwise expressly provided, shall mean such agreement, instrument or document, or replacement or predecessor thereto, as modified, amended, supplemented and restated through the date as of which such reference is made. All references to a law, regulation or ordinance includes any amendment or modification thereof. A reference to a Person includes its successors and permitted assigns. The singular shall include the plural and the masculine shall include the feminine, and vice versa. References to “days” shall mean calendar days. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires.
W I T N E S S E T H:
WHEREAS, Golden Matrix has entered into a Share Exchange Agreement (the “Exchange Agreement”) with the Current Shareholders, pursuant to which, on the Effective Date, Golden Matrix will become a shareholder of the Company;
WHEREAS, as of the Effective Date, the Shareholders own/will own ordinary issued share capital of the Company (the “Company Share Capital”) as set forth in greater detail on the signature pages hereof (collectively the “Shares”, which term shall also include any and all securities of the Company (including, but not limited to Company Share Capital) which a Shareholder may acquire from time-to-time during the Term of this Agreement, and shall also take into account permitted transfers of Shares, subject to the terms of this Agreement);
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Shareholders Agreement
WHEREAS, on the date hereof, the Current Shareholders are the sole owners of all of the outstanding shares of the Company and on the Effective Date, the Shareholders will be the sole owners of all of the outstanding shares of the Company; and
WHEREAS, the Shareholders and the Company believe that it is in their mutual best interest to impose certain restrictions and obligations upon themselves and upon the transfer of the Shares, and agree to certain other matters as set forth in greater detail herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, and considerations herein contained, which consideration the Parties each hereby acknowledge and confirm the receipt and sufficiency thereof, the Parties hereto agree as follows:
1. DEFINITIONS. The defined terms in the introductory paragraphs, the defined terms set forth below, and the defined terms in the remainder of this Agreement each have the meaning so given to it whenever used throughout this Agreement:
(a) “30 Day VWAP” means the greater of (a) the total of the VWAPs for the thirty days (for clarification, not the thirty Trading Days) prior to the date of determination; and (b) $1.75 per share, as adjusted equitably for stock splits, stock dividends and recapitalizations.
(b) “Addendum” has the meaning given to such term in Section 11.
(c) “Affiliate” of a specified Person means any other Person that (at the time when the determination is made) directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. As used in the foregoing sentence, the term “control” (including, with correlative meaning, the terms “controlling,” “controlled by” and “under common control with”) means the power to direct the management and/or the policies of a Person, directly or indirectly, whether through the ownership of voting shares, by contract or otherwise.
(d) “Agreement” means this Shareholders Agreement and any amendments, addendums and supplements hereto.
(e) “AU$” means Australian dollars.
(f) “Board” means the nominated board of Directors of the Company.
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Shareholders Agreement
(g) “Business Day” means a day other than (i) a Saturday, (ii) a Sunday or (iii) a day on which commercial banks in Australia are authorized or required to be closed for business.
(h) “Buyout Multiplier” means a whole number from 5 to 7, calculated as provided in the table below, with such “Buyout Multiplier” being the number in the “Buyout Multiplier” column below which corresponds to the actual calculation of Three-Month Trailing Net Profit for the applicable period, based on the “Three-Month Trailing Net Profit” column below:
| Three-Month Trailing Net Profit | Buyout Multiplier |
| Less than AU$3,000,000.00 | 5 |
| Between AU$3,000,000.01 and AU$4,500,000.00 | 6 |
| More than AU$4,500,000.00 | 7 |
(i) “Buyout Pro Rata Portion” means for each Current Shareholder, a fraction, the numerator of which is (i) the total number of Buyout Shares held by such Current Shareholder on the Buyout Notice Date, and the denominator of which is (ii) the total number of Buyout Shares held by all of the Current Shareholders on the Buyout Notice Date.
(j) “Classics For a Cause” means Classics For a Cause Pty Ltd., a limited company duly organized, validly existing, and in good standing under the laws of Australia, which is wholly-owned by the Company.
(k) “Company” has the meaning ascribed to such term in the introductory paragraph of this Agreement.
(l) “Competitor” means any Person who engages, directly or indirectly, in a business similar to that of the Company or Golden Matrix or who offers for sale any products or services similar to those offered by the Company or Golden Matrix, in each case as determined by a Majority In Interest.
(m) “Director” means an individual serving on the Board in accordance with Section 15 of this Agreement.
(n) “Effective Date” means the Closing Date of the Exchange Agreement, as defined in such Exchange Agreement.
(o) “Fair Market Value” means the value of the applicable Shares (i.e., the Company Share Capital) as determined in good faith by a Majority In Interest, taking into account, the assets, liabilities, operations, results of operations (all of which shall be given the values set forth in the Company’s internally prepared financial statements as supplied by the Company, as of a recent date compared to the valuation date, which shall not need to be audited or reviewed by independent accountants or auditors) and Projections, as well as such other items as such Majority In Interest may determine reasonable in its sole discretion. The Fair Market Value as determined by the Majority In Interest as provided herein shall be final and shall bind the Parties hereby. No more than one Fair Market Value shall be determined every three (3) months and instead the Parties shall use the Fair Market Value determined within the prior three (3) months as the Fair Market Value applicable to any transaction which occurs less than three (3) months from the date of the last calculation of the Fair Market Value, unless a material transaction involving the Company has occurred since the last calculation of the Fair Market Value.
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Shareholders Agreement
(p) “Incapacity” means permanent and total incapacity of an individual Shareholder, as reasonably determined by a Majority In Interest, such that the Shareholder is unable to engage in any substantial gainful activity by reason of any medically determinable mental or physical impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than three (3) months as determined by a licensed medical practitioner.
(q) “Golden Matrix Common Stock” means the common stock of Golden Matrix, par value US$0.00001 per share.
(r) “Golden Matrix Offsetting Expenses” means those expenses of the Company which relate solely to Golden Matrix, and which in the reasonable determination of Golden Matrix would not be incurred by the Company if it wasn’t majority owned by Golden Matrix. For example only, the incremental costs associated with the Company’s compliance with PCAOB auditing requirements over those costs associated with a non-PCAOB auditing requirement shall be included in Golden Matrix Offsetting Expenses.
(s) “Net Profits” means an amount (not less than zero) determined as of the end of any applicable period of determination, by subtracting (a) the sum of the Company’s direct expenses associated with such revenues, whether paid or accrued, based on the internally prepared financial statements of the Company, as reasonably acceptable to Golden Matrix, as of and for such applicable period, determined in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied, from (b) the sum of (A) any cash revenues of the Company for such applicable period of determination; and (B) the Golden Matrix Offsetting Expenses.
(t) “Majority In Interest” means Shareholders who collectively own and can vote more than fifty percent (50%) of all of the Shares (based on their voting rights for the election of Directors of the Company) subject to this Agreement.
(u) “Organizational Documents” means the Company’s certificate of incorporation, Memorandum of Association, Articles of Association, bylaws, operating agreement, company agreement, or other similar document setting forth matters of the governance and affairs of the Company.
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Shareholders Agreement
(v) “PCAOB” means U.S. Public Company Accounting Oversight Board.
(w) “Permitted Transfer” means a Transfer of Shares described in Section 8 hereof.
(x) “Person” means any natural person, company, general partnership, limited partnership, limited liability company, limited liability partnership, proprietorship, business or statutory trust, trust, union, association, instrumentality, governmental authority or other entity, enterprise, authority, unincorporated organization or business organization.
(y) “Principal Market” means initially the Nasdaq Capital Market and shall also include the New York Stock Exchange, Nasdaq Global Market, NYSE American, NYSE, the OTCQB, OTCQX or the NASDAQ National Market, whichever is at the time the principal trading exchange or market for the Golden Matrix Common Stock, based upon share volume.
(z) “Pro Rata Portion” means for each Shareholder, a fraction, the numerator of which is (i) the total number of voting shares of Company Share Capital held by such Shareholder on the date of determination (based on their voting rights for the election of Directors of the Company), and the denominator of which is (ii) the total number of voting shares of Company Share Capital of the Company held by all of the Shareholders on the date of determination (based on their voting rights for the election of directors of the Company), in each case (i) and (ii), not including any Company Share Capital which is subject to an Offer, if applicable, except in the case of a Buyout, where the denominator shall instead be all Company Share Capital subject to the Buyout.
(aa) “Projections” means revenue and profit forecasts of the Company, which shall be prepared in good faith by the Company (and which shall be the sole responsibility of the Company to prepare) and approved in writing by a Majority In Interest.
(bb) “Representatives” means, with respect to a Person, such Person’s Affiliates and their respective parents, directors, managers, officers, employees, attorneys, accountants, representatives, financial advisors, lenders, consultants, and other agents.
(cc) “ROFR Price” means (a) the value of the applicable Shares (i.e., the Company Share Capital) mutually agreed upon between the applicable offering Shareholder (or its, his or her Shareholder’s Representative, as applicable), if any, and the Company, or all of the Remaining Shareholders, as applicable, or (b) if the applicable offering Shareholder, if any, and the Company, or all of the Remaining Shareholders, as applicable, cannot mutually agree, as applicable, on a value for the Shares, the Fair Market Value.
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(dd) “Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
(ee) “Shares” has the meaning ascribed to such term in the introductory paragraph of this Agreement.
(ff) “Shareholders” has the meaning ascribed to such term in the introductory paragraph of this Agreement.
(gg) “Three-Month Trailing Net Profit” means the Net Profit as reflected in the Company’s financial statements for the most recent completed fiscal quarter preceding the Buyout Notice Date (as defined in Section 4 (a)).
(hh) “Trading Day” means any day on which Golden Matrix Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Golden Matrix Common Stock, then on the principal securities exchange or securities market on which Golden Matrix Common Stock is then traded; provided that “Trading Day” shall not include any day on which Golden Matrix Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Golden Matrix Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).
(ii) “Transfer” means to directly or indirectly sell, assign, hypothecate, transfer, pledge, mortgage, convey or in any other way encumber or dispose of Shares and shall be defined to include the process whereby Shares are transferred. The term “Transfer” also includes, but is not limited to, the grant of any proxy, the establishment of any voting trust or any sale, hypothecation, pledge, assignment, or other conveyance, with or without consideration, of any incidence of ownership or title as to any share of the Company’s share capital owned of record or beneficially by a Shareholder, regardless of whether or not record or beneficial title to such shares is thereby transferred.
(jj) “Transferee” means the Person to which a Shareholder desires to Transfer Shares.
(kk) “US$” means United States dollars.
(ll) “VWAP” means, for any Trading Day, the volume-weighted average price, calculated by dividing (a) the aggregate value of all shares of Golden Matrix Common Stock traded on the Principal Market during regular trading hours, calculated by multiplying the closing price per share of Golden Matrix Common Stock on such applicable Trading Day, by the aggregate number of shares of Golden Matrix Common Stock traded on such Trading Day, by (b) the total volume (number of shares) of Golden Matrix Common Stock traded on the Principal Market for such Trading Day, or if such volume-weighted average price is unavailable, the market value of one share of Golden Matrix Common Stock on such Trading Day as determined by the Board of Directors of Golden Matrix in a commercially reasonable manner.
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Shareholders Agreement
2. LEGEND. Each certificate or book-entry notation representing Shares issued in certificate form shall have the following legend:
“THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER RESTRICTIONS CONTAINED IN A SHAREHOLDERS AGREEMENT, DATED AUGUST 16, 2024, BY AND AMONG THE COMPANY AND ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY. TRANSFERS IN VIOLATION OF THE SHAREHOLDERS AGREEMENT ARE VOID. BY ACCEPTANCE OF THIS CERTIFICATE THE HOLDER HEREOF AGREES TO BE BOUND BY THE TERMS OF THE SHAREHOLDERS AGREEMENT.”
All Shares held by the Shareholders or any and all Permitted Transferees subject to this Agreement and hereafter issued shall bear the same legend, provided that for Shares issued or outstanding in book-entry form the Company shall note such legend in its book-entry records.
3. RESTRICTIONS ON TRANSFER OF SHARES.
(a) Except with the written consent of a Majority In Interest, no Shareholder shall Transfer any Shares that it, he or she may now or hereafter hold, nor shall any such Shares be transferable except in compliance with the terms of this Agreement. Any Transfer or purported Transfer of any Shares inconsistent with the terms and conditions of this Agreement and not otherwise consented to by a Majority In Interest in writing is void ab initio and transfers no right, title, or interest in or to such Shares to the purported transferee, buyer, assignee, pledgee, or encumbrance holder, except as specifically provided herein.
(b) Without limiting any other provision of this Section 3, no Transfer of Shares to a Person who is a Competitor of the Company or a Competitor of Golden Matrix, shall be permitted without the prior written consent of Golden Matrix.
4. GOLDEN MATRIX BUYOUT RIGHT.
(a) From the date of this Agreement, until the two year anniversary of the Effective Date (the “Buyout Period”), Golden Matrix shall have the right, exercisable upon written notice from Golden Matrix to the Current Shareholders (the “Buyout Notice”), to purchase all, but not less than all, of the Shares then held by the Current Shareholders (the “Buyout Shares”) for an aggregate purchase price equal to 20% of the product of (i) the Company’s most recent Three-Month Trailing Net Profit as of the date on which the Buyout Notice is delivered (the “Buyout Notice Date”), multiplied by (ii) the Buyout Multiplier, multiplied by (iii) by four (4) (the “Buyout Price”) . The closing of the sale of the Buyout Shares in accordance with this Section 4(a)shall occur on the earlier of (i) the date indicated by Golden Matrix in the Buyout Notice, which shall not be earlier than five (5) Business Days from the Buyout Notice Date, or (ii) such other earlier date as Golden Matrix and the Current Shareholders may mutually agree upon in writing (the “Buyout Closing Date”). The purchase of the Buyout Shares by Golden Matrix under this Section 4 shall be defined herein as the “Buyout”.
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Shareholders Agreement
(b) The Buyout Price will be payable to the Current Shareholders in accordance with their Pro Rata Portion of the Buyout Shares on the Buyout Closing Date, with 70% of the Buyout Price payable in cash (the “Buyout Cash”) and 30% of the Buyout Price payable in shares of Golden Matrix Common Stock valued at the 30 Day VWAP (subject to equitable adjustment in accordance with dividends payable in stock on such Golden Matrix Common Stock, stock splits, stock combinations, and other similar events affecting the Golden Matrix Common Stock), with such number of Golden Matrix Common Stock rounded to the nearest whole share (the “Golden Matrix Shares”)(the Buyout Cash and Golden Matrix Shares, collectively, “Buyout Consideration”).
(c) On the Buyout Closing Date, (i) Golden Matrix will deliver the Buyout Consideration, including, as to the Golden Matrix Shares, photocopies of the certificates evidencing the Golden Matrix Shares forming part of the Buyout Consideration as issued by Golden Matrix’s transfer agent to be released and sent to the Current Shareholders (or their counsel) on the Buyout Closing Date, and (ii) each of the Current Shareholders shall deliver (A) the certificate(s) representing the Buyout Shares to Golden Matrix, duly endorsed in blank for Transfer or accompanied by duly endorsed Medallion Guaranteed stock powers in the form attached hereto as Exhibit A or notarized signatures of the holders thereof so as to make Golden Matrix the sole owner thereof (the “Stock Power”); (B) the terms of such Current Shareholder’s ownership, record address and social security number/EIN (or, if such Current Shareholder is not a U.S. citizen, a national identity number or other form of identification acceptable to Golden Matrix) on the Share Registration Form, a form of which is attached hereto as Exhibit B (the “Share Registration Form”); and (C) a completed and signed Transferee Certificate in the form attached hereto as Exhibit C (the “Transferee Certificate”). For the avoidance of doubt, each Current Shareholder’s execution and delivery to Golden Matrix of the Stock Power, Share Registration Form, and Transferee Certificate is a condition precedent to Golden Matrix’s payment of the Buyout Consideration on the Buyout Closing Date, provided that the required delivery of the Stock Power, Share Registration Form and Transferee Certificate may be waived by Golden Matrix in its discretion, and provided further that such Buyout shall be effective regardless of whether any Current Shareholder delivers the Stock Power, Share Registration Form or Transferee Certificate. On the Buyout Closing Date, the Buyout Shares shall be free and clear of any and all liens, pledges, charges, security interests and other encumbrances. Effective upon the closing of a sale under this Section 4(c), (x) the Current Shareholders will no longer be Shareholders of the Company and will have no further rights (including voting rights and economic rights) in connection with the Buyout Shares or otherwise, (y) the Current Shareholders will be automatically removed from any position they may hold as Directors or officers of the Company, provided that such Current Shareholders agree to provide whatever resignations or other confirmations as Golden Matrix may request, and (z) this Agreement shall terminate.
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Shareholders Agreement
(d) Each Current Shareholder hereby represents and warrants that each of the representations and warranties set forth in Section 1 and 2 of the Transferee Certificate, which are incorporated herein by reference as if fully set forth herein and as if confirmed, acknowledged and represented by each Current Shareholder, substituting the date of this Agreement for the ‘Buyout Closing Date’ as set forth therein, are true and correct as of the date of this Agreement.
5. RIGHTS OF FIRST REFUSAL.
(a) Except with the written consent of a Majority In Interest, a Shareholder may Transfer all or a portion of his or her Shares only if he/she/it, prior to making such Transfer, first offers (an “Offer”) such portion of the Shares (the “Offered Interest”) for sale first to the other Shareholders (for purposes of this Section 5, the “Remaining Shareholders”). The Offer shall be made for (a) the price at which the proposed Transfer is to occur; or (b) if no proposed Transfer is then contemplated, at the ROFR Price ((a) or (b), as applicable, the “Proposed Price”). The Offer shall be made by notice in accordance with Section 17 hereof, which shall state that the Offer is being made pursuant to this Section and which shall set forth the amount of the Shares attributable to the Offered Interest, the name or names of the proposed purchaser or purchasers of the Offered Interest (if any), the Proposed Price, method of payment of the Proposed Price (provided that if there is no proposed Offer to purchase the Shares, the Shares shall be purchased on such terms as mutually agreed upon by the selling Shareholder and the buying Shareholder (s), as applicable, provided that if the parties cannot agree, the terms shall be as set forth in Section (b)of this Section 5) (the “Proposed Terms”), and the scheduled date of consummation of the proposed sale. A copy of the written offer, and any proposed sales agreement, from or with the proposed purchaser shall be attached to the Offer. The Remaining Shareholders shall have the option exercisable during the thirty (30) day period beginning on their receipt of the Offer (the “Option Period”) to accept the Offer on the Proposed Terms (pursuant to an “Exercise Notice”) to purchase (i) their Pro Rata Portion of the Offered Interest (rounded to the nearest whole Share) and (ii) such additional portion of the Offered Interest designated by the Remaining Shareholders (an “Additional Portion”). Any two or more Remaining Shareholders may agree among themselves to reallocate the portions of the Offered Interest to be purchased by them from their respective Pro Rata Portions. If any Remaining Shareholder fails to exercise his or her right to purchase its Pro Rata Portion of the Offered Interest (the “Remaining Portion”), then the Remaining Shareholders that have indicated in their Exercise Notice a desire to purchase an Additional Portion in accordance with their relative ownership interest of the Shares to the extent of the Additional Portion indicated in their Exercise Notice. The purchase by the Remaining Shareholders of the Offered Interest shall only be effective if all of the Offered Interest is purchased pursuant to this Section 5.
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Shareholders Agreement
(b) In the event any Remaining Shareholder(s) exercises his, her, or its right of first refusal as set forth in the proceeding sentence, the purchase price for the applicable Offered Interest shall be paid by each applicable purchasing Remaining Shareholder(s) as follows: a down payment of twenty-five percent (25%) of the applicable purchase price shall be paid on the date which falls thirty (30) days from the end of the Option Period (the “Down Payment Date”), with the remaining balance due on the date that is six (6) months from the Down Payment Date.
(c) If the Remaining Shareholders elect not to purchase the Offered Interest in accordance with this Section 5, then the selling Shareholder may sell not less than all of the Offered Interest at any time within, but not subsequent to, ninety (90) days after the lapse of the options granted pursuant to this Section 5; provided, however, that such sale must be made to a third party purchaser and for the price and in accordance with the terms specified in the Offer notice. Notwithstanding the above, no Transfer shall be made if such Transfer does not comply with the Transfer Conditions defined in Section 8(b)or if the Transfer would be prohibited under Section 3.
(d) The selling Shareholder will be responsible for the payment of any and all expenses incurred by the selling Shareholder in the exercise of the rights specified in this Section 5 and the sale of its, his or her Shares.
(e) Notwithstanding the foregoing, no rights under this Section 5 shall apply with respect to any Permitted Transfer.
(f) Notwithstanding the foregoing, in the event the Company determines not to exercise the Company Option (as defined in Section 7), a Repurchase Event shall be treated for all purposes as an Offer for the Shareholder (or Shareholder’s Representative, as applicable) to Transfer such Shares pursuant to the terms and conditions of this Section 5 and Section 9, below.
6. DRAG-ALONG RIGHTS.
(a) If a Shareholder or multiple Shareholders (as applicable, the “Selling Holders” for the purposes of this Section 6) propose a Transfer to any Person (collectively, a “Drag-Along Transferee”) in a bona fide arm’s-length transaction or series of transactions (including by way of a purchase agreement, tender offer, merger or other business combination transaction or otherwise) of an amount of Shares equal to 51% or more in the aggregate of the then outstanding voting Shares or economic interests of the Company on the date thereof (an “Exit Sale” for the purposes of this Section 6), then the Selling Holders may elect to require each (but not fewer than each) other Shareholder (for the purposes of this Section 6, the “Other Shareholders”) to transfer, as a part of the Exit Sale to such Drag-Along Transferee at the purchase price and upon the other terms and subject to the conditions of the Exit Sale (all of which shall be set forth in the Drag-Along Notice (defined below)), that number of Shares as is equal to the product of (i) a fraction, the numerator of which is the total number of Company Shares proposed to be sold by the Selling Holder(s) and the denominator of which is the aggregate number of Company Shares owned as of the date of the Drag-Along Notice by the Selling Holder(s), and (ii) the number of Company Shares owned by such Other Shareholders as of the date of the Drag-Along Notice.
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Shareholders Agreement
(b) The rights set forth in Section 6(a) shall be exercised by giving notice in accordance with Section 17 hereof (the “Drag-Along Notice”) to each Other Shareholder, at least fourteen (14) Business Days prior to the date on which the Selling Holders expect to consummate the Transfer giving rise to such Drag-Along Right. In the event that the terms and/or conditions set forth in the Drag-Along Notice are thereafter amended in any respect, the Selling Holders shall give notice in accordance with Section 17 hereof (an “Amended Drag-Along Notice”) of the amended terms and conditions of the proposed Transfer to each Other Shareholder. Each Drag-Along Notice and Amended Drag-Along Notice shall set forth: (i) the name of the Drag-Along Transferee and the amount of Shares proposed to be purchased by such Drag-Along Transferee, (ii) the proposed amount and form of consideration and terms and conditions of payment offered by the Drag-Along Transferee and a summary of any other material terms pertaining to the Transfer, (iii) the number of Shares that such Other Shareholders are required to sell in such Transfer, and (iv) all other material terms of the proposed Transfer. After the delivery of such Drag-Along Notice, such Selling Holder will provide each of the Other Shareholders with any additional information as is reasonably requested with respect to such Transfer, provided that the Selling Holder may require the Other Shareholders to execute such confidentiality and non-disclosure provisions with respect to the identity of the Drag-Along Transferee or otherwise with respect to the Transfer as the Selling Holder may deem necessary or desirable.
(c) All Transfers of Shares to the Drag-Along Transferee pursuant to this Section 6 shall be consummated contemporaneously at the offices of the Company, unless the Selling Holder(s) elects otherwise, on the later of (i) a Business Day not less than fourteen (14) or more than twenty-one (21) days after the Drag-Along Notice is delivered to the parties. The delivery of certificates (if any) or other instruments evidencing such Shares shall be made on such date, against payment of the purchase price for such Shares, duly endorsed for Transfer or with duly executed stock powers or similar instruments, or such other instrument of Transfer of such Shares as may be reasonably requested by the Selling Holders and the Company, with all stock transfer taxes paid and stamps affixed. Additionally, each Shareholder shall comply with any other conditions to closing generally applicable to such Selling Holders and all Other Shareholders selling Shares in such transaction. Each Other Shareholder shall receive the same amount and form of consideration received by the Selling Holder per each interest sold. To the extent that the Parties are to provide any indemnification or otherwise assume any other post-closing liabilities, the Selling Holders and all Other Shareholders selling Shares in a transaction under this Section shall do so severally and not jointly (and on a pro rata basis in accordance with their Shares being sold) and their respective potential liability thereunder shall not exceed the proceeds received, subject to customary exceptions in excess of such limits. Furthermore, each Other Shareholder shall only be required to give customary representations and warranties, including, but not limited to, title to interests conveyed, legal authority and capacity and non-contravention of other agreements.
(d) Notwithstanding the foregoing, no drag-along rights under this Section 6 shall apply with respect to any Permitted Transfer or any Repurchase Event and each Drag-Along Transferee and Transfer shall comply with the Transfer Conditions defined in Section 8(b).
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Shareholders Agreement
7. DEATH OR INCAPACITY OF SHAREHOLDER.
(a) Generally. Any individual who is subject to Incapacity (the “Incapacitated Shareholder”), or such Incapacitated Shareholder’s estate, executor, personal representative or other successor in interest or the deceased Shareholder’s estate, executor, personal representative or other successor in interest, as applicable (as applicable, the “Shareholder’s Representative”), must sell the deceased Shareholder’s/Incapacitated Shareholder’s Shares to the Company, to the extent the Company exercises its right to acquire the deceased Shareholder’s/Incapacitated Shareholder’s Shares under this Section 7. Any purchase or sale of Shares pursuant to this Section 7 shall be for the purchase price and upon the terms set forth below.
(b) Purchase Option.
(i) Upon the death or Incapacity of any Shareholder, the Company may, for a period of thirty (30) days from the date of the Company’s actual knowledge of such Shareholder’s death or Incapacity, exercise its option to purchase from the applicable Shareholder’s Representative all or any portion of such Shareholder’s Shares (the “Company Option”). If the Company elects to purchase less than all of such Shareholder’s Shares, the Shareholder’s Representative will not be bound to sell such portion of the Shares to the Company.
(iii) In the event the Company chooses not to exercise the Company Option for any reason, the Shareholders shall have the right to acquire the deceased Shareholder’s /Incapacitated Shareholder’s Shares pursuant to the terms of Section 5 hereof (the “Shareholder Option”), as if the deceased Shareholder/Incapacitated Shareholder or his or her Shareholder’s Representative had made an Offer to the other Shareholders to sell all of the Shares held by such deceased Shareholder /Incapacitated Shareholder.
(c) Failure to Exercise. If the Shares of the deceased Shareholder/Incapacitated Shareholder are not purchased as contemplated above pursuant to the Company Option or the Shareholder Option, through no fault of the Shareholder’s Representative, such Shareholder Representative or any beneficiary or heir of the deceased Shareholder succeeding in ownership of the Shares shall remain the owner of such Shares subject to this Agreement, provided that such transferee executes an Addendum and such applicable Transfer complies with all of the Transfer Conditions of Section 8(b).
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Shareholders Agreement
(d) Purchase Price. The purchase price per share to be paid for any Shares sold by a Shareholder’s Representative to the Company pursuant to this Agreement must be equal to the Fair Market Value.
(e) Terms of Purchase. The Company must pay the purchase price at closing by the delivery of either cash, electronic bank transfer, or banker’s draft.
(f) Closing. The closing of each purchase and sale of Shares contemplated by this Section 7 must occur at the offices of the Company no later than 10:00 a.m. GMT on the later to occur of:
(i) the sixtieth (60th) day following the determination of the Fair Market Value;
(ii) the sixtieth (60th) day following the qualification of the executor or personal representative of the estate of the deceased or Incapacitated Shareholder (if applicable under the circumstances);
(iii) the sixtieth (60th) day following the date of the qualification of a guardian for the property of the deceased or Incapacitated Shareholder (if applicable under the circumstances); or
(iv) the sixtieth (60th) day following the date upon which the Company timely exercises its right to purchase Shares pursuant to Section 7,
provided that each day that the closing contemplated by this Section 7 is delayed by the Shareholder’s Representative or a third party (either due to their actions or inactions), the deadline to complete the closing as set forth in this Section 7(f) shall be automatically extended by one day.
8. PERMITTED TRANSFERS.
(a) The following types of Transfers (“Permitted Transfers”) may be consummated notwithstanding, and without such Shareholder needing to comply with, the provisions of Section 5 of this Agreement:
(i) a Transfer by any Shareholder of all or any portion of his, her or its Shares to an Affiliate of the Shareholder.
(b) Any Permitted Transfer by a Shareholder must satisfy all of the following conditions (the “Transfer Conditions”):
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Shareholders Agreement
(i) the Shareholder who is Transferred Shares by a Shareholder must execute an Addendum and become subject to the terms of this Agreement, unless such requirement is waived in writing by a Majority In Interest.
(c) In the event a Shareholder makes a Permitted Transfer, it, he or she shall notify the Company thereof, in accordance with Section 17 hereof which shall specify (i) the name of the Transferee, (ii) the relationship of the Transferee to the Shareholder, (iii) the Shares transferred, and (iv) the date of such Transfer. Any such Transferee shall, as a condition of the recognition by the Company of such Transfer, execute an Addendum.
(d) Unless approved in writing by a Majority In Interest, a Shareholder may also not pledge, hypothecate or otherwise encumber his or her Shares to, or in favor of, any national or state bank or other financial institution; provided, however, that a Shareholder may pledge, hypothecate or encumber all of its, her or his Shares in order to secure a loan made to the Company.
9. OTHER EVENTS CONSTITUTING AN OFFER TO TRANSFER INTERESTS.
(a) Each of the following events or conditions shall constitute a “Repurchase Event”:
(i) The filing of a petition in bankruptcy by or against the Shareholder (unless the petition is dismissed within sixty (60) days);
(ii) Any general assignment by the Shareholder for the benefit of his or her creditors;
(iii) Any other event, other than an Offer made pursuant to Section 5 of this Agreement, a Transfer subject to Section 5, or a Permitted Transfer, which, were it not for the provisions of this Agreement, would cause any such Shares, or any interest therein, to be sold, assigned, awarded, confirmed or otherwise transferred, for consideration or otherwise, to any person, whether voluntarily, involuntarily or by operation of law, or any event which would cause the Shares to be pledged, hypothecated or encumbered.
(b) Upon the occurrence of a Repurchase Event, as defined in Section 9(a), the Remaining Shareholders shall have the right to purchase such Shareholder’s Shares on the same terms and conditions as if such Shareholder had made an Offer to sell such Shares pursuant to Section 5 at the ROFR Price.
(c) Within thirty (30) days after the occurrence of a Repurchase Event, the Shareholder or his or her trustee in bankruptcy, personal representative, guardian, executor or administrator, as appropriate (the “Transferor”), shall give notice in accordance with Section 17 hereof to the Company and the Remaining Shareholders of such event specifying the date of such event and describing in reasonable detail the nature of the event and the number of Shares affected. The price per Share shall be as specified as provided in Section 9(b), above, as appropriate. Such notice shall be deemed to be an Offer for the purposes of Section 5, the number of Shares affected shall be deemed to be the Offered Interest and such ROFR Price (or other price as determined in Section 9(b)) shall be deemed to be the Proposed Price. If any Remaining Shareholder has not received this notice upon the expiration of the thirty (30) day period, any Remaining Shareholder of the Company who has actual knowledge of such event may give notice in accordance with Section 17 hereof to the Company and the Remaining Shareholders at any time after the end of such period, and the notice shall be deemed to be the Offer.
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Shareholders Agreement
(d) The purchase price for the Offered Interest for purposes of this Section 9 shall be paid within thirty (30) days of the exercise of any option to purchase such shares as described in this Section 9 above. The other terms and conditions and procedures for transferring Offered Interest shall be determined in accordance with Section 5.
10. SECURITY FOR PURCHASE PRICE OF SHARES; COMPANY AS ATTORNEY-IN-FACT. Whenever any Shares are purchased pursuant to the option created under Sections 5,7 or 9 of this Agreement and the Parties agree that the entire purchase price for the Shares will not be paid at closing, then the purchaser(s) may endorse the certificates for the purchased Shares and deliver the same to the selling Shareholder (or his or her representatives) as collateral security for the payment of the unpaid purchase price, and such Shares may be held until the entire purchase price shall have been paid. While such Shares shall be held as collateral security and so long as the purchasing Shareholder is not in default, the purchasing Shareholder shall be entitled to all rights as a Shareholder, including voting rights and rights to all dividends, with respect to such Shares. On the closing date for any sale of Shares as provided in this Agreement, certificates representing such Shares shall be delivered to the Company with appropriate stock powers or endorsements duly executed in blank. If the stock certificate or certificates with appropriate stock powers or endorsements duly executed as aforesaid are not delivered contemporaneously with the tender of the purchase price, then the Company and its officers shall be appointed, and the Company and its officers are hereby irrevocably constituted and appointed, the attorney-in-fact with full power and authority to execute the necessary stock powers and to perform all other acts necessary and proper in order to transfer such stock certificate or certificates to the Company or other Shareholders in accordance with the provisions of this Agreement, whether upon the Incapacity of a Shareholder or otherwise. This special power of attorney is irrevocable and is coupled with an interest.
11. REQUIREMENT FOR TRANSFEREE TO EXECUTE ADDENDUM. Any Transferee permitted pursuant to the terms of this Agreement, i.e., including, but not limited to (i) a Permitted Transferee; (ii) the acquirer of Shares pursuant to a Transfer described in Section 5, pursuant to which not all of the rights of first refusal have been exercised; or (iii) any Person who acquires Shares pursuant to Section 8, subject to the rights provided for therein, shall, as a condition of the recognition by the Company of such Transfer, execute an addendum to this Agreement acknowledging the terms and restrictions of this Agreement and the Transferee’s obligation to be bound hereby (an “Addendum”). In the event that any Transferee permitted hereunder fails to execute an Addendum, and/or until such time as the permitted Transferee executes any Addendum, the original Shareholder who attempted the permitted Transfer, shall continue to be considered a Shareholder of the Company, the Transferee shall have no rights as a Shareholder of the Company, and the attempted Transfer shall be considered void ab initio. Nothing in this Section 11 shall modify the other terms and conditions of this Agreement, or allow any Transferee not permitted by the terms and conditions of this Agreement to become a Shareholder of the Company by executing an Addendum, and any such unpermitted execution of an Addendum shall be void and of no force and effect. Notwithstanding the above, no Addendum shall become effective until accepted and counter-signed by the Company.
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Shareholders Agreement
12. EFFECT OF NON-COMPLYING TRANSFER. If any Transfer in violation of this Agreement shall be attempted, or if any involuntary or other purported Transfer by law of any Shares occurs or is attempted (each, a “Non-complying Transfer”), it shall be void ab initio and upon presentation for transfer the Company shall not give effect to such purported Transfer.
13. LOCK-UP. Each Shareholder agrees to execute a customary lock-up agreement with the underwriters in connection with any IPO (defined below in Section 21), provided that the duration of the lock-up period shall not exceed 180 days.
14. CONSIDERATION. Each Current Shareholder confirms and acknowledges that Golden Matrix would not have entered into the Exchange Agreement but for the Current Shareholder agreeing to the terms of this Agreement, and further confirms that such Current Shareholder has received valid and sufficient consideration for its entry into this Agreement from the mutual agreements and covenants set forth herein, and the terms of the Exchange Agreement.
15. GOVERNANCE.
(a) Shareholder and Director Voting. The Shareholders entitled to vote covenant and agree, one to the other, that they shall, at all times and from time to time, if lawfully permitted to do so, vote or cause to be voted their Shares (and, if applicable, vote as a Director of the Company), to propose or approve any action required to be taken by a Majority In Interest pursuant to this Agreement.
(b) Number of Directors. The business and affairs of the Company shall be governed by the Board, which shall consist of at least three (3) Directors, two of whom shall by appointed by Golden Matrix (each a “Golden Matrix Director”). Once designated, Directors will serve on the Board until they resign or are removed pursuant to the terms of this Agreement, or their earlier death or Incapacity. The number of members on the Board may be increased (but not decreased) with the consent of a Majority In Interest. Notwithstanding anything herein to the contrary, Golden Matrix shall have the right to designate a replacement individual to serve as a Golden Matrix Director at any time upon written notice to the other Shareholders and Directors.
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Shareholders Agreement
(c) Initial Directors. The initial Directors will be (1) Thomas Bailey, (2) Anthony Brian Goodman, and (3) Bret Goodman. Golden Matrix hereby designates Anthony Brian Goodman and Bret Goodman as the initial Golden Matrix Directors. A majority of the Directors will appoint the directors of the Company’s subsidiaries and such subsidiary directors shall appoint the officers of such subsidiary.
(d) Removal. A Director, other than a Golden Matrix Director, may be removed from the Board at any time, with or without cause, upon, and only upon, the affirmative vote of a Majority In Interest. A Director then serving as a Golden Matrix Director may be removed only with the prior written consent of Golden Matrix.
(e) Vacancy. If a vacancy is created on the Board as a result of the death, disability, retirement, resignation or removal of a Director, other than a Golden Matrix Director, a Majority In Interest shall have right to designate a Director to fill such vacancy. The term of such new Director will commence immediately upon his or her designation by a Majority In Interest. In the event of the death, disability, retirement, resignation or removal of a Golden Matrix Director in accordance herewith, Golden Matrix will have the exclusive right to appoint such Golden Matrix Director’s replacement.
(f) Meetings. Meetings of the Board shall be held not less than once per calendar quarter, except that a Director or a Majority In Interest may at any time call a Board meeting by giving at least 24 hours written notice to the Company and each other Director (which may be via email) to enable the meeting to be convened.
(g) Quorum. A majority of the number of Directors on the Board at the time of a meeting constitutes a quorum for the transaction of business at such meeting (provided if there are two Members, both Members must be present). Directors may participate in a meeting of the Board by means of telephonic or video conference or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
(h) Devotion of Time. The Directors shall not be obligated to devote all of their time or business efforts to the Company’s affairs, but shall devote that amount of their time, effort and skill to the Company as may be reasonably necessary for the ongoing operations of the Company’s affairs.
(i) Officers. The Board may elect one or more officers of the Company such as President, Vice President, Secretary and Treasurer, which officers shall serve at the will and direction of the Board, and shall have only the authority delegated to them by the Board.
(j) Banking Authority. Notwithstanding anything herein to the contrary, Golden Matrix has the sole right to designate one or more individuals (the “Banking Representative”, whether one or more), who shall be one of the Golden Matrix Directors unless Golden Matrix designates a different individual as Banking Representative from time to time, who will have exclusive authority in connection with the Company’s banking and other financial accounts and controlling and/or directing Company funds. No action may be taken by the Board or other representative of the Company in connection with the Company’s banking authority without the express written consent of the Banking Representative.
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Shareholders Agreement
(k) Actions Requiring Consent of Majority In Interest. The Directors will not, without the prior written consent of a Majority In Interest, engage or cause the Company or Classics For a Cause to engage in any of the following actions (and any such actions purported to be taken without such consent shall be null and void):
(i) Amend, waive or alter the Company’s or Classics For a Cause’s Organizational Documents or any provisions thereof;
(ii) (A) create (by new authorization, reclassification, recapitalization or otherwise) or (B) issue, any class or series of Shares or shares of ordinary shares of Classics For a Cause (“Classics For a Cause Shares”) or stock or securities exchangeable for or convertible into Shares or Classics For a Cause Shares or other securities;
(iii) consolidate or divide or alter, increase or reduce all or any of the Company’s Share capital or Classics For a Cause’s Classics For a Cause Shares capital, or grant or issue any options, rights or warrants which may require the issuance of Shares or Classics For a Cause Shares or stock in the future or do any act which has the effect of diluting or reducing the effective shareholding of the Shareholders in the Company or the Company in Classics For a Cause;
(iv) negotiate, litigate, or settle any claim against the Company or Classics For a Cause;
(v) pay or declare any dividends, or make any other distribution of cash, Shares, Classics For a Cause Shares or other assets, on any of the Shares or Classics For a Cause Shares or other securities of the Company or Classics For a Cause;
(vi) capitalize any sum standing to the credit of any of the Company’s or Classics For a Cause’s reserve accounts or profit or loan accounts;
(vii) authorize or approve a merger or consolidation or sale or spin-off of all or substantially all of the Company’s or Classics For a Cause’s assets;
(viii) sell, lease, convey, exchange, transfer, grant an exclusive license in any country under, or otherwise dispose of (x) the copyrights, trademarks, and patents and any other tangible or intangible assets which are requisite for the Company or Classics For a Cause to carry on their business or (y) all or substantially all of the assets held by the Company or Classics For a Cause;
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Shareholders Agreement
(ix) redeem, repurchase, cancel or otherwise acquire any of the Company’s Shares or Classics For a Cause Shares or securities;
(x) create, assume, or guarantee any indebtedness (other than trade payables in the ordinary course) of Classics or Classics For a Cause;
(xi) authorize, adopt, amend or establish, or allocate or issue additional Shares or Classics For a Cause Shares or options to any employee, share grant, share purchase, share options, incentive or compensation plan, program or arrangement relating to Classics or Classics For a Cause;
(xii) change in any material respect the nature of the Company’s or Classics For a Cause’s current or contemplated business as carried on as of the date hereof;
(xiii) establish or invest in, or divest or sell off any interest in, any affiliated company of Classics or Classics For a Cause;
(xiv) approve the listing of Classics’ or Classics For a Cause’s shares on any stock exchange;
(xv) approve any recapitalization, restructuring or reorganization or any action that would result in its dissolution, liquidation or winding up, or apply for the appointment of a receiver of Classics or Classics For a Cause;
(xvi) increase or decrease the maximum number of Directors;
(xvii) enter into any joint venture agreements or the formation of any subsidiary of Classics or Classics For a Cause;
(xviii) sell, transfer, license, charge, encumber or otherwise dispose of any trademarks, patents or other intellectual property owned by Classics or Classics For a Cause except in the ordinary course of their business;
(xix) enter into any agreement with any Shareholder or any Affiliate or family member of any Shareholder;
(xx) enter into any agreement with a potential value in excess of AU$50,000 relating to Classics or Classics For a Cause; or
(xxi) approve any Transfer of Shares or Transfer of Classics For a Cause Shares.
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Shareholders Agreement
16. MUTUAL REPRESENTATIONS, COVENANTS AND WARRANTIES.
(a) The Parties have all requisite power and authority, corporate or otherwise, to execute and deliver this Agreement and to consummate the transactions contemplated hereby and thereby. The Parties have duly and validly executed and delivered this Agreement and will, on or prior to the consummation of the transactions contemplated herein, execute, such other documents as may be required hereunder and, assuming the due authorization, execution and delivery of this Agreement by the Parties hereto and thereto, this Agreement constitutes, the legal, valid and binding obligation of the Parties enforceable against each Party in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general equitable principles.
(b) The execution and delivery by the Parties of this Agreement and the consummation of the transactions contemplated hereby and thereby do not and shall not, by the lapse of time, the giving of notice or otherwise: (a) constitute a violation of any law; or (b) constitute a breach or violation of any provision contained in the Company Documents, or such other document(s) regarding organization and/or management of the Parties, if applicable; or (c) constitute a breach of any provision contained in, or a default under, any governmental approval, any writ, injunction, order, judgment or decree of any governmental authority or any contract to which either the Company or the Shareholders is a Party or by which either the Company or the Shareholders is bound or affected.
(c) Any individual executing this Agreement on behalf of an entity has authority to act on behalf of such entity and has been duly and properly authorized to sign this Agreement on behalf of such entity.
17. NOTICES. All notices, requests and other communications hereunder, shall be given in writing and delivered by: (a) regular, overnight or registered or certified mail (return receipt requested), with first class postage prepaid; (b) hand delivery; (c) facsimile transmission; (d) overnight courier service; or (e) email, and shall be, addressed to a Shareholder at the address set forth on the signature page hereto or at such other address of which a Shareholder has given the Company and the other Shareholders written notice of at least ten (10) days previously. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given: (A) in the case of a notice sent by regular or registered or certified mail, three Business Days after it is duly deposited in the mails; (B) in the case of a notice delivered by hand, when personally delivered; (C) in the case of a notice sent by facsimile, upon transmission subject to telephone confirmation of receipt; (D) in the case of a notice sent by overnight mail or overnight courier service, the next Business Day after such notice is mailed or delivered to such courier, in each case given or addressed as aforesaid; and (E) in the case of a notice sent by email, effective only when the recipient, by return or reply email or notice delivered by other method provided for in this Section 17, acknowledges having received that email (with an automatic “read receipt” or similar notice not constituting an acknowledgement of an email receipt for purposes of this Section 17, but which acknowledgement of acceptance shall include cases where recipient ‘replies’ to such prior email, including the body of the prior email in such ‘reply’).
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Shareholders Agreement
18. AMENDMENTS; WAIVERS. Neither this Agreement nor any term hereof may be amended or waived (each an “Amendment”) orally or in writing, except that any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), and such amendment or waiver shall be applicable to all of the Shareholders, with the written consent of the Company and a Majority In Interest.
19. GOVERNING LAW. This Agreement shall be construed and interpreted in accordance with the laws of the jurisdiction of Nevada. Any dispute with respect to the terms and conditions of this Agreement shall be subject to the exclusive jurisdiction of Nevada.
20. BINDING EFFECT AND BENEFITS. Except as otherwise provided herein, the terms of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns, and shall be binding upon any person to whom any of the Shares of the Parties are transferred and upon the heirs, executors, administrators, personal representatives, successors and assigns of each such Person.
21. TERM OF AGREEMENT. This Agreement shall become effective as of the Effective Date (for the sake of clarity, this Agreement shall not bind the Initial Shareholders until the Effective Date) and shall remain in full force and effect until the Company and a Majority In Interest, shall agree in writing to its termination or until the first to occur of (i) offering of Shares by the Company pursuant to a registration statement effective under Nevada Law (an “IPO”); (ii) the purchase by one Shareholder of all the issued and outstanding Shares of the Company; or (iii) the dissolution, bankruptcy or receivership of the Company (the “Term”). Upon termination of this Agreement, the Secretary of the Company or the Company’s Transfer Agent shall, upon tender of the certificates for Shares, delete the legend endorsed thereon pursuant to Section 2 of this Agreement. This Agreement may be terminated at any time prior to the Effective Date with the approval of a Majority In Interest.
22. REMEDIES FOR VIOLATIONS. The Shares cannot be readily purchased or sold on the open market and for this reason, among others, the Parties hereto will be irreparably damaged in the event that this Agreement is not complied with by all Parties hereto. The Parties agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement. If any Party brings any action or proceeding to enforce the provisions of this Agreement, any Party against whom such action or proceeding is brought waives the claim or defense that an adequate remedy at law exists and such Party will not urge in any such action or proceeding the claim or defense that such remedy at law exists. The Parties further agree that an injured Party will, at its option, have the right to an injunction from a court of competent jurisdiction restraining further violation of this Agreement or any provision of this Agreement or affirmatively compelling any violating Party to carry out its obligations hereunder without necessity of posting bond/providing security for costs or proving damages. The rights granted in this Section 22 shall be cumulative and not exclusive, and shall be in addition to any and all other rights which the Parties hereto may have hereunder, at law or in equity. In the event a Party to this Agreement must employ an attorney or solicitor or barrister to enforce the provisions hereof or to secure performance by a defaulting Party under the terms herein stated, the prevailing Party in litigation arising therefrom shall be entitled to an award of its reasonable attorney’s legal fees both on trial/hearing and the appellate level incurred in enforcing this Agreement and/or securing performance of the terms herein stated.
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Shareholders Agreement
23. ENTIRE AGREEMENT. This Agreement contains the entire understanding and agreement between the Parties hereto and supersedes any prior agreements among the Parties pertaining to the Shares. There are no representations, warranties, promises, covenants or understandings other than those herein expressly set forth.
24. CONFLICTS WITH ORGANIZATIONAL DOCUMENTS. To the extent that any terms in the Company’s or Classics For a Cause’s Organizational Documents conflict with any term in this Agreement, (i) the terms of this Agreement shall take precedence, and (ii) the Shareholders covenant and agree to take prompt action to amend the Company’s or Classics For a Cause’s Organizational Documents to conform to this Agreement.
25. SEVERABILITY. Every provision of this Agreement is intended to be severable. If, in any jurisdiction, any term or provision hereof is determined to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, (b) any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such term or provision in any other jurisdiction, and (c) the invalid or unenforceable term or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. If a court of competent jurisdiction determines that any covenant or restriction or portion thereof, set forth in this Agreement is unreasonable or unenforceable, the court shall reduce or modify such covenants or restrictions to those which it deems reasonable and enforceable under the circumstances and, as so reduced or modified, the Parties hereto agree that such covenants and restrictions shall remain in full force and effect as so modified. In the event a court of competent jurisdiction determines that any provision of this Agreement is invalid or against public policy and cannot be so reduced or modified so as to be made enforceable, the remaining provisions of this Agreement shall not be affected thereby, and shall remain in full force and effect.
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Shareholders Agreement
26. SECTION AND OTHER HEADINGS. The Section and other headings contained in this Agreement are for reference purposes only and shall not affect the interpretation of this Agreement.
27. INDEPENDENT COUNSEL. Each Shareholder, by signing this Agreement acknowledges that he, she or it (a) has read and understood this Agreement, and understands the terms and conditions hereof, including, but not limited to Sections 4 through 15; has had the opportunity to obtain separate and independent counsel of his or her own choosing prior to signing this Agreement and has either exercised or waived such right; (b) has relied solely and completely upon its own judgment in executing this Agreement; (c) has had the opportunity to seek and has obtained the advice of its own tax and business advisors before executing this Agreement; (d) has acted voluntarily and of its own free will in executing this Agreement; and (e) understands that this Agreement is the result of arm’s length negotiations conducted by and among the Parties and their respective counsel. No other Party’s legal counsel has not undertaken to assist or render legal advice to any Shareholders in regards to this Agreement.
28. ADDITIONAL PARTIES. With the approval of the Company, anyone in whose name Shares are validly Transferred pursuant to the terms of this Agreement may become a Party to this Agreement by executing an Addendum, which shall not require the approval or consent of the other Shareholders already a Party hereto.
29. FURTHER ASSURANCES. Each Shareholder hereby covenants that it will, whenever and as reasonably requested by the other Parties hereto at such Shareholder’s sole cost and expense, do, execute, acknowledge and deliver any and all such other and further acts, deeds, assignments, transfers, conveyances, confirmations, powers of attorney and any instruments of further assurance, approvals and consents as the other Parties may reasonably request or require from time to time in order to comply with the terms and conditions of this Agreement and the restrictions, requirements and rights set forth herein.
30. ARBITRATION. Any controversies or disputes arising out of or relating to this Agreement shall be resolved by binding arbitration by an arbitration panel selected in accordance with the then-current arbitrator selection procedures of the American Arbitration Association. Such arbitration shall be conducted in Las Vegas, Nevada (absent mutual agreement by the parties to do otherwise) pursuant to the national rules for the resolution of employment disputes of the American Arbitration Association then in effect, subject to the provisions of this Section 30. Such arbitration shall be final and binding on the Parties. All documents, materials, and information in the possession of each Party that are in any way relevant to the dispute shall be made available to the other Party for review and copying no later than 30 days after the notice of arbitration is served. The arbitrator shall not have the authority to modify any provision of this Agreement or to award punitive damages. The arbitrator shall have the power to issue mandatory orders and restraint orders in connection with the arbitration. The decision rendered by the arbitrator shall be final and binding on the Parties, and judgment may be entered in conformity with the decision in any court having jurisdiction. This agreement to arbitration shall be specifically enforceable under any prevailing arbitration law. During the continuance of any arbitration proceeding, the Parties shall continue to perform their respective obligations under this Agreement. The arbitrator shall award to the prevailing party, if any, as determined by the arbitrators, all of its costs and fees. “Costs and fees” mean all reasonable pre-award expenses of the arbitration, including the arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, and solicitors’ and barristers’ and attorneys’ fees.
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Shareholders Agreement
31. COUNTERPARTS, EFFECT OF FACSIMILE, EMAILED AND PHOTOCOPIED SIGNATURES. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any such delivery, an “Electronic Delivery”) shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
[Remainder of page left intentionally blank. Signature pages follow.]
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Shareholders Agreement
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have executed this Agreement as of the date first written above to be effective upon the Effective Date.
COMPANY:
| Classics Holdings Co. Pty Ltd. |
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| /s/ Thomas Bailey |
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| Name: Thomas Bailey Title: Director |
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Address:
32 Wright Place
Algester QLD 4115
Email:
| SHAREHOLDERS: |
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| NJF Exercise Physiologists Pty Ltd (ACN 147 139 222) |
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| /s/ Nicholas Flanigan |
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| Name: Nicholas Flanigan Title: Director |
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Shares: 15 Ordinary Shares (12% of the issued and outstanding Company Stock at the end of the Effective Date)
Address:
32 Wright Place
Algester QLD 4115
Email:
| Think Tank Enterprises Pty Ltd (ACN 617 369 909) |
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| /s/ Thomas Bailey |
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| Name: Thomas Bailey Title: Director |
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Shares: 10 Ordinary Shares (8.0% of the issued and outstanding Company Stock at the end of the Effective Date)
Address:
32 Wright Place
Algester QLD 4115
Email:
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Shareholders Agreement
| Golden Matrix Group, Inc. |
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| /s/ Anthony Brian Goodman |
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| Name: Anthony Brian Goodman Title: President |
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Shares: 100 Ordinary Shares (80% of the issued and outstanding Company Stock at the end of the Effective Date)
Address:
3651 Lindell Road Ste D131
Las Vegas NV 89103, USA
Email:
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Shareholders Agreement
EXHIBIT A
STOCK POWER AND ASSIGNMENT OF
UNCERTIFICATED ORDINARY SHARES
FOR VALUE RECEIVED, effective __________, 202__, the undersigned (the “Assignor”), the owner of ___% of the capital stock of Classics Holdings Co. Pty Ltd., an Australian proprietary limited company (the “Company”), hereby sells, assigns, and transfers unto Golden Matrix Group, Inc., a Nevada corporation (the “Assignee”), an aggregate of ___ Ordinary Shares of the Company (representing ____% of the aggregate outstanding Ordinary Shares of the Company), which are owned by the undersigned Assignor, along with any and all appurtenant rights thereto (the “Securities”) and Assignor does hereby irrevocably constitute and appoint the Secretary or other appropriate officers of the Company as its attorney-in-fact with full power to transfer said Securities on the books of the Company with full power of substitution in the premises. Such Securities are not represented by certificates, are held in book entry form and stand in the undersigned’s name on the books and records of the Company.
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| [Name of Assignor] |
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EXHIBIT B
FORM OF STOCK REGISTRATION FORM
(CHECK ONE):
_____ INDIVIDUAL OWNERSHIP (one signature required)
_____ TRUST (please include name of trust, name of trustee, and date trust was formed and copy of the Trust Agreement or other authorization)
_____ PARTNERSHIP (please include a copy of the Partnership Agreement authorizing signature)
_____ CORPORATION (please include a certified corporate resolution authorizing signature)
_____ LIMITED LIABILITY COMPANY (please include a certified corporate resolution authorizing signature)
________________________________________________________________________
Please print here the exact name (registration)
Seller desires to appear in the records of the Purchaser
________________________________________________________________________
Please print here the exact address
Seller desires to appear in the records of the Purchaser
Signature:
By: _________________________
Printed Name: ______________________
If on behalf of Entity:
Entity Name: ___________________
Signatory’s Position with Entity: ___________________
Beneficial Owner(s) of Securities To Be Owned by Entity:
_____________________
Address: ____________________________________________________________
SS#/Tax Id Number: ______________________________
Telephone Number: ( ) - _____ - _______
Email:____________________
EXHIBIT C
TRANSFEREE CERTIFICATE
This Transferee Certificate (“Certificate”) is entered into in connection with, and forms a part of, that certain Shareholders Agreement dated on or around August [ ], 2024 (the “Shareholders Agreement”), by and between Classics Holdings Co. Pty Ltd., an Australian proprietary limited company (the “Company”), NJF Exercise Physiologists Pty Ltd and Think Tank Enterprises Pty Ltd, each an Australian proprietary limited company and a shareholder of the Company (each a “Transferee”), and Golden Matrix Group, Inc., a Nevada corporation (“Golden Matrix”). Capitalized terms used herein but not otherwise defined have the meanings given to such terms in the Shareholders Agreement. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires.
1. Representations and Warranties of Transferee. The undersigned Transferee, in connection with its receipt and acceptance of certain Golden Matrix Shares pursuant to Section 4 of the Shareholders Agreement, represents, warrants, and certifies that the following is true and correct as of the Buyout Closing Date:
(i) Transferee recognizes that the Golden Matrix Shares have not been registered under the Securities Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Golden Matrix Shares are registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or unless an exemption from registration is available. Such Transferee may not sell the Golden Matrix Shares without registering them under the Securities Act and any applicable state securities laws unless exemptions from such registration requirements are available with respect to any such sale;
(ii) Each Transferee is acquiring the Golden Matrix Shares for its own account for long-term investment and not with a view toward resale, fractionalization or division, or distribution thereof, and it does not presently have any reason to anticipate any change in its circumstances, financial or otherwise, or particular occasion or event which would necessitate or require the sale or distribution of the Golden Matrix Shares. No one other than such Transferee will have any beneficial interest in said securities;
(iii) Each Transferee acknowledges that it is an “accredited investor” as such term is defined in Rule 501 of Regulation D of the Securities Act, as the same is more particularly set forth in Section 2 of this Certificate;
(iv) Each Transferee (A) is aware of, has received and had an opportunity to review (i) Golden Matrix’s Annual Report on Form 10-K for the most recent fiscal year ended prior to the Buyout Closing Date; and (ii) Golden Matrix’s Quarterly Reports on Form 10-Q and current reports on Form 8-K issued on or prior to the Buyout Closing Date (which filings can be accessed by going to https://www.sec.gov/edgar/searchedgar/companysearch.html, typing “Golden Matrix Group, Inc.” in the “Name, ticker symbol, or CIK” field, and clicking the “Search” button), in each case (i) through (ii), including the audited and unaudited financial statements, description of business, risk factors, results of operations, certain transactions and related business disclosures described therein (collectively the “Disclosure Documents”) and an independent investigation made by it of Golden Matrix; (B) has, a reasonable time prior to the date of this Agreement, been given an opportunity to review material contracts and documents of Golden Matrix and has had an opportunity to ask questions of and receive answers from Golden Matrix’s officers and directors and has no pending questions as of the date of this Agreement; and (C) is not relying on any oral representation of Golden Matrix or any other person, nor any written representation or assurance from Golden Matrix; in connection with each Transferee’s acceptance of the Securities and investment decision in connection therewith. Each Transferee acknowledges that due to its receipt of and review of the information described above, it has received similar information as would be included in a Registration Statement filed under the Securities Act;
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Transfer Certificate
(v) Each Transferee has such knowledge and experience in financial and business matters such that such Transferee is capable of evaluating the merits and risks of an investment in the Golden Matrix Shares and of making an informed investment decision, and does not require a representative in evaluating the merits and risks of an investment in the Golden Matrix Shares;
(vi) Each Transferee has had an opportunity to ask questions of and receive satisfactory answers from Golden Matrix, or any person or persons acting on behalf of Golden Matrix, concerning the terms and conditions of this Certificate and Golden Matrix, and all such questions have been answered to the full satisfaction of such Transferee;
(vii) Each Current Shareholder recognizes that an investment in Golden Matrix is a speculative venture. The ownership of the Golden Matrix Shares as an investment involves special risks;
(viii) Each Transferee realizes that the Golden Matrix Shares cannot readily be sold as they will be restricted securities and therefore the Golden Matrix Shares must not be accepted unless such Transferee has liquid assets sufficient to assure that such purchase will cause no undue financial difficulties and such Transferee can provide for current needs and possible personal contingencies;
(ix) Each Transferee confirms and represents that it is able (i) to bear the economic risk of its investment, (ii) to hold the Golden Matrix Shares for an indefinite period of time, and (iii) to afford a complete loss of its investment;
(x) Each Transferee has carefully considered and has, to the extent it believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Golden Matrix Shares for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, have determined that the Golden Matrix Shares are a suitable investment for itself;
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Transfer Certificate
(xi) Each Transferee has not become aware of and has not been offered the Golden Matrix Shares by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to such Transferee’s knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising;
(xii) Each Transferee confirms and acknowledges that Golden Matrix is under no obligation to register or seek an exemption under any federal and/or state securities acts for any sale or transfer of the Golden Matrix Shares by such Transferee, and such Transferee is solely responsible for determining the status, in its hands, of the Golden Matrix Shares acquired in connection herewith and the availability, if required, of exemptions from registration for purposes of sale or transfer of the Golden Matrix Shares; and
(xiii) Each Transferee confirms and acknowledges that the Golden Matrix Shares will bear the following restrictive legend (or a similar legend):
‘‘THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.’’
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Transfer Certificate
2. Accredited Investor Status. By signing below, the undersigned Transferee confirms, acknowledges and agrees that he, she or it is an “accredited investor,” as that term is defined in the Securities Act. The undersigned Transferee has initialed the line below indicating the basis on which he, she or it is representing his, her or its status as an “accredited investor”. The representation and confirmation below shall be effective for all purposes as of the Buyout Closing Date, as defined in the Shareholders Agreement (the “Applicable Date”) pursuant to the terms of the Shareholders Agreement. Golden Matrix and its attorneys and representatives shall be able to rely on this Certificate for any and all purposes. The undersigned Transferee confirms, acknowledges and agrees that he, she or it, is an “accredited investor”, due to the fact that he, she or it is:
| _______ |
| a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, and such plan has total assets in excess of US$5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; |
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| _______ |
| a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; |
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| an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; |
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| a natural person whose individual net worth, or joint net worth with the undersigned’s spouse or spousal equivalent, at the time of this purchase exceeds US$1,000,000. For purposes of this item, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the Applicable Date, but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the Applicable Date; |
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| a natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with the undersigned’s spouse or spousal equivalent in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. “Income” for this purpose is computed by adding the following items to adjusted gross income for federal income tax purposes: (a) the amount of any tax-exempt interest income received; (b) the amount of losses claimed as a limited partner in a limited partnership; (c) any deduction claimed for depletion; (d) deductions for alimony paid; (e) deductible amounts contributed to an IRA or Keogh retirement plan; and (f) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the U.S. Internal Revenue Code; or |
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| an entity (other than a trust) in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards. |
Page 4 of 6
Transfer Certificate
3. Release. Upon the closing of Golden Matrix’s purchase of the Buyout Shares on the Buyout Closing Date, the undersigned hereby, for itself and its successors and assigns, releases, acquits and forever discharges Golden Matrix, the Company and their subsidiaries and their respective Affiliates, the officers, directors, employees and agents thereof and their respective successors and assigns of and from any and all debts, amounts owed, claims, demands, liabilities, responsibilities, disputes, causes of action and obligations of every nature whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that the undersigned, as of the Buyout Closing Date has, owns or holds or has at any time previously had, owned or held against such parties, whether in connection with any breach of the Shareholders Agreement or the Company’s Organizational Documents or otherwise, including, without limitation, all liabilities created as a result of the negligence of Golden Matrix or the Company and their employees and agents, or under a theory of strict liability, existing as of the Buyout Closing Date and any amounts owed to the undersigned for the repayment of loans or advances made prior to the Company prior to the Buyout Closing Date.
4. Indemnification. The undersigned shall indemnify, defend and hold harmless Golden Matrix and its Affiliates from, against, and in respect of, any and all claims, liabilities, obligations, damages, losses, costs, expenses, charges, assessments, interest, penalties, fines and judgments (at equity or at law, including statutory and common) whenever arising or incurred (including amounts paid in settlement, costs of investigation and reasonable attorneys’ fees and expenses) arising out of or relating to any breach or inaccuracy of any representation or warranty made by the undersigned in this Transferee Certificate.
Golden Matrix and its attorneys and representatives shall be able to rely on such representations set forth in this Transferee Certificate for any and all purposes.
Page 5 of 6
Transfer Certificate
IN WITNESS WHEREOF, the undersigned Transferee has executed this Transferee Certificate on _______________, 20__.
| Name:______________________________________________
By: _________________________________________________ Signature
Printed Name of Signatory (if entity):_______________________
Title: _________________________________________________ (required for any shareholder that is a corporation, partnership, trust or other entity)
If joint ownership, both parties should sign above. |
Page 6 of 6
Transfer Certificate
EXHIBIT 99.1
Golden Matrix Enters Into Definitive Agreement to Acquire a Controlling Interest in Australian-Based Classics for a Cause
Las Vegas – August 20, 2024 – Golden Matrix Group, Inc. (Nasdaq: GMGI) (“GMGI” or the “Company”), a developer and licensor of online gaming platforms, systems and gaming content, today announced that it has entered into a definitive agreement to acquire an indirect 80% controlling interest in Classics for a Cause Pty Ltd (“CFAC”), a leading independent online discount platform in Australia.
This strategic acquisition marks GMGI’s entry into the consumer loyalty and rewards industry, complementing its existing operations in the gaming and sports betting sectors and solidifying its position as a premier tournament operator. Moreover, it provides a significant opportunity to scale CFAC's business and expand the firm’s operations globally.
CFAC operates a well-established business-to-consumer (B2C) platform that offers paid members access to a wide range of discounts from retailers across Australia. The company rewards its members with free entries into promotional giveaways, which feature luxury, high-end American and Australian classic cars, caravans and campers as well as cash and vacation giveaways.
Business Highlights:
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| · | CFAC generated over $10 million in revenue and more than $1.9 million in operating profit before tax* for the 12-month fiscal year ending June 30, 2024. |
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| · | CFAC has generated considerable free cash flow over the last two fiscal years. |
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| · | The company boasts a social media following exceeding 50,000 and a customer base of more than 300,000, with over 10,000 active monthly subscribers. |
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| · | Recurring monthly subscribers contribute over 30% of CFAC’s total revenue. |
*Net operating income before tax calculated for the 12-month period ending June 30th 2024. Financials presented in Australian Dollars and written on a cash basis. With cash basis accounting, revenue and expenses are recorded when cash is received or paid out. Post transaction financials will be presented in terms of GAAP and presented on an accrual basis.
Under the terms of the agreement, GMGI will acquire its 80% stake in the entity which owns CFAC at a purchase price representing a multiple of roughly 5x profits before tax, declared for fiscal year ending June 30th 2024, totalling approximately $8.4 million inclusive of the earnout component. Of this amount, 70% will be paid in cash, with the remaining 30% settled through the issuance of restricted shares of GMGI common stock. The agreement includes provisions for a holdback amount and an earnout, contingent upon CFAC meeting certain post-closing profit targets. Additionally, GMGI will inherit a call option to acquire the remaining 20% minority interest.
The acquisition is subject to customary closing conditions, expected to be fulfilled within the next several days, with an effective date of August 1, 2024.
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Commenting on the acquisition, Brian Goodman, CEO of Golden Matrix, said, “We are thrilled to proceed with this acquisition as it aligns perfectly with our strategy of acquiring profitable and accretive businesses. Our previous acquisition of RKings Competitions has been a phenomenal success, significantly contributing to our revenues and profits, and we anticipate similar results with CFAC. CFAC will provide a strong foundation to build on, as was the case with RKings, and we expect this acquisition will not only enhance our revenue and cash flow but will also add to our bottom-line profitability. We are confident in our ability to scale CFAC, implement cost efficiencies, upgrade its technology and further strengthen its free cash flow.”
Thomas Bailey, founder of CFAC, added, “We are incredibly excited to join forces with GMGI and contribute to their ongoing success. This partnership offers a significant opportunity to expand CFAC into new markets and elevate the company to new heights.”
Thomas Bailey will continue in an executive role with CFAC, where he will oversee the company's growth and lead the roadmap for its planned expansion into the U.S. Tom co-founded CFAC in 2019 to support Australian veteran charity programs. Over the past decade, he has played a pivotal role in successfully establishing over 14 start-ups and has a strong background in marketing and implementing growth strategies.
According to Research and Markets, the consumer loyalty and rewards market will continue to grow and is forecasted to record a CAGR of 9.5% from 2024-2028, as well as an increase from $3.64 billion in 2023 to $5.79 billion by 2028.
For full details of the purchase agreement and related terms, please refer to the Current Report on Form 8-K filed today with the Securities and Exchange Commission.
About Classics for a Cause (CFAC)
Classics for a Cause (CFAC) is a premier discount club that offers its members valuable shopping rewards, exclusive discounts and cashback deals from a diverse range of high-profile brands and popular entertainment and dining establishments. With an extensive and growing list of brand partners, CFAC stands out as a leading provider of trade promotions in Australia. Members of the CFAC discount club enjoy the added benefit of participating in exciting free giveaways, featuring prizes including high end and rare Australian and American classic cars and have recently expanded into campers, caravans and cash giveaways.
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CFAC was created to address the funding needs of under-resourced veteran programs, and in 2019, the organization gave away its first classic car, an Eleanor Mustang, to raise essential funds. Since then, CFAC has given away over 70 high-end classic cars and raised and donated more than $3 million to veteran charities. The organization currently gives away two classic cars per month, with plans to increase this to four per month while expanding into prize homes and cash prizes later this year.
CFAC remains closely aligned with Veteran Affairs in Australia and proactively supports veterans and their families. The company is also a regular contributor to multiple charities and social organizations, supporting Australian veterans. CFAC believes in ‘Paying it Forward’ and is committed to expanding its charitable efforts while providing every member with a wide range of rewards, discounts and valuable opportunities to win high end prizes.
About Golden Matrix
Based in Las Vegas, NV, Golden Matrix Group is a leading gaming technology company with a global presence, operating across multiple international markets. The Company specializes in both B2B and B2C sectors, leveraging proprietary technology to deliver innovative solutions. Golden Matrix's B2B division focuses on developing and licensing branded gaming platforms to a broad client base, while its B2C division, RKings, runs a high-volume eCommerce site that allows users to participate in paid competitions on its exclusive platform in authorized regions. Additionally, the Company owns and operates MEXPLAY, a regulated online casino in Mexico. In 2024, Golden Matrix expanded its international footprint with the acquisition of Meridianbet, a prominent B2B and B2C sports betting and gaming platform, which operates under regulation in multiple markets across Europe, Africa and Latin America.
Forward-Looking Statements
Certain statements made in this press release contain forward-looking information within the meaning of applicable securities laws, including within the meaning of the Private Securities Litigation Reform Act of 1995 (“forward-looking statements”). Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements.
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Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the ability of the parties to close the acquisition described above on the terms set forth in, and pursuant to the required timing set forth in, the agreement, if at all; the occurrence of any event, change or other circumstances that could give rise to the right of one or all of the parties to terminate the acquisition agreement; the effect of such termination; the ability to meet the closing conditions of the agreement on a timely basis or at all; the future revenues and profitability (or non-profitability) of Classics following the closing, the Company’s ability to integrate the operations of Classics into the Company’s current operations and costs associated therewith, the Company’s ability to scale Classics, potential synergies and benefits expected in connection with the planned acquisition, and additional regulations, restrictions and requirements the Company will become subject to as a result of such planned acquisition; the amount, timing, and sources of funding for the Company’s repurchase program, the fact that common share repurchases may not be conducted in the timeframe or in the manner the Company expects, or at all, the ability of the Company to obtain the funding required to pay certain Meridianbet Group acquisition post-closing obligations, the terms of such funding, potential dilution caused thereby and/or covenants agreed to in connection therewith; potential lawsuits regarding the acquisition; dilution caused by the terms of an outstanding convertible note and warrants, the Company’s ability to pay amounts due under the convertible note and covenants associated therewith and penalties which could be due under the convertible note and securities purchase agreement related thereto for failure to comply with the terms thereof; the business, economic and political conditions in the markets in which the Company operates; the effect on the Company and its operations of the ongoing Ukraine/Russia conflict and the conflict in Israel, changing interest rates and inflation, and risks of recessions the need for additional financing, the terms of such financing and the availability of such financing; the ability of the Company and/or its subsidiaries to obtain additional gaming licenses; the ability of the Company to manage growth; the Company’s ability to complete acquisitions and the availability of funding for such acquisitions; disruptions caused by acquisitions (including the contemplated acquisition discussed above); dilution caused by fund raising, the conversion of outstanding preferred stock, convertible securities and/or acquisitions; the Company’s ability to maintain the listing of its common stock on the Nasdaq Capital Market; the Company’s expectations for future growth, revenues, and profitability; the Company’s expectations regarding future plans and timing thereof; the Company’s reliance on its management; the fact that the sellers of the MeridianBet Group hold voting control over the Company; related party relationships; the potential effect of economic downturns, recessions, increases in interest rates and inflation, and market conditions, decreases in discretionary spending and therefore demand for our products and services, and increases in the cost of capital, related thereto, among other affects thereof, on the Company’s operations and prospects; the Company’s ability to protect proprietary information; the ability of the Company to compete in its market; the effect of current and future regulation, the Company’s ability to comply with regulations and potential penalties in the event it fails to comply with such regulations and changes in the enforcement and interpretation of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our business; the risks associated with gaming fraud, user cheating and cyber-attacks; risks associated with systems failures and failures of technology and infrastructure on which the Company’s programs rely; foreign exchange and currency risks; the outcome of contingencies, including legal proceedings in the normal course of business; the ability to compete against existing and new competitors; the ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products, including potential recessions and global economic slowdowns. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this press release are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved.
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Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly-filed reports, including, but not limited to, under the “Special Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Qs and Form 10-Ks, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended October 31, 2023 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and future periodic reports on Form 10-K and Form 10‑Q. These reports are available at www.sec.gov.
The Company cautions that the foregoing list of important factors is not complete, and does not undertake to update any forward-looking statements except as required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on the Company’s future results. The forward-looking statements included in this press release are made only as of the date hereof. The Company cannot guarantee future results, levels of activity, performance, or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
The financial information of Classics provided above is based on information internally compiled by Classics and has not been reviewed or audited by an independent auditing firm. As such, those amounts are inherently uncertain and subject to change. For example, during the course of the preparation of the final audited financial statements and related notes for Classics, additional items that would require adjustments to be made to the financial results presented above may be identified.
Connect with us:
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| · | Website – www.goldenmatrix.com |
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| · | X - https://x.com/gmgi_official |
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| · | Instagram - https://www.instagram.com/goldenmatrixgroup/ |
Golden Matrix Group, Inc
ir@goldenmatrix.com
ICR
Investors:
Brett Milotte
Brett.Milotte@icrinc.com
Press:
Greg Michaels
Gregory.Michaels@icrinc.com
| 5 |
Cover |
Aug. 20, 2024 |
|---|---|
| Cover [Abstract] | |
| Entity Registrant Name | GOLDEN MATRIX GROUP, INC. |
| Entity Central Index Key | 0001437925 |
| Document Type | 8-K |
| Amendment Flag | false |
| Entity Emerging Growth Company | false |
| Document Period End Date | Aug. 20, 2024 |
| Entity File Number | 001-41326 |
| Entity Incorporation State Country Code | NV |
| Entity Tax Identification Number | 46-1814729 |
| Entity Address Address Line 1 | 3651 S. Lindell Road |
| Entity Address Address Line 2 | Suite D131 |
| Entity Address City Or Town | Las Vegas |
| Entity Address State Or Province | NV |
| Entity Address Postal Zip Code | 89103 |
| City Area Code | 702 |
| Local Phone Number | 318-7548 |
| Security 12b Title | Common Stock, $0.00001 Par Value Per Share |
| Trading Symbol | GMGI |
| Security Exchange Name | NASDAQ |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
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