Item
14. Indemnification of Directors and Officers.
Neither
our Articles of Incorporation nor our Bylaws prevent us from indemnifying our officers, directors and agents to the extent permitted
under the Nevada Revised Statutes, as amended (“NRS”). NRS Section 78.751 provides that a corporation shall indemnify any
director, officer, employee or agent of a corporation against expenses, including attorneys’ fees, actually and reasonably incurred
by him in connection with any the defense to the extent that a director, officer, employee or agent of a corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred to Section 78.7502(1) or 78.7502(2), or in defense of
any claim, issue or matter therein.
NRS
Section 78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (a) is not liable pursuant to NRS Section
78.138; or (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
NRS
Section 78.7502(2) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, by reason
of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense
or settlement of the action or suit if he: (a) is not liable pursuant to NRS Section 78.138; or (b) acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any
claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals
there from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that
the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of
all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
NRS
Section 78.747 provides that except as otherwise provided by specific statute or agreement, no person other than a corporation is individually
liable for a debt or liability of the corporation, unless the person acts as the alter ego of the corporation. The court as a matter
of law must determine the question of whether the person acts as the alter ego of a corporation.
Insofar
as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers or controlling persons of
ours, pursuant to the foregoing provisions, or otherwise, we have been informed that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such a director, officer or controlling
person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy
as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.
In
addition, we have entered into indemnification agreements with each of our directors and executive officers. These agreements, among
other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys’ fees, judgments
and fines incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors
or executive officers or any other company or enterprise to which the person provides services at our request.
Any
underwriting agreement or distribution agreement that we enter into with any underwriters or agents involved in the offering or sale
of any securities registered hereby may require such underwriters or dealers to indemnify us, some or all of our directors and officers
and its controlling persons, if any, for specified liabilities, which may include liabilities under the Securities Act.
See
also the undertakings set out in response to Item 17 of this Registration Statement.
Item
15. Recent Sales of Unregistered Securities.
IPO
and Business Combination Issuances
On
August 13, 2021, simultaneously with the closing of the CNTQ IPO, CNTQ completed the private sale of an aggregate of 4,361,456 Private
Warrants to Warrant Holdings at a purchase price of approximately $0.93 per Private Warrant, generating gross proceeds to CNTQ of $4,052,000.
The Private Warrants are identical to the warrants sold in the IPO except that the Private Warrants, so long as they are held by the
initial purchasers or their respective permitted transferees, (i) were not redeemable by CNTQ, (ii) could not, subject to certain limited
exceptions, be transferred, assigned, or sold by the initial purchaser until 30 days after the completion of the Business Combination,
and (iii) may be exercised by the holders on a cashless basis. No underwriting discounts or commissions were paid with respect to such
sale. The issuance of the Private Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities
Act.
At
the Closing, we issued an additional 15,000 shares to CCM pursuant to the terms of the Subscription Agreement. See “Management’s
Discussion and Analysis — The Business Combination — PIPE Investment.”
At
Closing, in connection with the entry into the Term Loan Agreement, we entered into (i) the Penny Warrants and (ii) the $10 Warrants.
See “Certain Relationships and Related Person Transactions — Debt Financing — Warrant Agreements.”
Except
for the registered transactions, we issued the securities in the foregoing transactions under Section 4(a)(2) of the Securities Act,
and/or Rule 506 of Regulation D promulgated under the Securities Act, as a transaction not requiring registration under Section 5 of
the Securities Act. The parties receiving the securities represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution, and appropriate restrictive legends were affixed to the certificates
representing the securities (or reflected in restricted book entry with our transfer agent). The parties also had adequate access, through
business or other relationships, to information about us.
RSU
Grants
On
October 7, 2022, we granted each of our non-employee directors (i.e. Jonathan Bellows, Perry Boyle, Karina Edmonds, Luisa Ingargiola,
Brian Nelson, and Rick Parod) an award of 30,000 restricted stock units (“RSUs”) under the Dragonfly Energy Holdings Corp.
2022 Equity Incentive Plan. The RSUs are eligible to vest on the first anniversary of the grant date, subject to each director’s
continued service on our board through the vesting date.
The
foregoing transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering. We believe these
transactions were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation
D promulgated thereunder) as transactions by an issuer not involving any public offering.
All
certificates or book entry statements representing the securities issued in the transactions described above included appropriate legends
setting forth that the securities had not been offered or sold pursuant to a registration statement and describing the applicable restrictions
on transfer of the securities.
Promissory
Note
On
March 5, 2023, we issued a note in the principal amount of $1.0 million (the “Principal Amount”) to Brian Nelson (the “Note”),
one of our directors, in a private placement in exchange for cash in an equal amount. The Note became due and payable in full on April
1, 2023. We were also obligated to pay a loan fee in the amount of $100,000 to Mr. Nelson on April 4, 2023 (the “Loan Fee”).
The Principal Amount of the Note was paid in full on April 1, 2023 and the Loan Fee was paid in full on April 4, 2023.