Big Digital Energy, Inc 8-K, filed Jul 6, 2026
Big Digital Energy, Inc. (BGDE)
About this 8-K
Big Digital Energy, Inc filed this 8-K on July 6, 2026, reporting on events of June 30, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On June 30, 2026, Big Digital Energy, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with Six Thirty AI, LLC (the “Purchaser”), pursuant to which the Company issued and sold to the Purchaser an aggregate of 16,700 shares of newly designated Series D Convertible Preferred Stock, par value $0.001 per share, with a stated value of $1,000 per share (“Series D Preferred Stock”), at a purchase price of $900.00 per share, for gross proceeds to the Company of $15.03 million, before deducting placement agent fees and other offering expenses. The Series D Preferred Stock is convertible into shares of common stock of the Company, par value $0.001 per share (“Common Stock,” and such shares of Common Stock as so converted, the “Conversion Shares”), as described below under “Series D Preferred Stock.” Under the Purchase Agreement, the Company also issued to the Purchaser a warrant (the “Warrant”) exercisable for five years to purchase 926,748 shares of Common Stock (the “Warrant Shares”) at an exercise price of $10.81, which is 120% of the closing price of the Common Stock immediately before closing, subject to adjustment upon the occurrence of any stock split, stock dividend, stock combination or similar transaction.
The offer and sale of the foregoing securities was made to the Purchaser in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company relied on representations from the Purchaser that it is an “accredited investor” (defined in Rule 501(a) of Regulation D promulgated under the Securities Act), acquiring securities for investment only without a view to distribution. The offering was conducted without general solicitation or advertising, with restrictions on resale absent registration or an exemption.
The Purchaser is controlled by Josh Kilgore, Phil Stanley, and Cody Smith, who are, respectively, the Executive Chairman, Chief Executive Officer, and Chief Operating Officer of the Company. A Special Transactions Committee of the Company’s board of directors (the “Board”) comprised solely of disinterested directors, together with the Audit Committee of the Board, reviewed and approved the Purchase Agreement and related agreements.
The transaction documents prohibit the Company from issuing any Conversion Shares or Warrant Shares to the extent such issuances would violate applicable rules and regulations of The Nasdaq Stock Market LLC (“Nasdaq”). The Company has agreed to include in the proxy statement for its next annual meeting of stockholders, which the Company has agreed to hold no later than November 14, 2026, a proposal to obtain requisite approvals of its stockholders to permit issuances of Conversion Shares and Warrant Shares in excess of any restrictions currently imposed by applicable rules and regulations of Nasdaq.
The Purchase Agreement contains customary representations, warranties and covenants for similar transactions. The representations and warranties were made only for purposes of the Purchase Agreement and as of specific dates; were solely for the benefit of the parties thereto; and may be subject to limitations agreed by the parties, including being qualified by confidential disclosure schedules. Investors should not rely on the representations and warranties as characterizations of the actual state of facts or circumstances of the Company or any other person.
The Company retained Northland Securities, Inc. (the “Placement Agent”) as exclusive placement agent for the transaction and paid the Placement Agent a cash fee of 6.0% of the gross proceeds from the sale of the shares of Series D Preferred Stock, together with customary expense reimbursements.
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Letter Agreement
The Purchaser acquired the Series D Preferred Stock using borrowed funds. Concurrently with the execution of the Purchase Agreement, the Company entered into a letter agreement (the “Letter Agreement”) with the Purchaser and the administrative and collateral agent for the lenders (the “Agent”), pursuant to which the Company consented to (i) the Purchaser’s pledge of the shares of Series D Preferred Stock to the Agent for the ratable benefit of the lenders; (ii) the Purchaser’s assignment of the Warrant to the lenders as a commitment fee under the loan facility; and (iii) the lenders’ right to exchange all or any portion of the outstanding obligations under the loan and guaranty agreement for shares of the Series D Preferred Stock and settlement using the Series D Preferred Stock or Conversion Shares.
Registration Rights Agreement
Concurrently with the execution of the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company is obligated to file and maintain the effectiveness of one or more resale registration statements with the Securities and Exchange Commission (the “SEC”) registering the resale of the Conversion Shares and Warrant Shares on a continuous basis under Rule 415 of the Securities Act. The Company is required to file the initial registration statement for such purposes no later than July 20, 2026, and to have such registration statement declared effective by the SEC no later than August 29, 2026 (or in the event of a “full review” by the SEC, no later than September 28, 2026).
Series D Preferred Stock
On June 30, 2026, the Company filed a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware, establishing the voting and other relative rights, powers and preferences of the Series D Preferred Stock. The Certificate of Designations became effective upon filing and authorizes the issuance of up to 100,000 shares of Series D Preferred Stock.
General. Each share of Series D Preferred Stock has an initial stated value of $1,000 per share, which is subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination or similar transaction, and is fully paid and non-assessable.
Ranking. The Series D Preferred Stock, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all other classes or series of the Company’s capital stock, unless specified required holders consent to the creation of other capital stock that is senior or equal in rank to the Series D Preferred Stock.
Dividends. Dividends accrue on the Series D Preferred Stock from the date of issuance at a rate of 5% per annum, which increases to 18% per annum during the pendency of a Triggering Event (as defined in the Certificate of Designations), and are payable quarterly in arrears through the issuance of additional shares of Series D Preferred Stock (i.e., PIK shares) or, at the Company’s election, in cash.
Conversion at the Option of the Holders. Each holder of Series D Preferred Stock may convert all, or any part, of its shares of Series D Preferred Stock, at any time on or after August 30, 2026, into Conversion Shares at a conversion price (the “Conversion Price”) equal to 95% of the lowest daily volume-weighted average price of the Common Stock over the five consecutive trading days immediately preceding the conversion date, subject to a floor price of $1.80 and certain limitations on conversion as described below.
Adjustments to the Conversion Price. The Conversion Price is subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination or similar transactions.
Beneficial Ownership Limitation. The Company may not effect the conversion of any shares of Series D Preferred Stock to the extent that, after giving effect to such conversion, the applicable holder, together with any person whose beneficial ownership of Common Stock would or could be aggregated with such holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such conversion (provided that such limitation shall not apply to any holder whose beneficial ownership exceeds the Maximum Percentage on the date such holder acquires Series D Preferred Stock).
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Monthly Conversion Limitation. In addition, the Company may not effect the conversion of any shares of Series D Preferred Stock to the extent that, after giving effect to such conversion, the aggregate stated value of shares of Series D Preferred Stock that has been converted into shares of Common Stock during the calendar month in which such conversion occurred exceeds the greater of (a) 10% of aggregate dollar trading volume during the month or (b) $2,000,000 (provided that such limitation shall not apply during the pendency of a Triggering Event).
Limitation on Conversions for Purposes of Listing Rules. The Company may not effect the conversion of any shares of Series D Preferred Stock to the extent the issuance of such Conversion Shares would violate applicable rules and regulations of Nasdaq, as described above under “Securities Purchase Agreement.”
Voting Rights. The Series D Preferred Stock is non-voting, except as required by applicable law or as expressly set forth in the Certificate of Designations.
Transfer Restrictions. Consent of the Board is required to transfer shares of Series D Preferred Stock, except in certain limited situations, including as described below under “Letter Agreement.”
Company Optional Redemption. The Company may redeem the Series D Preferred Stock at any time, in whole or in part, at a cash price equal to 105% of the aggregate Conversion Price for the Series D Preferred Stock being redeemed, subject to customary conditions as set forth in the Certificate of Designations, including a 12–60 trading day notice window and the absence of any Equity Condition (as defined in the Certificate of Designations).
Fundamental Transactions. The Certificate of Designations prohibits the Company from entering into specified “Fundamental Transactions,” which include, without limitation, mergers, business combinations and similar transactions, unless the Company (or the successor entity) assumes in writing all of the Company’s obligations under the Certificate of Designations and the other transaction documents, provided that any such successor entity shall be a publicly traded corporation listed on an eligible trading market. The Company may alternatively exercise its optional redemption right in full in connection with a Fundamental Transaction.
Covenants. Among other negative covenants, and subject to customary exceptions, so long as the Series D Preferred Stock is outstanding, the Company will not, and will cause its subsidiaries not to, (i) redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock; (ii) incur indebtedness or create liens, except for customary permitted indebtedness and permitted liens; or (iii) enter into any variable rate transaction.
The foregoing description of the terms of the Certificate of Designations, the Warrant, the Purchase Agreement, the Letter Agreement, and the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such documents, copies of which are filed as Exhibits 3.1, 4.1, 10.1 through 10.3, respectively, to this Current Report on Form 8-K.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated herein by reference into this Item 3.02.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The description of the terms of the Series D Preferred Stock and the Certificate of Designations in Item 1.01 is incorporated herein by reference.
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Item 7.01. Regulation FD Disclosure.
On July 6, 2026, the Company issued a press release announcing the entry into a joint venture with energy-infrastructure company 10NetZero, and is furnishing related investor presentation materials. A copy of the press release and presentation materials are attached to this Current Report on Form 8-K as Exhibits 99.1 and 99.2.
The information included in this Item 7.01 and in Exhibits 99.1 and 99.2 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall any such information or exhibits be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such document.
Forward-Looking Statements
This Current Report on Form 8-K and its Exhibits contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements regarding the Company’s financing transactions (including the issuance of Series D Convertible Preferred Stock and Warrant), the expected timing and effects of such transactions, the Company’s plans and expectations regarding any joint venture with 10NetZero and the proposed development of a data-center site in Texas, and the Company’s strategy, operations, and future results. Words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “target,” “will,” “would,” “subject to,” and similar expressions are intended to identify forward-looking statements.
These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Important factors include, without limitation: the Company’s ability to continue as a going concern; the Company’s ability to maintain its Nasdaq listing; the need for and availability of additional financing; the Company’s ability to obtain any required stockholder approvals and to file and maintain the effectiveness of any required registration statements; the timing, negotiation, and execution of any definitive agreements relating to a joint venture with 10NetZero and the proposed acquisition and development of any Texas site, and the satisfaction of any closing conditions; availability and cost of power, grid interconnection and build-out timing; the feasibility, permitting, and development of any behind-the-meter generation; execution risks in developing AI/HPC digital infrastructure; market demand for AI/HPC and accelerated computing; evolving and uncertain regulation of digital assets, artificial intelligence, and high-performance computing; volatility in digital asset prices and reductions in mining incentives; and the other risks described under “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and in other filings made with the SEC from time to time. Any forward-looking statements speak only as of the date of this report, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as required by law.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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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.
| Big Digital Energy, Inc. | ||
| Date: July 6, 2026 | By: | /s/ Kaliste Saloom |
| Kaliste Saloom | ||
| General Counsel | ||
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Exhibit 3.1
Delaware The First State Page 1 5081043 8100 SR# 20263573108 You may verify this certificate online at corp.delaware.gov/authver.shtml Authentication: 204389613 Date: 06 - 30 - 26 I, CHARUNI PATIBANDA - SANCHEZ, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF “BIG DIGITAL ENERGY, INC.”, FILED IN THIS OFFICE ON THE THIRTIETH DAY OF JUNE, A.D. 2026, AT 10:10 O`CLOCK A.M.
St a te o f D e l a w a re Sec re t ary o f S ta te Dh , i sio n of Corporati o n s Deli, • e re d 10 : 10A M 06 / 30 / 2 026 FIL E D 10:10 AM 06 / 3 0 / 2 026 SR 2 0 2635 7 3 10 8 - File N umber 50 81043 CERTIFICATE OF DESIGNATIONS OF SERIES D CONVERTIBLE PREFERRED STOCK OF BIG DIGITAL ENERGY, INC. I, Kaliste Saloom, hereby certify that I am the Authorized Officer of Big Digital Energy , Inc . (the "Company"), a corporation organized and existing under the Delaware General Corporation Law (the "DGCL"), and further dohereby certify on behalf of the Company and not in my personal capacity : That pursuant to the authority expressly conferred upon the Board of Directors of the Company (the "Board") by the Company's Amended and Restated Certificate of Incorporation (the "Certificate oflncorporation"), and Section 15 l(g) of the DGCL, the Special Transactions Committee of the Board, with authority delegated by the Board, on June 29 , 2026 , passed the following resolutions, creating a series of preferred stock having a par value of $ 0 . 001 per sha r e, designated as "Series D Convertible Preferred Stock" . RESOLVED, that, in accordance with the provisions of the Certificate of Incorporation, the Special Transactions Committee of the Board does hereby authorize and provide for the establishment, allotment and issuance of a series of preferred stock , par value $ 0 . 001 per share, of the Company designated as "Series D Convertible Preferred Stock" and that the de s ignation and number of shares thereof and the other relative rights, powers and preferences of the shares of such series and the qualifications, limitations and restrictions thereof in accordance with this certificate of designations (this "Certificate of Designations"), as follows : TERMS OF SERIES D CONVERTIBLE PREFERRED STOCK 1. Designation and Number of Shares . There shall hereby be created and established a series of preferred stock of the Company designated as "Series D Convertible Preferred Stock" (the "Preferred Stock") . The authorized number of Preferred Stock shall be 100 , 000 shares . Each Preferred Share shall have a par value of $ 0 . 001 and shall be certificated and represented in physical or electronic stock - certificate form . Capitalized term s not defined herein shall have the meanings as set forth in Section 33 below . 2. Ranking . For so long as any Preferred Stock are issued, except (x) as permitted pursuan t to Section 15 (e) or (y) to the extent that the Required Holders (as defined below) e xpressly consent to the creation of Parity Shares or Senior Preferred Stock (as defined below ) in accordance with Section 18 , all shares in the capital of the Company shall be junior in rank to the Pr e ferred Stock with respect to the preference s as to divid e nds, distributions a nd payment s upon the liquidation, dissolution and winding up of the Company (such junior shares are referred to herein collectively as "Junior Shares") . The rights of all shares in the capital of the Company shall b e subjec t t o the rights, powers , preference s and privileges of th e Preferred Stock . Without limiting any other pro v ision of this Certificat e of Designations, withou t the prior express consent of holders of at leas t a majority of the issued Preferred Stock and Yorkville (as defined below ) (collec t ively, the "Required Holders"), voting s eparately a s a s ingle cl a s s, th e Compan y sh a ll not h e reafter authori z e or issu e any a dditional or oth e r s hares in t he capital of the Company t hat is (i) of senior rank to the Preferred Sto c k in respect of the preferences as to di v idends , distributions 49 08 - 8 91 4 - 4248 v . 14 4 9 3 4 - 35 I0 - 8 0 25 \ 7
and payments upon the liquidation, dissolution and winding up of the Company (collectively, the "Senior Preferred Stock"), (ii) of pari passu rank to the Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the "Parity Shares") or (iii) any Junior Shares having a maturity date or which is mandatorily redeemable or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 90 days after the date that no Preferred Stock remain issued, except, in the case of the foregoing clause (i) and (ii), to the extent permitted pursuant to Section 15 (e) . In the event of the merger or consolidation of the Company with or into another corporation, so long as any Preferred Stock remain issued, the Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein and nosuch merger or consolidation shall be consummated if it would result in the Preferred Stock being treated in any manner inconsistently with the foregoing, unless the Company has exercised its right of Company Optional Redemption in full prior to or in connection with such merger or consolidation and actually pays the applicable Company Optional Redemption Price prior to or simultaneously with such merger or consolidation . 3. Dividends. (a) Dividends . Each holder of a Preferred Share (each, a "Holder" and collectively, the "Holders"), shall be entitled to receive dividends ("Dividends") on the Stated Value of its Preferred Stock at the applicable Dividend Rate (as defined below) . Dividends on the Preferred Stock shall commence accruing on the date of issuance of a Preferred Share and shall be computed on the basis of a 360 - day year and twelve 30 - day months . Dividends shall be payable quarterly in arrears on the last Trading Day of each quarter (each, a "Dividend Date") . On each Dividend Date, the Company shall, at its election, (i) pay such Dividend through the issuance of additional Preferred Stock ("PIK Shares") to each holder equal to the quotient of (x) the aggregate amount of Dividends accrued on such Holder's Preferred Stock and (y) the Stated Value or (ii) pay such Dividend in cash ; provided, however, that the Company shall not pay any Dividend in cash to the extent prohibited by applicable law or agreements governing the Company's debts or other liabilities . If the Company elects to pay a Dividend through the issuance of PIK Shares, the Company shall promptly after each Dividend Date deliver to each Holder stock certificate receipts evidencing the issuance of the PIK Shares on such Dividend Date, if any such PIK Shares are so issued on such Dividend Date . Dividends on the Preferred Stock as provided in this Section 3 (a) shall accrue and be payable whether or not declared , set aside for payment or otherwise authorized by the Board and whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends, such that if Dividends are not paid as provided in this Section 3 (a), the unpaid Dividends shall accumulate until paid . 4. Conversion . At any time beginning two months after the Initial Issuance Date, each Preferred Share shall be convertible into validly issued, fully paid and non - assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 4 . (a) Holder's Conversion Right . Subject to the provisions of Section 4 (d), at any time or times on or after the date that is two ( 2 ) months after the Initial Issuance Date, each Holder shall be entitled to convert any Preferred Stock held by such Holder into validly 2 4934 . 3 5 I 0 - 8025 \ 7
3 4934 - 3 510 - 8025 \ 7 issued, fully paid and non - assessable shares of Common Stock in accordance with Section 4 (c) at the Conversion Rate (as defined below) . The Company shall not issue any fraction of a share of Common Stock upon any conversion . If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share . The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Stock, except any such taxes that are due because the converting Holder requests the shares of Common Stock to be registered in a name other than the Holder's name . (b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 4(a) shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the "Conversion Rate") : (i) "Conversion Amount" means, with respect to each Preferred Share, as of the applicable date of determination, the sum of (A) the Stated Value thereof plus (B) any Additional Amount thereon as of such date of determination . (ii) "Conversion Price" means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, 95 % of the lowest daily VWAP of the Common Stock during the five ( 5 ) consecutive Trading Day period immediately preceding but not including the Conversion Date, provided that the Conversion Price shall not be lower than the Floor Price and subject to adjustment as provided herein . (iii) Derivative Liability Savings Adjustment . Notwithstanding anything to the contrary in this Certificate of Designations, solely with respect to fiscal quarter ending June 30 , 2026 , if the Company's independent registered public accounting finn confinns in writing that, absent an increase in the Floor Price pursuant to this Section 4 (b)(iii), the issuance of the Preferred Stock or the existence, terms or operation of the conversion rights hereunder would be required under U . S . GAAP to result in a Derivative Liability in excess of $ 2 , 000 , 000 , or would cause the Company to breach the Stockholders' Equity Requirement, then the Floor Price shall, effective as of the date of such written confirmation and without further action by the Company or any Holder, be increased solely to the lowest price that such independent registered public accounting firm confirms in writing would (A) limit such Derivative Liability to not more than $ 2 , 000 , 000 and (B) cause the Company to satisfy shareholder's equity maintenance requirement for continued listing on the Nasdaq Capital Market . Any such written confirmation shall include reasonably detailed supporting calculations , shall be delivered to each Holder promptly and in any event within one ( 1 ) Business Day after receipt by the Company, and shall be conclusive absent manifest error . No adjustment under this Section 4 (b)(iii) shall be made based on the Company's internal determination or without such written confirmation, and any increase in the Floor Price pursuant to
4 4934 - 3510 - 8025 \ 7 this Section 4 (b)(iii) shall be no greater than necessary to achieve the foregoing limits . If, after any increase in the Floor Price pursuant to this Section 4 (b)(iii), the Company's independent registered public accounting firm confirms in writing that a lower Floor Price would not result in a Derivative Liability in excess of $ 2 , 000 , 000 or cause the Company's stockholders' equity to be less than the Stockholders' Equity Requirement as of any fiscal quarter end, then the Floor Price shall automatically decrease to such lower price, but in no event below the Floor Price in effect immediately prior to the applicable increase under this Section 4 (b)(iii) . Notwithstanding anything to the contrary contained herein, and for the avoidance of doubt, this Section 4 (b) shall only be effective with respect to the fiscal quarter ended June 30 , 2026 , and shall not have any force and effect, and shall not be operative, with respect to any other fiscal period of the Company . (c) Any Mechanics of Conversion. The conversion of each Preferred Share shall be conducted in the following manner: (i) Optional Conversion . To conver t a Preferred Share into shares of Common Stock on any date (a "Conversion Date"), a Holder shall deliver (whether via electronic mai l or otherwise ), for receip t on or prior to 11 : 59 p . m . , New York City time, on such date, a copy of an executed notic e of conversion of the share(s) of Preferred Stock subjec t to such conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company . As promptly as practicable, and in any event on or before the second ( 2 nd) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by electroni c mail an acknowledgmen t of confirmation of receip t of such Conversion Notice, substantially in the form attached hereto as Exhibit II, to such Holder and the Company's transfer agent (the "Transfer Agent"), which confirmation shall constitute an instruction to the Transfer Agent to proces s such Conversion Notice in accordanc e with the terms herein . On or before the second ( 2 nd) Trading Day following each date on which the Company has received a Conversion Notice (the "Share Delivery Deadline"), the Company shall : (l) provided tha t the Transfer Agent is participating in DTC's Fas t Automated Securitie s Transfer Program ("FAST"), credit such aggregate number of shares of Common Stock to which such Holder shall be entitled pursuan t to such conversion to such Holder's or its designee's balanc e account with DTC through its Deposit/Withdrawa l at Custodian system, or ( 2 ) if the Transfer Agent is not participating in FAST, upon the request of such Holder, issu e and deliver (whether via electronic email or reputable overnigh t courier) to the address as specified in such Conversion Notice, a Book - Entry Statement, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled . If less than all of the Preferred Stock then held by a Holder are submitted for conversion pursuan t to any Conversion Notice, then the Company shall, as soon as practicable and in no event later than two ( 2 ) Trading Days after receipt of the applicable Conversion Notice and at its own expense, issue and deliver to such Holder (or its designee) a new stock certificate (in accordance with Section 20 (c)) representing the number of Preferred Stock not converted . The Person or Person s entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Stock
balance account of such Holder or such Holder's designee, as applicable, with DTC 5 4934 - 3510 - 8025 \ 7 shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. (ii) Company's Failure to Timely Convert . If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, if the Transfer Agent is not participating in FAST, to issue and deliver to such Holder (or its designee) a Book - Entry for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Company's share register or, if the Transfer Agent is participating in FAST, to credit such Holder's or its designee's balance account with DTC for such number of shares of Common Stock to which such Holder is entitled upon such Holder's conversion of any Conversion Amount (as the case may be) (a "Conversion Failure"), then, in addition to all other remedies available to such Holder, such Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be, all, or any portion, of such Preferred Stock that has not been converted pursuant to such Conversion Notice ; provided that the voiding of a Conversion Notice shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 4 (c)(ii) or otherwise . In addition to the foregoing, if on or prior to the Share Delivery Deadline the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver to such Holder (or its designee) a Book - Entry and register such shares of Common Stock on the Company's share register or, if the Transfer Agent is participating in FAST, the Transfer Agent shall fail to credit the balance account of such Holder or such Holder's designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder's conversion hereunder or pursuant to the Company's obligation pursuant to clause (II) below, and if on or after such Share Delivery Deadline such Holder purchases (in an open market transaction, shares loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that such Holder is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure, as applicable (a "Buy - In"), then, in addition to all other remedies available to such Holder, the Company shall, within three ( 3 ) Business Days after receipt of such Holder's request and in such Holder's discretion, either : (I) pay cash to such Holder in an amount equal to such Holder's total purchase price (including brokerage commissions, shares loan costs and other out - of - pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of such Holder) (the "Buy - In Price"), at which point the Company's obligation to so issue and deliver such Book - Entry (and to issue such shares of Common Stock) or credit to the balance account of such Holder or such Holder's designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder's conversion hereunder ( as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to such Holder a Book - Entry representing such shares of Common Stock or credit the
6 4 9 34 - 35 10 - 8 02 5 \ 7 for the number of shares of Common Stock to which such Holder is entitled upon such Holder's conversion hereunder (as the case may be) and pay cash to such Holder inan amount equal to the excess (if any) of the Buy - In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during theperiod commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause (II) . Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver a Book Entry representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of Preferred Stock as required pursuant to the terms hereof . (iii) Registration : Book - Entry . The Company (or the Transfer Agent, as custodian for the Preferred Stock) shall maintain a register (the "Register") for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Stock (the "Registered Preferred Stock") . The entries in the Register shall be conclusive and binding for all purposes absent manifest error . The Company and each Holder of the Preferred Stock shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including, without limitation, the right to receive payments and Dividends hereunder) notwithstanding notice to the contrary . A Registered Preferred Share may be assigned, transferred or sold only by registration of such assignment or sale on the Register . Upon its receipt of a written request to assign, transfer or sell one or more Registered Preferred Stock by such Holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Preferred Stock in the same aggregate Stated Value as the Stated Value of the surrendered Registered Preferred Stock to the designated assignee or transferee pursuant to Section 20 , provided that, subject to Section 19 , if the Company has granted its consent to an assignment or other transfer (or such consent is not required in accordance with Section 19 ) and the Company does not so record an assignment, transfer or sale (as the case may be) of such Registered Preferred Stock within two ( 2 ) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be) . Each Holder and the Company shall maintain records showing the Stated Value, Dividends converted and/or paid (as the case may be) and Late Charges converted and/or paid (as the case may be), and the dates of such conversions and/or payments (as the case may be), or shall use such other method, reasonably satisfactory to such Holder and the Company, and if the Company does not update the Register to record such Stated Value, Dividends converted and/or paid (as the case may be) and Late Charges converted and/or paid (as the case may be), and the dates of such conversions and/or payments (as the case may be), within two ( 2 ) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence . In the event of any dispute or discrepancy, such records of the Company establishing the number of Preferred Stock to which the record holder is entitled shall be controlling and determinative
7 4934 - 3 510 - 8025 \ 7 in the absence of manifest error . A Holder and any transferee or assignee, by acceptance of a Book - Entry, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any Preferred Stock, the number of Preferred Stock represented by such Book - Entry may be less than the number of Preferred Stock stated in the most recent Book - Entry statement delivered to the Holder . Each Book - Entry representing Preferred Stock shall bear the following legend : ANY TRANSFEREE OR ASSIGNEE OF THIS INSTRUMENT SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION'S CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT, INCLUDING SECTION 4 (c)(iii) THEREOF . THE NUMBER OF SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES D PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 4 (c)(iii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT . (iv) Pro Rata Conversion ; Disputes . In the event that the Company receives a Conversion Notice from more than one Holder for the same Conversion Date and the Company can convert some, but not all, of such Preferred Stock submitted for conversion, the Company shall convert from each Holder electing to have Preferred Stock converted on such date a Holder Pro Rata Amount of such Holder's Preferred Stock submitted for conversion on such date based on the number of Preferred Stock submitted for conversion on such date by such Holder relative to the aggregate number of Preferred Stock submitted for conversion on such date . In the event of a dispute as to the number of shares of Common Stock issuable to a Holder in connection with a conversion of Preferred Stock, the Company shall issue to such Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 25 . (d) Limitation on Beneficial Ownership . The Company shall not effect the conversion of any of the Preferred Stock held by a Holder, and such Holder shall not have the right to convert any of the Preferred Stock held by such Holder pursuant to the terms and conditions of this Certificate of Designations, and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such Holder together with the other Attribution Parties collectively would beneficially own in excess of 4 . 99 % (the "Maximum Percentage") of the shares of Common Stock outstanding immediately after giving effect to such conversion . For purposes of the foregoing sentence, the aggregate number of shares of Common Stock
8 4934 - 3 510 - 8025 \ 7 beneficially owned by such Holder and the other Attribution Parties shall includ e the number of shares of Common Stock held by such Holder and all other Attribution Parties plus the number of shares of Common Stock issuabl e upon conversion of the Preferred Stock with respect to which the determination of such sentence is being made, bu t shall exclud e shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted Preferred Stock beneficially owned by such Holder or any of the other Attribution Partie s and (B) exercis e or conversion of the unexercised ornonconverted portion of any other securitie s of the Company (including, withou t limitation, any convertible notes, convertibl e Preferred Stock or warrants, including the Preferred Stock) beneficially owned by such Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 4 (d) . For purposes of this Section 4 (d), beneficial ownership shall be calculated in accordance with Section 13 (d) of the 1934 Act . In addition, a determination a s to any group status as contemplated above shall be determined in accordanc e with Section 13 (d) of the 1934 Act and the rules and regulations promulgated thereunder . For purposes of detennining the number of outstanding shares of Common Stock a Holder may acquire upon the conversion of such Preferred Stock without exceeding the Maximum Percentage, such Holder may rely on the number of shares of Common Stock outstanding as reflected in (x) the Company's mos t recent Annual Repor t on For m 10 - K, Curren t Repor t on Form 8 - K or other public filing with the SEC, as the cas e may be,(y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the "Reported Outstanding Share Number") . If the Company receive s a Conversion Notic e from a Holder a t a time when the actual number of shares of Common Stock outstanding is less than the Reported Outstanding Share Number, the Company shall notify such Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such Holder's beneficia l ownership, as determined pursuan t to this Section 4 (d), to exceed the Maximu m Percentage, such Holder mus t notify the Company of a reduced number of shares of Common Stock to be purchased pursuan t to such Conversion Notice . For any reason at any time, upon the written or ora] request of any Holder, the Company shall within two( 2 ) Busines s Day s confinn in writing or by electroni c mai l to such Holder the number of shares of Common Stock then outstanding . In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securitie s of the Company, including such Preferred Stock, by such Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported . In the event that the issuance of shares of Common Stock to a Holder upon conversion of such Preferred Stock results in such Holder and the other Attribution Partie s being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as detennined under Section 13 (d) of the 1934 Act), the number of shares so issued by which such Holder's and the other Attribution Parties' aggregate beneficial ownership exceed s the Maximu m Percentag e (the "Excess Shares") shall be deemed null and void and shall be cancelled ab initio, and such Holder shall not have the power to vote or to transfer the Excess Shares . For purposes of clarity, the shares of Common Stock issuable to a Holder pursuan t to the tenns of this Certificat e of Designation s in excess of the Maximum Percentage shall not be deemed to be beneficially
4934 - 3 510 - 8025 \ 7 owned bysuch Holder for any purpose including for purposes of Section 13 (d) or Rule 16 a - l(a)(l) of the 1934 Act . No prior inability to convert such Preferred Stock pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility . The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4 (d) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 4 (d) or to make changes or supplements necessary or desirable to properly give effect to such limitation . The limitation contained in this paragraph may not be waived or eliminated (except by an amendment to this Certificate of Designations) and shall apply to a successor holder of such Preferred Stock . Notwithstanding the foregoing, this Section 4 (d) shall not apply to any Holder that, together withsuch Holder's other Attribution Parties, beneficially owns shares of Common Stock in excess of the Maximum Percentage as of the first date on which such Holder acquires Preferred Stock . (e) Conversion Limitation . During any calendar month, so long as no Triggering Event has occurred and is continuing, no Holder shall convert Preferred Stock to the extent that the aggregate dollar value of the shares of Common Stock issuable upon all conversions by Holders during such calendar month would exceed the greater of (a) ten percent ( 10 % ) of aggregate dollar trading volume of the Common Stock during such calendar month or (b) $ 2 . 0 million . For the avoidance of doubt, after the occurrence and during the continuance of a Triggering Event the limitations set forth in this Section 4 (e) shall have no force and effect . (t) Principal Market Regulation . The Company shall not issue any shares of Common Stock uponconversion of any Preferred Shares or otherwise pursuant to the terms of this Certificate of Designations if the issuance of such shares of Common Stock together with the number of shares issued under that certain Warrant would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Preferred Shares without breaching the Company's obligations under the listing rules of the Principal Market (the number of shares which may be issued without violating such rules, including rules related to the aggregate offerings under NASDAQ Listing Rule 5635 (d) and NYSE Listed Company Manual Section 312 . 03 (c), as applicable, the "Exchange Cap"), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable listing rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders . Until such approval or such written opinion is obtained, no Holder shall be issued in the aggregate, upon conversion of any Preferred Shares, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the quotient of ( 1 ) the aggregate number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by ( 2 ) the aggregate number of Preferred Shares issued to the Holders on the Initial Issuance Date (with respect to each Holder, the "Exchange Cap Allocation") . In the event that any Holder shall sell or otherwise transfer any of such Holder's Preferred Shares, the transferee shall be allocated a pro rata portion 9
4934 - 3 510 - 8025 \ 7 of such Holder's Exchange Cap Allocation with respect to such portion of such Preferred Shares so transferred, and the restrictions of the priorsentence shall applyto suchtransferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee . Upon conversion in full of a Holder's Preferred Shares, the difference (if any) between such Holder's Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Holder upon such Holder's conversion in full of such Preferred Shares shall be allocated to the respective Exchange Cap Allocations of the remaining Holders of Preferred Shares on a pro rata basis in proportion to the shares of Common Stock underlying the Preferred Shares then held by eachsuch Holder of Preferred Shares . 5. Triggering Events. (a) Triggering Event . Each of the following events, in each case to the extent such event (disregarding any cure period) occurs following the Initial Issuance Date, shall constitute a "Triggering Event" : (i) the suspension from trading or the failure of the shares of Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of ten ( 10 ) consecutive Trading Days ; (ii) the Company's (A) failure to cure a Conversion Failure (as defined herein) by delivery of the required number of shares of Common Stock within three ( 3 ) Trading Days after the applicable Conversion Date or (B) written notice to any Holder of Preferred Stock, including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Preferred Stock into shares of Common Stock that is requested in accordance with the provisions of this Certificate of Designations (for the avoidance of doubt, other than the Company's valid refusal to effectuate a conversion in accordance with Section 4 (d) or Section 4 (f) hereof) ; (iii) except to the extent the Company is in compliance with Section lO(b) below, at any time following the tenth ( 10 th) consecutive day that a Holder's Authorized Share Allocation (as defined in Section lO(a) below) is less than 100 % of the number of shares of Common Stock that such Holder would be entitled to receive upon a conversion in full, of all of the Preferred Stock then held by such Holder (assuming conversion at the Floor Price then in effect without regard to any limitations on conversion set forth in this Certificate of Designations) ; (iv) the Company's failure to pay to any Holder any Dividend on any Dividend Date (whether or not declared by the Board) , solely to the extent such failure remains uncured for a period of at least five ( 5 ) Trading Days after the Company's receipt of written notice thereof ; (v) the Company's failure to pay any other amount due in cash when and as due under this Certificate of Designations (including, without limitation, the Company's failure to pay any Late Charges or other amounts due in cash
11 4934 - 3510 - 8025 \ 7 hereunder), the Securities Purchase Agreement or any other Transaction Document or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby (in each case, whether or not permitted pursuant to the DGCL), solely to the extent such failure remains uncured for a period of at least five ( 5 ) Trading Days after the Company's receipt of written notice thereof ; (vi) the Company fails to deliver the shares of Common Stock issuable upon a conversion of Preferred Stock without a restrictive legend either on any Book - Entry representing such shares of Common Stock or by credit of such shares of Common Stock to such Holder's or its designee's balance account with DTC as and when required by this Certificate of Designations, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five ( 5 ) Trading Days after the Company's receipt of written notice thereof ; (vii) the Company or any of its Significant Subsidiaries, pursuant to or within the meaning of any Bankruptcy Law, either : (1) commences a voluntary case or proceeding; (2) consents to the entry of an order for relief against it in an involuntary case or proceeding; (3) consents to the appointment of a custodian of it or for substantially all of its property; (4) makes a general assignment for the benefit of its creditors; (5) takes any comparable action under any foreign Bankruptcy Law; or (6) is not paying its undisputed debts as they become due, and such failure continues unremedied for a period of thirty ( 30 ) consecutive days ; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that either : (l) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case or proceeding; (2) appoint s a custodian of the Company or any of its Significant Subsidiaries, or for any substantia l part of the property of the Company or any of its Significan t Subsidiaries ; (3) orders the winding up or liquidation of the Company or any Significant Subsidiary ; or
12 4934 - 3510 - 8025 \ 7 (4) grants any similar relief under any foreign Bankruptcy Law, and, in each case under this subsection (viii), such order or decree remains unstayed and in effect for at least sixty (60) days; (ix) one or more final and non - appealable judgment being rendered against the Company or any of its Significant Subsidiaries for the payment of at least $ 10 , 000 , 000 in the aggregate (excluding any amounts covered by insurance or bond), where such judgment is not discharged, stayed, vacated or otherwise satisfied within sixty ( 60 ) days after (A) the date on which the right to appeal the same has expired, if no such appeal has commenced or (B) the date on which all rights to appeal have been extinguished (for the avoidance of doubt, excluding any judgments or awards in favor of Affiliates of Celsius Mining LLC occurring prior to the Initial Issuance Date) ; (x) default by the Company or any of its Subsidiaries with respect to any one or more mortgages, agreements or other instruments under which there is outstanding, or by which there is secured or evidenced, any indebtedness for money borrowed of at least $ 2 , 500 , 000 (or its foreign currency equivalent) in the aggregate of the Company or any of its Subsidiaries, whether such indebtedness exists as of the Initial Issuance Date or is thereafter created, where such default constitutes a failure to pay principal or interest on such indebtedness or results in such indebtedness becoming or being declared due and payable prior to its stated maturity (for the avoidance of doubt, excluding any amounts owed to Affiliates of Celsius Mining LLC on account of judgments or awards occurring prior to the Initial Issuance Date or any amount shown as unpaid or past due on Schedule 3 . l(aa) to the Securities Purchase Agreement) ; (xi) other than as specifically set forth in another clause of this Section 5 (a), the Company or any Subsidiary breaches any representation or warranty made by or on behalf of the Company or such Subsidiary in any Transaction Document in any material respect (other than the representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of thirty ( 30 ) consecutive days after the Company's receipt of written notice thereof ; (xii) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company as to whether any Triggering Event has occurred ; (xiii) any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 15 (e) of this Certificate of Designations, only if such breach remains uncured for a period of five ( 5 ) consecutive Trading Days ; or
13 4934 - 3510 - 8025 \ 7 (xiv) any breach or failure in any material respect by the Company to comply with the covenant titled "Equity Classification ; Stockholders' Equity" in Section 15 , or any representation or warranty made by the Companythereinproving to have been false or inaccurate in any material respect when made or deemed made (it being understood and agreed that failure to comply with the Stockholders' Equity Requirement as of any applicable measurement date shall constitute such a material breach, failure, falsehood or inaccuracy) . (b) Notice of a Triggering Event . Within two ( 2 ) Business Days after becoming aware of the occurrence of a Triggering Event, the Company shall deliver written notice thereof via electronic mail to each Holder . 6. Rights Upon Fundamental Transactions. (a) Assumption . The Company shall not enter into or be party to a Fundamental Transaction unles s (i) (x) the Successor Entity or its Parent Entity (in which case, all subsequen t reference s to "Successor Entity" in this paragraph shall be deemed to refer to such Parent Entity) assume s in writing all of the obligation s of the Company under this Certificate of Designation s and the other Transaction Documents in accordanc e with the provisions of this Section 6 (a) pursuant to written agreement s in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction (such approva l not to be unreasonably withheld, conditioned or delayed), including agreement s to deliver to each Holder of Preferred Stock in exchang e for such Preferred Stock a security of the Successor Entity evidenced by a written instrumen t substantially similar in form and substance to this Certificat e of Designations, including, without limitation, having a stated value and dividend rate equal to the stated value and dividend rate of the Preferred Stock held by the Holder s and having similar ranking to the Preferred Stock, and satisfactory to the Required Holder s and (y) the Successor Entity is a publicly traded corporation whos e common equity is quoted on or listed for trading on an Eligibl e Market or (ii) the Company exercise s its right of Company Optional Redemption in full effective upon the consummation of such Fundamental Transaction . Excep t in the cas e of the foregoing clause (ii), upon the occurrence of any Fundamental Transaction, (A) the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamenta l Transaction, the provisions of this Certificate of Designation s and the other Transaction Document s referring to the "Company" shall refer instead to the Successor Entity), and may exercis e every right and power of the Company and shall assume all of the obligations of the Company under this Certificate of Designation s and the other Transaction Documents with the same effec t as if such Successor Entity had been named as the Company herein and therein, and (B) the Successor Entity shall deliver to each Holder confirmation tha t ther e shall be issued upon conversion of the Preferred Stock at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 7 and 15 , which shall continue to be receivabl e thereafter)) issuable upon the conversion of the Preferred Stock prior to such Fundamental Transaction, such shares of the publicly traded common equity (or their equivalent) of the Successor Entity which each Holder would have been entitled to receive upon the happening of such Fundamental Transaction had all the Preferred Stock
to the extent the Company exercises its right of Company Optional Redemption effective 14 49 34 - 35 10 - 8 02 5 \ 7 held by each Holder been converted immediately prior to such Fundamental Transaction at the Conversion Price in effect at such time (without regard to any limitations on the conversion of thePreferred Stock contained in this Certificate of Designations), as adjusted in accordance with the provisions of this Certificate of Designations . Notwithstanding the foregoing, such Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 6 (a) to permit the Fundamental Transaction without the assumption of the Preferred Stock . The provisions of this Section 6 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of the Preferred Stock . 7. Rights Upon Issuance of Purchase Rights and Other Corporate Events. (a) Purchase Rights . In addition to any adjustments pursuant to Section 8 and Section 15 below, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase shares, warrants, securities or other property pro rata to all or substantially all of the record holders of shares of Common Stock (the "Purchase Rights"), then each Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Stock (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock and assuming for such purpose that all the Preferred Stock were converted at the Conversion Price as of the applicable record date) held by such Holder immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights, provided, however, to the extent that such Holder's right to participate in any such Purchase Right would result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Purchase Right to such extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the benefit of such Holder until such time or times, if ever, as its right thereto would not result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times such Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable)) to the same extent as ifthere had been no such limitation . (b) Other Corporate Events . In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), except
Conversion Price then in effect, (b) shall take all such actions as may be necessary or appropriate 15 4934 - 3510 - 8025 \ 7 upon the consummation of such Fundamental Transaction, the Company shall make appropriate provision to ensure that each Holder will thereafter have the right, at such Holder's option, to receive upon a conversion of all thePreferred Stock held by such Holder (i) such securities or other assets to which such Holder would have been entitled with respect to the shares of Common Stock receivable upon such conversion had such shares of Common Stock been held by such Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock set forth in this Certificate of Designations) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as such Holder would have been entitled to receive had the Preferred Stock held by such Holder initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate in effect at such time . Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders . The provisions of this Section 7 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion of the Preferred Stock set forth in this Certificate of Designations . 8. Rights Upon Issuance of Other Securities . (a) Voluntary Adjustment by Company . Subject to the rules and regulations of the Principal Market, the Company may at any time any Preferred Stock remain issued, with the prior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board . (b) Calculations . All calculations under this Section 8 shall be made by rounding to the nearest cent or the nearest 1 / 100 th of a share, as applicable . The number of shares of Common Stock issued at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock . The Company will make all calculations in good faith, and, absent manifest error, its calculations will be final and binding on all Holders . The Company will provide a schedule of such calculations to any Holder upon written request . 9. Non - circumvention . The Company hereby covenants and agrees, to the extent that it is within the power and control of the Company, that the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Certificate of Designations, and will at all times in good faith carry out all the provisions of this Certificate of Designations and take all action as may be required to protect the rights of the Holders hereunder . Without limiting the generality of the foregoing or any other provision of this Certificate of Designations or the other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the conversion of any Preferred Stock above the
16 4934 - 3 510 - 8025 \ 7 in order that the Company may validly and legally issue fully paid and non - assessable shares of Common Stock upon the conversion of Preferred Stock and (c) shall, so long as any Preferred Stock are issued, take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Stock, the maximum number ofshares of Common Stock as shall from time to time be necessary to effect the conversion of the Preferred Stock then issued (without regard to any limitations on conversion contained herein) . Notwithstandinganything herein to the contrary, if each Holder is not permitted to convert such Holder's Preferred Stock in full for any reason (other than pursuant to restrictions set forth in Section 4 (d) hereof), the Company shall use its reasonable best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to effect such conversion into shares of Common Stock . 10. Authorized Shares. (a) Reservation . So long as any Preferred Stock remain issued, the Company shall at all time s reserve out of its authorized and unissued Common Stock a number of shares of Common Stock equal to the sum of (i) l 00 % of the aggregate number of shares of Common Stock as shall from time to time be necessary to effec t the conversion of all of the Preferred Stock then issued at the Floor Price then in effec t (without regard to any limitation s on conversions ) and (ii) 100 % of the aggregate number of shares of Common Stock tha t would be necessary to effec t the conversion of that number of PIK Shares equal toeighteen ( 18 ) months of Dividends on the Preferred Stock then issued at the Floor Price then in effec t (without regard to any limitations on conversions set forth herein) (the "Required Reserv e Amount") . The Required Reserve Amount (including, without limitation, each increas e in the number of shares so reserved) shall be allocated pro rata among the Holder s based on the number of the Preferred Stock held by each Holder on each Issuanc e Date or increase in the number of reserved shares, as the case may be (the "Authorized Share Allocation") . In the event tha t a Holder shall sell or otherwise transfer any of such Holder's Preferred Stock, each transferee shall be allocated a pro rat a portion of such Holder's Authorized Share Allocation . Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Preferred Stock shall be allocated to the remaining Holder s of Preferred Stock, pro rata based on the number of the Preferred Stock then held by the Holders . (b) Insufficient Authorized Shares . If, notwithstanding Section 10 (a) and not in limitation thereof, at any time while any of the Preferred Stock remain issued the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Preferred Stock at least a number of shares of Common Stock equal to the Required Reserve Amount (an "Authorized Share Failure"), then the Company shall immediately take all action necessary to increase the Company's authorized Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Preferred Stock then issued (or deemed issued pursuant to Section l 0 (a) above) . Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authori z ed Share Failure, but in no event later than sixty ( 60 ) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized Common Stock . Nothing contained
17 493 4 - 3 510 - 8 02 5 \ 7 in Section lO(a) or this Section l 0 (b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement . 11. Company Optional Redemption . (a) At any time, or from time to time, after the Issuance Date for the applicable Preferred Shares, the Company shall have the right to redeem all or any portion of such Preferred Shares (the "Company Optional Redemption") at a redemption price equal to the Conversion Amount of the Preferred Shares to be redeemed multiplied by I 05 % (such price, subject to adjustment as provided herein, the "Company Optional Redemption Price") . Notwithstanding the foregoing, the Company will not exercise its rights to Company Optional Redemption, or otherwise send a Notice of Company Optional Redemption, unless the Company has sufficient funds legally available to fully pay the Company Optional Redemption Price in respect of allPreferred Shares called for Company Optional Redemption . The Company Optional Redemption Price shall be paid in cash . Notwithstanding the foregoing, if on the date of the Notice of Company Optional Redemption or if at any time during the Company Optional Redemption Period, the Equity Conditions are not, or cease to be, satisfied, then the Company Optional Redemption Price shall be the greater of (x) such portion of the Conversion Amount multiplied by I 05 % and (y) the product of (A) such portion of the Conversion Amount multiplied by (B) the quotient determined by dividing (I) the highest VWAP for the Common Stock during the Company Optional Redemption Period by (II) the Conversion Price in effect on the Trading Day on which such highest VWAP occurs ; provided, such increased Company Optional Redemption Price shall apply only with respect to that portion of the Conversion Amount being redeemed that is convertible into a number of shares of Common Stock that would be required to be registered for resale under the RRA but are not so registered . (b) If the Company elects to effec t a Company Optional Redemption, the Company shall send to the Holders a written notic e (i) notifying the Holder s of the election of the Company to redeem all or the applicable part of the Preferred Shares and the date set for redemption (the "Company Optional Redemptio n Date"), (ii) stating the Conversion Amoun t subject to the Company Optional Redemption (the "Company Optional Redemptio n Amount"), (iii) stating the instructions a Holder must follow to receive payment, and (iv) stating the Company Optional Redemption Price therefor (such notice, a "Notice of Company Optional Redemption") . The Company Optional Redemption Date selected by the Company shall be no less than 12 Trading Days nor more than 60 Trading Days after the date on which the Company provides the Notic e of Company Optional Redemption to the Holder s (such period, "Company Optional Redemptio n Notice Period") . In the case of a partial redemption, then (x) the Preferred Share s to be redeemed will be selected pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Company Optional Redemption Date and (y) all Conversion Amounts converted by the Holder after the date of the Notice of Company Optional Redemption shall reduce the Company Optional Redemption Amount required to be redeemed on the Company Optional Redemption Date . (c) For the avoidance of doubt, the Holder may convert Preferred Shares, at any time and from time to time during or after a Company Optional Redemption Notice Period
18 493 4 - 3 510 - 8 02 5 \ 7 until 5 : 00 p . m . New York City time on the second ( 2 nd ) Business Day immediately before the applicable Company Optional Redemption Date, except to the extent the Company fails to pay the Company Optional Redemption Price for such Preferred Shares in accordance with this Section 11 . With respect to any portion of the Conversion Amount of the Preferred Shares which have not been converted by a Holder prior to the applicable Company Optional Redemption Date and have been specified to be redeemed by the Company pursuant to the Company Optional Redemption and which have been redeemed in accordance with the provisions of this Section 11 , (i) Dividends, if any, shall cease to accrue on such Preferred Shares, (ii) such Preferred Shares shall no longer be deemed outstanding and (iii) all rights with respect to such Preferred Shares shall cease and terminate . (d) Any such Notice of Company Optional Redemption given in accordance with the provision s of this Section 11 may, at the Company's discretion, be given prior to the completion of a transaction (including a Fundamental Transaction or other transaction) and be subject to the satisfaction (or waiver by the Company) of one or more conditions precedent, including, bu t not limited to, completion of a related transaction . If such Company Optional Redemption is so subjec t to satisfaction of one or mor e conditions precedent, such Notic e of Company Optiona l Redemption shall describe each such condition, and if applicable, shall state that, in the Company's discretion, the applicable Company Optiona l Redemption Date may be delayed until such time (including more than 60 days after the dat e the Notic e of Company Optiona l Redemption was delivered) a s any or all such condition s shall be satisfied (or waived by the Company), or such Company Optional Redemption may not occur and such Notic e of Company Optional Redemption may be rescinded in the event that any or all such condition s shall not have been satisfied (or waived by the Company) by such Company Optiona l Redemption Date, or by such Company Optional Redemption Date as so delayed . In addition, the Company mayprovide in such Notic e of Company Optional Redemption that payment of the Company Optional Redemption Price and performanc e of the Company's obligations with respect to such Company Optional Redemption may be performed by another Person . If any such condition preceden t has not been satisfied (or waived by the Company), the Company shall provide written notice to the Holders no later than the close of business on the third ( 3 rd) Busines s Day prior to the applicable Company Optional Redemption Date . To the extent any such condition preceden t is satisfied (or waived by the Company) prior to the Company Optiona l Redemption Date, the Company shall promptly provid e written notice to the Holder s of the completion of the condition s precedent . Upon the Company providing such written notice to the Holders, the Notice of Company Optional Redemption shall be rescinded or delayed, and the Company Optional Redemption of the Preferred Shares shall be rescinded or delayed, in each case , as provided in such Notic e of Company Optional Redemption . 12. Reserved. 13. Reserved. 14. Voting Rights. Holders of the Preferred Stock shall be entitled to written notice of all shareholders meetings or written consents, as well as copies of proxy materials and other
19 493 4 - 3 510 - 8 02 5 \ 7 information sent to shareholders . Notwithstanding the foregoing, except as required by applicable law or as expressly set forth herein, the holders of the Preferred Stock shall not be entitled to vote the Preferred Stock on any matter presented to the shareholders of the Company for their action or consideration, whether at a meeting or by written consent . 15. Covenants. For so long as any Preferred Stock are outstanding, without the prior written consent of the Required Holders: (a) Incurrence oflndebtedness . The Company shall not, nor shall the Company permit any of its Subsidiaries to, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness for borrowed money, except for Permitted Indebtedness . (b) Existence of Liens . The Company shall not, nor shall the Company permit any of its Subsidiaries to create, assume or suffer to exist any Lien to secure Indebtedness on any property or assets now owned or hereafter acquired by the Company or any of its Subsidiaries except for Permitted Liens . (c) Restriction on Redemption and Cash Dividends . The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital shares (other than as required by this Certificate of Designations) . (d) Preservation of Existence, Etc . The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary ; provided, however, that the Company shall not be required to preserve any such corporate existence of any of its Subsidiaries if, in the judgment of the Company, the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and all material assets of any such Subsidiaries have been assigned to the Company or another Subsidiary, in each case where such restructuring does not have a material impact on the Company's ability to comply with the provisions hereof . (e) Restricted Issuances . The Company shall not, directly or indirectly, without the prior written consent of the Required Holders, (i) issue any Preferred Stock (other than as contemplated by the Securities Purchase Agreement and this Certificate of Designations), (ii) issue any other securities that would cause a breach or default under this Certificate of Designations or (iii) other than where the use of proceeds is used to (x) redeem the Preferred Stock in full or (y) refinance the Company or its Subsidiary's Indebtedness existing as of the Subscription Date, create, or authorize the creation of, any additional class or series of capital shares of the Company (or any equity security convertible into or exercisable for anysuch class or series of capital shares of the Company) or issue or sell, or obligate itself to issue or sell, any equity securities of the Company ( or any equity security convertible into or exercisable for any such class or series of capital
20 493 4 - 3 510 - 8 02 5 \ 7 shares of the Company) that ranks on par or superior (except in the case of clause (y), in which case such securities may only rank par or junior) to the Preferred Stock as to dividends, distributions and payments upon the liquidation, dissolution or winding up of the Company or as to redemption or repurchase rights . (t) Stay, Extension and Usury Laws . To the exten t tha t i t may lawfully do so, the Company ( A) agrees that it will not at any time insist upon, plead, or in any manner whatsoever clai m or take the benefi t or advantage of, any stay, extension or usury law (wherever or whenever enacted or in force) that may affect the covenant s or the performance of this Certificat e of Designations ; and (B) expressly waives all benefits or advantages of any such law and agrees that it will not, by resort to any such law, hinder, delay or imped e the execution of any power granted to the Holders by this Certificate of Designations, but will suffer and permi t the execution of every such power as though no such la w has been enacted . (g) Taxes . The Company and its Subsidiaries shall pay when due (taking into account all available extensions) all taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except where the failure to pay would not, individually or in the aggregate, have a material adverse effect on the Company or any of its Subsidiaries) . The Company and its Subsidiaries shall file on or before the due date therefor (taking into account all available extensions) all personal property tax returns ( except where the failure to file would not, individually or in the aggregate, have a material adverse effect on the Company or any of its Subsidiaries) . Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings , taxes for which they maintain adequate reserves therefor in accordance with U . S . GAAP . (h) Variable Rate Transaction . Neither the Company nor its Subsidiaries will be party to, enter into, effect or consummate any Variable Rate Transaction or enter into any agreement to effect or consummate any Variable Rate Transaction . "Variable Rate Transaction" means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock whereby the Company or any Subsidiary may sell securities at a future determined price (other than pursuant to a customary "weighted average" anti - dilution provision or standard and customary "preemptive" or "participation" rights) . Notwithstanding the foregoing , (i) shares of Common Stock issued and sold pursuant to the ATM Facility ; (ii) the issuance of Excluded Securities ; and (iii) the making of payments to customers, vendors or suppliers in the ordinary course of business consistent with past practice consisting of, or the consideration
21 493 4 - 3 510 - 8 02 5 \ 7 for which consists of, securities subject to a variable price shall not be deemed a Variable Rate Transaction for purposes of this Section 15(h). (i) Organizational Documents . The Company shall not amend, alter, modify, or repeal this Certificate of Designations, by the adoption or amendment of any Certificate of Designation or similar document, in each case, in any manner that materially adversely affects the rights of any of the Holders of the Preferred Stock . The Company shall not amend, alter, modify, or repeal its Certificate of Incorporation, bylaws or any other corporate governance document, in any manner that materially adversely affects the rights of any of the Holders of the Preferred Stock . (j) Agreement . The Company shall not enter into any agreement which would substantially impair its obligations under this Certificate of Designations or any other Transaction Document . (k) Independent Investigation . At the request of any Holder holding not less than $ 5 . 0 million in Stated Value of Preferred Stock either (x) at any time when a Triggering Event has occurred and is continuing, (y) upon the occurrence of an even t that with the passage of time or giving of notice would constitut e a Triggering Event or (z) at any time such Holder reasonably believe s a Triggering Event may have occurred or be continuing, the Company will permit an independent, reputable investment bank selected by the Company and approved by such Holder (such approva l not to be unreasonably withheld) to investigate, at the Company's expense (provided, however, that if such investigation is undertaken pursuant to the preceding clause (z) and, following such investigation, no Triggering Event is found to have occurred, such investigation shall be at the Holder's expense (and the Holder shall promptly reimburse the Company, if applicable)), as to whether any breach of the Certificate of Designations has occurred (the "Independent Investigator") ; provided that, absent the occurrence and continuanc e of a Triggering Event, no more than two ( 2 ) such investigations shall be permitted in any fiscal year . If the Independent Investigator determine s tha t such breach of the Certificate of Designation s has occurred, the Independen t Investigator shall notify the Company of such breach and the Company shall deliver written notice to each Holder of such breach . In connection with such investigation, the Independent Investigator may, upon reasonable notice and at such reasonable times during normal business hours, inspect all contracts, books, records, personnel, office s and other facilitie s and properties of the Company and its Subsidiarie s and, to the extent availabl e to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants' work papers) and any book s of account, records, reports and other paper s not contractually required of the Company to be confidentia l or secret, or subject to attorney - clien t or other evidentiary privilege, and the Independent Investigator may make such copies and inspection s thereof as the Independent Investigator may reasonably request ; provided that, prior to being permitted to engage in any such visitation, inspection or access rights provided for under this Section l 5 (k), such Independent Investigator shall have executed a standard confidentiality agreement in favor of the Company oncustomary term s reasonably satisfactory to the Company . The Company shall furnish the Independent Investigator with such financia l and operating data and other information with respec t to the business and properties of the Company as the Independent
22 493 4 - 3 510 - 8 02 5 \ 7 Investigator may reasonably request . The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company's officers, directors, key employees and independent public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested . Notwithstanding the foregoing, this Section 15 (k) shall not require the Company to breach any confidentiality obligations owed to third parties or to waive the Company's attorney - client privilege . (l) Equity Classification : Stockholders' Equity . The Company represents, warrant s and covenants to each Holder tha t (i) the Preferred Stock shall be classified and treated as equity, and not as a liability, in the Company's financial statement s in accordance with U . S . GAAP, except solely to the exten t of any Derivative Liability permitted by clause (ii), (ii) neither the issuanc e of the Preferred Stock nor the existence, term s or operation of the conversion rights hereunder shall resul t in a Derivativ e Liability in excess of $ 2 , 000 , 000 or in any Derivative Liability that would cause the Company's stockholders' equity to be less than the Stockholders' Equity Requirement as of any fiscal quarter end, and (iii) the Company shall have stockholders' equity of at least the Stockholders' Equity Requirement as of the last day of each fiscal quarter . (m) Affiliated Debt . The Company shall not make any payments of principal or other payments, except for regularly scheduled payments of interest at the non - default rate of interest, on the Endeavor Debt and/or any other Indebtedness then held by an Affiliate of the Company . 16 . Liquidation, Dissolution . Winding - Up . In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its shareholders (the "Liquidation Funds"), before any amount shall be paid to the holders of any Junior Shares, but pari passu with any Parity Shares then issued, an amount per Preferred Share equal to the greater of (x) Stated Value and (y) the amount per share such Holder would receive if such Holder converted such Preferred Share into shares of Common Stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of Parity Shares, if any, then each Holder and each holder of Parity Shares shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Shares as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Preferred Stock and all holders of Parity Shares . To the extent necessary, the Company shall cause such actions to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed to the Holders in accordance with this Section 16 . All the preferential amounts to be paid to the Holders under this Section 16 shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of the Company to the holders ofJunior Shares inconnection with a Liquidation Event as towhich this Section 16 applies .
23 4934 - 35 1 . 0 - 8025 \ 7 17. Distribution of Assets . In addition to any adjustments pursuant to Section 7 (a) and Section 8 , if the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way ofretum of capital or otherwise (including without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the "Distributions"), then each Holder, as holders of Preferred Stock, will be entitled to such Distributions as if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred Stock (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock and assuming for such purpose that the Preferred Share was converted at the current Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken forsuch Distribution or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for such Distributions (provided, however, that to the extent that such Holder's right to participate in any such Distribution would result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Distribution to the extent of anysuch excess over the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of such Holder until such time or times as its right thereto would not result in such Holder and the other Attribution Parties exceeding theMaximum Percentage, at which time or times, ifany,such Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation) . 18. Vote to Change the Terms of or Issue Preferred Stock . For so long as any Preferred Stock are issued and outstanding, in addition to any other rights provided by law, except where the vote or written consent of the holders ofa greater number of shares is required by law or by another provision of the Certificate of Incorporation, without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders, voting together as a single class, the Company shall not : (a) amend, alter, modify or repeal any provision of, or add any provision to, its Certificate of Incorporation, or file any certificate of designations or certificate of amendment of any series of stock , including this Certificate of Designations, ifsuch actionwould materially adversely alter or change in any respect the preferences, rights, privileges or powers, orrestrictions provided for the benefit of the Preferred Stock hereunder, regardless of whether any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise ; (b) increase or decrease (other than by conversion) the authorized number of Preferred Stock ; (c) without limiting any provision of Section 2 , create orauthorize (by reclassification or otherwise) any new class or series of Senior Preferred Stock or Parity Shares ; (d) purchase, repurchase or redeem any Junior Shares (other than pursuant to the terms of the Company's equity incentive plans and options and other equity awards granted under such plans (that have in good faith been approved by the Board)) ; (e) without limiting any provision of Section 2 , pay dividends or make any other distribution on any shares of any Junior Shares ; (f) issue any Preferred Stock other than as contemplated hereby or pursuant to the Securities Purchase Agreement ; (g) become subject to any agreement that would restrict the Company's ability to perform its obligations under this Certificate of Designations ; or
24 4934 - 35 10 - 8025 \ 7 (h) without limiting any provision of Section 9, whether or not prohibited by the terms of the Preferred Stock, circumvent a right of the Preferred Stock hereunder. 19. Transfer of Preferred Stock . A Holder may not transfer all or any portion of its Preferred Stock without the express prior written consent of the Company (through its Board), except for any transfer to an Affiliate of such Holder, to the Company, to YA II PN, LTD . , a Cayman Islands exempt limited company ("Yorkville") or any of its Affiliates, or to any other Person in connection with, or upon the exercise of, any rights or remedies of Yorkville under the Pledge and Security Agreement . Notwithstanding the foregoing, a Holder may pledge all or any portion of its Preferred Stock to Yorkville pursuant to the Pledge and Security Agreement without the prior written consent of the Company . Any transfer of Preferred Stock shall be in compliance with all applicable securities laws and Sections 4 . 1 and 5 . 7 of the Securities Purchase Agreement . Any purported transfer of Preferred Stock in violation of this Certificate of Designations shall be null and void, and no such transfer shall be recorded on the Company's books and the purported transferee in any such transfer shall not be treated (and the Holder proposing to make any such transfer shall continue to be treated) as the owner of such Preferred Stock for all purposes of this Certificate of Designations . Each Holder shall pay all costs and expenses incurred by the Company in connection with any transfer of Preferred Stock by such Holder . 20. Reissuance of Certificates. (a) Transfer . If any Preferred Stock represented by a stock certificate are to be transferred, the applicable Holder shall provide written notice of such transfer to the Company and surrender to the Company the stock certificate representing such Preferred Stock, together with a duly executed instrument of transfer, whereupon the Company shall forthwith issue and deliver, upon the order of such Holder, a new stock certificate registered in such name or names as such Holder may request, representing the number of Preferred Stock being transferred by such Holder and, ifless than all of the Preferred Stock represented by the surrendered stock certificate are being transferred, a new stock certificate (in accordance with Section 20 (c)) to such Holder representing the number of Preferred Stock not being transferred . (b) Certificated Exchangeable for Different Denominations . Each stock certificate may be exchanged by the applicable Holder , upon surrender of such stock certificate to the Company together with written notice to the Company , for two or more new stock certificates (in accordance with Section 20 (c)) representing, in the aggregate, the number of Preferred Stock represented by the original stock certificate, and each such new stock certificate shall represent such portion of such number of Preferred Stock represented by the original stock certificate as is designated in writing by such Holder at the time of such surrender . (c) Issuance of New Certificates . Whenever the Company is required to issue a new stock certificate pursuant to the terms of this Certificate of Designations, such new stock certificate (i) shall represent, as indicated on the face of such stock certificate, the number of Preferred Stock then represented thereby, which, when added to the number of Preferred Stock represented by the other new stock certificate or stock certificates issued in connection with such issuance , does not exceed the number of Preferred Stock
25 4934 - 35 10 - 8025 \ 7 represented by the original stock certificate immediately prior to such issuance, and (ii) shall have an issuance date, as indicated on the face of such new stock certificate, which is the same as the issuance date of such original stock certificate . 21. Remedies . Characterizations . Other Obligations . Breaches and Injunctive Relief . The remedie s provided in this Certificat e of Designations shall be cumulative and in addition to all other remedie s availabl e under this Certificate of Designation s and any of the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit any Holder's right to pursue actua l and consequential damages for any failur e by the Company to comply with the term s of this Certificat e of Designations . No failur e on the part of a Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operat e as a waiver thereof ; nor shall any single or partial exercise by such Holder of any right, power or remedy preclude any other or further exercis e thereof or the exercis e of any other right, power or remedy . In addition, the exercise of any right or remedy of a Holder a t law or equity or under this Certificate of Designation s or any of the documents shall not be deemed to be an election of such Holder's rights or remedie s under such documents or at law or equity . The Company covenant s to each Holder tha t there shall be no characterization concerning this instrument other than as expressly provided herein . Amounts set forth or provided for herein with respec t to payments, conversion and the like (and the computation thereof) shall be the amount s to be received by a Holder and shall not, excep t as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof) . The Company acknowledges that a breach by it of its obligations hereunder will cause irreparabl e harm to the Holder s and tha t the remedy at law for anysuch breach may be inadequate . The Company therefore agrees that, in the even t of anysuch breach or threatened breach, each Holder shall be entitled, in addition to allother availabl e remedies, to specifi c performance and/or temporary, preliminary and permanent injunctiv e or other equitable relief from any court of competent jurisdiction in anysuch cas e withou t the necessity of proving actual damages and without posting a bond or other security . The Company shall provid e all information and documentation to a Holder that is reasonably requested in writing by such Holder to enabl e such Holder to confirm the Company's compliance with the term s and condition s of this Certificate of Designations ; provided that, to the exten t the Company indicates to such Holder that the requested information or documentation may contain material non - publi c information, such information or documentation will not be provided to such Holder withou t such Holder's express prior written consent . 22. Payment of Collection, Enforcement and Other Costs . If (a) any Preferred Stock are placed in the hands of an attorney for collection or enforcement or are collected or enforced through any legal proceeding or a Holder otherwise takes action to collect amounts due under this Certificate of Designations with respect to the Preferred Stock or to enforce the provisions of this Certificate of Designations or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors' rights and involving a claim under this Certificate of Designations, then the Company shall pay the costs reasonably incurred bysuch Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys' fees and disbursements . The Company expressly acknowledges and agrees that no amounts due under this Certificate of Designations with respect to any Preferred Stock shall be affected, or limited, by the fact that the purchase price paid for each Preferred Share was less than the original Stated Value thereof .
26 4934 - 35 10 - 8025 \ 7 23. Construction ; Headings . This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Holders and shall not beconstrued against anysuch Person as the drafter hereof . The headings of this Certificate of Designations are for convenience of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations . Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof . The terms "including," "includes," "include" and words of like import shall be construed broadly as if followed by the words "without limitation . " The tenns "herein,""hereunder," "hereof' and words oflike import refer to this entire Certificate of Designations instead of just the provision in which they are found . Unless expressly indicated otherwise, all section references are to sections of this Certificate of Designations . Terms used in this Certificate of Designations and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Initial Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the Required Holders . 24. Failure or Indulgence Not Waiver . No failure or delay on the part of a Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege . No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party . Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any provision of Section 4 (d) . 25. Dispute Resolution. (a) Submission to Dispute Resolution for Certain Matters . (x) In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the applicable Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two ( 2 ) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) ifbysuch Holder at any time after such Holder learned of the circumstances giving rise to such dispute . If such Holder and the Company are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate, at any time after the tenth ( 10 th) Business Day following such initial notice by the Company or such Holder (as the case may be) of such dispute to the Company or such Holder (as the case may be), then such Holder and the Company may select an independent, reputable investment bank mutually agreeable in good faith to them to resolve such dispute . (xi) Such Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5 : 00 p . m . (New
27 4934 - 35 I 0 - 8025 \ 7 York time) by the fifth ( 5 th) Business Dayimmediately following the date onwhich such investment bank was selected (the "Dispute Submission Deadline") (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the "Required Dispute Documentation") (it being understood and agreed that if either such Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (andhereby waives its right to) deliver or submit any written documentation or other support tosuch investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline) . Unless otherwise agreed to in writing by both the Company and such Holder or otherwise requested by such investment bank, neither the Company nor such Holder shall be entitled to deliver or submit any written documentation or other suppo 1 t to such investment bank in connection with such dispute (other than the Required Dispute Documentation) . (xii) The Company and such Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and such Holder of such resolution no later than ten ( 10 ) Business Days immediately following the Dispute Submission Deadline . The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank's resolution of such dispute shall be final and binding upon all parties absent manifest error . (b) Miscellaneous . The Company expressly acknowledges and agrees that (i) this Section 25 constitutes an agreement to arbitrate between the Company and each Holder (and constitutes an arbitration agreement) under † 7501 , et seq . of the New York Civil Practice Law and Rules ("CPLR") and that any Holder is authorized to apply for an order to compel arbitration pursuant to CPLR † 7503 (a) in order to compel compliance with this Section 25 , (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (A) the consideration per share at which an issuance or deemed issuance of shares of Common Stock occurred, (B) whether any issuance or sale or deemed issuance or sale of shares of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, and (C) whether an agreement, instrument, security or the like constitutes an Option or Convertible Security, (iii) the terms of this Certificate of Designations and each other applicable Transaction Document shall serve as the basis for the selected investment bank's resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Certificate of Designations and any other applicable Transaction Documents, (iv) either the Company or the applicable Holder (and only such Holder with respect to disputes solely relating to such Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 25 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section
28 4934 - 3510 - 8025 \ 7 25 and (v) nothing in this Section 25 shall limit such Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 25 ) . 26. Notices : Currency ; Payments . (a) Notices . The Company shall provide each Holder ofPreferred Stock with prompt written notice of all material actions taken pursuant to the terms of this Certificate of Designations, including in reasonable detail a description of such action and the reason therefor ; provided that the Company shall not be required to provide any such notice in connection with (x) a Conversion Notice except as set forth in Section 4 or (y) transfers of any stock certificate . Without limiting the generality of the foregoing and unless disclosed by the Company in a press release or in a filing on Form 8 - K, the Company shall give written notice to each Holder (i) immediately upon anyadjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen ( 15 ) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase shares, warrants, securities or other property to holders of all or substantially all shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or simultaneously with such notice being provided to such Holder by issuance of press release or the filing of Form 8 - K with the SEC . Whenever notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice must be in writing and shall be given in accordance with Section 5 . 4 of the Securities Purchase Agreement . (b) Currency . All dollar amounts referred to in this Certificate of Designations are in United States Dollars ("U . S . Dollars"), and all dollar amounts owing under this Certificate ofDesignations shall be paid in U . S . Dollars . All amounts denominated in other currencies (if any) shall be converted into the U . S . Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation . "Exchange Rate" means, in relation to any amount of currency to be converted into U . S . Dollars pursuant to this Certificate of Designations, the U . S . Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time) . (c) Payments . Whenever any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations , unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately available funds pursuant to wire transfer instructions that Holder shall provide to the Company in writing from time to time . Whenever any amount expressed to be due by the terms of this Certificate of Designations is due on any daywhich is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day . Any amount due under the Transaction Documents in cash which is not paid when due (except to the extent such amount is simultaneously accruing Dividends) shall
29 4934•3510 - 8025 \ 7 result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of ten percent ( 10 % ) per annum from the date such amount was due until the same is paid in full ("Late Charge") . 27. Waiver ofNotice . To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Certificate of Designations and the Securities Purchase Agreement . 28. Governing Law . This Certificate of Designations shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Certificate of Designations shall be governed by, the DGCL, without giving effect to any choice oflaw or conflict oflaw provision or rule (whether of the DGCL or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware . Except as otherwise required by Section 25 above, the Company and each Holder (by acceptance of its Preferred Stock) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper . Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law . Nothing contained herein (i) shall be deemed or operate to preclude any Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to such Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of such Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 25 above . THE COMPANY AND EACH HOLDER (BY ACCEPTANCE OF ITS PREFERRED STOCK) HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS OR ANY TRANSACTION CONTEMPLATED HERKBY . 29. Judgment Currency. (a) If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 29 referred to as the "Judgment Currency") an amount due in U . S . dollars under this Certificate of Designations, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding : (x) the date of actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date : or
30 4934 .3 510 - 8025 \ 7 (xi) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 29 (a)(ii) being hereinafter referred to as the "Judgment Conversion Date") . (b) If in the case of any proceeding in the court of any jurisdiction referred to in Section 29 (a)(ii) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date . (c) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Certificate of Designations . 30 . Severability . If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this Certificate of Designations as somodified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties . The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to tha t of the prohibited, invalid or unenforceable provision(s) . 3 l . Maximum Payments . Without limiting Section 5 . 2 of the Securitie s Purchase Agreement, nothing contained herein shall be deemed to establish or require the paymen t of a rate of interest or other charges in excess of the maximu m pennitted by applicabl e law . In the event tha t the rate of interes t required to be paid or other charge s hereunder exceed the maximum permitted by such law, any payment s in excess of such maximum shall be credited agains t amounts owed by the Company to the applicable Holder and thus refunded to the Company . 32 . Amendment . Excep t for Section 4 (d), which may not be amended or waived hereunder, this Certificate of Designations or any provision hereof may be amended by obtaining the affirmativ e vot e at a meeting duly called for such purpose, or written consent withou t a meeting in accordance with the DGCL, of the Required Holders, voting separately as a singl e class, and with such other shareholder approval, if any, as may then be required pursuan t to the DGCL and the Certificat e oflncorporation .
31 4934 - 35 10 - 8025 \ 7 33. Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings: " 1933 Act" means the Securities Act of 1933 , as amended, and the rules and regulations thereunder . " 1934 Act" means the Securities Exchange Act of 1934 , as amended, and the rules and regulations thereunder . "Additional Amount" means, as of the applicable date of determination, with respect to each Preferred Share, all unpaid Dividends that have accrued on such Preferred Share and any other unpaid amounts then due and payable hereunder with respect to such Preferred Share . "Additional Issuance Date" means, for any date after the Initial Issuance Date where Preferred Stock are issued pursuant to the Securities Purchase Agreement, the issuance date for such Preferred Stock . "Affiliate" or "Affiliated" means, with respect to anyspecified Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such specified Person, with "control" having the meaning ascribed to such term in Rule 405 under the Securities Act of 1933 , as amended . "Affiliated Party" means, with respect to any natural person, (i) any company, partnership, trust or other entity for which such natural person (or such natural person's estate) has dispositive or voting power with respect to the equity securities of the Company held by such company, partnership, trust or other entity ; (ii) any trust the beneficiaries of which consist solely of such natural person, any Family Member of such natural person or any person described in clause (i) ; (iii) the trustees, legal representatives, beneficiaries or beneficial owners (in each case, solely in such capacity and not in their individual or other capacities) of any such company, partnership, trust or other entity referred to in clause (i) or (ii) ; (iv) the estate of such natural person (it being understood, for the avoidance of doubt, that this clause (iv) will not include any person to whom any securities are transferred from anysuch estate) ; and (v) the Family Members of such natural person . "Approved Share Plan" means any employee benefit plan which has been approved by the Board prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock may be issued to any employee, officer, consultant, director or other service provider of the Company or any of its Subsidiaries for services provided to the Company or any of its Subsidiaries in their capacity as such . "ATM Facility" means the Company's "at the market" facility with H . C . Wainwright & Co . , LLC for the issuances of Common Stock at prevailing market prices from time to time . "Attribution Parties" means, collectively, the following Persons and entities : (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Initial Issuance Date, directly or indirectly managed or advised
32 4934 - 35 10 - 8025 \ 7 by a Holder's investmen t manager or any of its Affiliates or principals, (ii) any direc t or indirec t Affiliates of such Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with such Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated with such Holder's and the other Attribution Partie s for purposes of Section 13 (d) of the 1934 Act . For clarity, the purpose of the foregoing is to subject collectively such Holder and all other Attribution Partie s to the Maximum Percentage . "Bankruptcy Law" means Title 11 , United States Code, or any similar U . S . federal or state or non - U . S . law for the relief of debtors . "Bloomberg" means Bloomberg, L . P . "Book - Entry" means each entry on the Register evidencing one or more Preferred Stock that has been converted into shares of Common Stock . "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed ; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to "stay at home", "shelter - in - place", "non - essential employee" or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day . "Capital Lease Obligation" means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under U . S . GAAP ; the amount of such obligations shall be the capitalized amount thereof determined in accordance with U . S . GAAP, and the final maturity of such obligations shall be the date of the last payment of such amounts due under such lease (or other arrangement) prior to the first date on which such lease (or other arrangement) may be terminated by the lessee without payment of a premium or a penalty ; and, for the purposes of this Certificate of Designations, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with U . S . GAAP . "Closing Bid Price" and "Closing Sale Price" mean, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be), then the last bid price or last trade price, respectively, of such security prior to 4 : 00 : 00 p . m . , New York City time, as reported by Bloomberg, or, if the Principal Market isnot the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
33 4934 - 35 10 - 8025 \ 7 securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over - the - counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bidprices, or the ask prices, respectively, of any market makers for such security as reported in the "pink sheets" by OTC Markets Group Inc . (formerly Pink Sheets LLC) . If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Required Holders . If the Company and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25 . All such determinations shall be appropriately adjusted for any share splits, share dividends, share combinations, recapitalizations or other similar transactions during such period . "Common Stock" means (i) the Company's common stock, $ 0 . 001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock . "Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto . "Convertible Securities" means any shares or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common Stock . "Current Subsidiary" means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns more than fifty percent (50%) of the outstanding voting power of the capital shares or equity or similar interests of such Person entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or shareholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such Person; or (ii) controls the business , operations or administration of such Person, and all of the foregoing, collectively, "Current Subsidiaries". For purposes of this definition, "control" means t he power to direct the management and the policies of such Person, whether through the ownership of voting capital, by contract or otherwise. "Derivative Liability" means any derivative, embedded derivative or other liability required under U.S. GAAP to be recorded on the Company's balance sheet as a result of
34 4934 - 35 10 - 8025 \ 7 the issuance of the Preferred Stock or the existence, terms or operation of the conversion rights under this Certificate of Designations. "Dividend Rate" means five percent (5%) or eighteen percent (18%) per annum upon the occurrence and continuation of a Triggering Event. "Eligible Market" means The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, or, in each case, any successor thereto . "Equity Conditions" means, with respect to a given date or period of determination, on each day during the period beginning thirty ( 30 ) Trading Days prior tosuch applicable date of determination and ending on and including such applicable date of determination (the "Equity Conditions Measuring Period") (i) all shares of Common Stock issuable upon conversion of the Preferred Shares that would be required to be registered for resale under the RRA shall be eligible to be resold by the Holders without restriction or any legend under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Preferred Shares) ; (ii) the Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Preferred Shares) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on such Eligible Market nor shall delisting or suspension by such Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of such Eligible Market ; (iii) the Company shall have delivered all shares of Common Stock issuable upon conversion of the Preferred Shares on a timely basis as set forth in Section 4 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents ; (iv) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated ; (v) none of the Holders shall be in possession of any material, non - public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees, officers, representatives, agents or the like ; and (vi) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been substantially in compliance with, and shall not have breached in any material respect any representation or warranty (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document in any material respect, including, without limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured as of or after the date that is ten ( 10 ) Trading Days prior to the applicable date of determination . "Excluded Securities" means (i) Common Stock or options to purchase Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock
35 4934 - 3 510 - 8025 \ 7 issued or issuable to directors, consultants, officers, employees or other service providers of the Company or any of its Subsidiaries for services rendered to the Company or any of its Subsidiaries in their capacity as such pursuant to an Approved Share Plan, provided that the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that materially adversely affects any of the Holders ; (ii) Convertible Securities and/or shares of Common Stock issued or issuable upon the conversion or exercise of Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued or issuable pursuant to an Approved Share Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion, exercise or issuance price of anysuch Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) is not lowered ( other than in accordance with the terms thereof in effect as of the Subscription Date), none of such Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder (other than in accordance with the terms thereof in effect as of the Subscription Date) and none of the terms or conditions of any such Convertible Securities ( other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) are otherwise materially changed in any manner that materially adversely affects any of the Holders ; (iii) the shares of Common Stock issuable upon conversion of the Preferred Stock or otherwise pursuant to the terms of this Certificate of Designations ; provided, that the terms of this Certificate of Designations are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms hereof in effect as of the Subscription Date) ; and (iv) securities issued as consideration for the acquisition of another entity by the Company by merger, purchase of substantially all of the assets or other reorganization or bona fide joint venture agreement, provided that such issuance is approved by the majority of the disinterested directors of the Company . "Family Member" means, with respect to any individual, any other individual having a relationship by blood (to the second degree of consanguinity), marriage (including former spouses), domestic partnership (including former domestic partners) or adoption to such individual . "Floor Price" means $ 1 . 80 (as adjusted for share splits, share dividends, share combinations, recapitalizations or other similar transactions occurring after the Subscription Date) . "Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, unless, for purposes of any Section hereunder other
36 4934 - 3 510 - 8025 \ 7 than Section l l(c), the holders of shares of Common Stock of the Company immediately prior to such consolidation or merger continue to hold at least 50 % of the aggregate ordinary voting power represented by the shares of Common Stock of the Company (or the surviving or acquiring entity), or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole, to one or more Subject Entities, other than solely to one or more of the Company's wholly owned Subsidiaries, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50 % of the issued shares of Common Stock, (y) 50 % of the issued shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not issued, or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13 d - 3 under the 1934 Act) of at least 50 % of the issued shares of Common Stock, or (iv) consummate a shares or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin - off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, in any transaction or series ofrelated transactions, acquire, either (x) at least 50 % of the issued shares of Common Stock, (y) at least 50 % of the issued shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such shares purchase agreement or other business combination were not issued, or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13 d - 3 under the 1934 Act) of at least 50 % of the issued shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, unless the holders of the shares of Common Stock of the Company immediately prior to such reorganization, recapitalization or reclassification continue to hold at least 50 % of the aggregate ordinary voting power represented by the shares of Common Stock of the Company (or the surviving entity), (B) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate, other than the Company or its wholly owned Subsidiaries, or their respective employee benefit plans, to be or become the "beneficial owner" (as defined in Rule 13 d - 3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in issued Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin - off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever , of either (x) at least 50 % of the aggregate ordinary voting power represented by issued shares of Common Stock, (y) at least 50 % of the aggregate ordinary voting power represented by issued shares of Common Stock not held by all such Subject Entities as of the date of this Certificate of Designations calculated as if any shares of Common Stock held by all such Subject Entities were not issued, or (z) a percentage of the aggregate ordinary voting power represented by issued
37 4934 - 3 510 - 8025 \ 7 shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner intended to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction . "Group" means a "group" as that term is used in Section 13 (d) of the 1934 Act and as defined in Rule 13 d - 5 thereunder . "Holder Pro Rata Amount" means, with respect to any Holder, a fraction (i) the numerator of which is the number of Preferred Stock issued to such Holder pursuant to the Securities Purchase Agreement on the Initial Issuance Date and (ii) the denominator of which is the number of Preferred Stock issued to all Holders pursuant to the Securities Purchase Agreement on the Initial Issuance Date . "Indebtedness" of any Person means, without duplication (A) all obligations of such Person for borrowed money, (B) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent such obligations would appear as a liability on a balance sheet of such Person prepared in accordance with U . S . GAAP, (C) all guarantees by such Person oflndebtedness of others, (D) all Capital Lease Obligations of suchPerson, (E) all obligations, contingent orotherwise, of such Person as an account party in respect of letters of credit, letters of guaranty, bank guarantees, bankers' acceptances and similar instruments and, (F) to the extent not otherwise included in this definition, net obligations of such Person under hedging obligations entered into by such Person in the ordinary course of business and entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Company (the amount of anysuch obligations to be equal at any time to the net payments under such agreement or arrangement giving rise to such obligation that would be payable by such person at the termination of such agreement or arrangement) ; provided that the term "Indebtedness" shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business, (iv) Indebtedness of any parent entity (for which none of the Company or any Subsidiary is liable) appearing on the balance sheet of the Company solely by reason of push down accounting under U . S . GAAP, (v) obligations in connection with government auctions, subsidies, benefits or similar programs or processes, and (vi) obligations under any license, permit or other approval (or guarantees in respect of such obligations) incurred prior to the Subscription Date or in the ordinary course of business . The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner), to the extent such Person is liable therefor as a result of such Person's ownership interest in or other
38 4934 - 3 510 - 8025 \ 7 relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor . For all purposes hereof, the Indebtedness of the Company and any of its Subsidiaries shall exclude (i) intercompany liabilities between and among them arising solely from their cash management, tax and accounting operations in the ordinary course of business and (ii) intercompany loans, advances or Indebtedness between and among them having a term not exceeding 364 days (inclusive of any rollover, conversion or extension terms) and made in the ordinary course of busine s s . "Initial Issuance Date" means the date Preferred Stock are first issued pursuant to the Securities Purchase Agreement . "Issuance Date" means the Initial Issuance Date or Additional Issuance Date, as applicable . "Liens" means, with respect to any asset, (a) any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or titleretention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset . "Liquidation Event" means, whether in a single transaction or series of transactions, the voluntary or involuntary liquidation, dissolution or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially all of the assets of the business of the Company and its Subsidiaries, taken as a whole . "Non - assessable" means, with respect to the issuance of shares, that a shareholder shall not, solely by virtue of its status as a shareholder, be liable for additional assessments or calls on shares of the Company or its creditors (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil) . "Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities . "Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose Common Stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction . "Permitted Indebtedness" means : (a) any Indebtedness arising in the ordinary course of business in connection with trade payables;
39 4934 - 3 510 - 8025 \ 7 (b) any Indebtedness arising in the ordinary course of business in connection with project financing or to finance Capital Lease Obligations in an aggregate amount outstanding not to exceed $ 500 , 000 ; (c) any Indebtedness under that certain Revolving Line of Credit Promissory Note payable to Endeavor Blockchain, LLC (for the avoidance of doubt, including any interest thereon) or any refinancing of such Indebtedness (the "Endeavor Debt") ; (d) any Indebtedness set forth in Schedule 3 . l(aa) to the Securities Purchase Agreement (for the avoidance of doubt, including any interest thereon) as in effect on the Initial Issuance Date ; (e) any intercompany Indebtedness of the Company or of any of its Subsidiaries owing to the Company or any of its Subsidiaries ; (f) any Indebtedness consented to by the Required Holders; and (g) any Indebtedness where the proceeds are to be used to pay the Company Optional Redemption Price upon the Company's exercise of its Company Optional Redemption right . "Permitted Liens" means any Lien securing Permitted Indebtedness, except to the extent such Permitted Indebtedness is specified as being unsecured . "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof . "Principal Market" means, as of any date of determination, the Eligible Market on which the shares of Common Stock are then listed or quoted. "RRA" means the Registration Rights Agreement, dated June 30, 2026, between the Company and the Holders. "SEC" means the United States Securities and Exchange Commission or the successor thereto. "Securities Purchase Agreement" means that certain securities purchase agreement by and among the Company and the initial holders of Preferred Stock, dated as of the Subscription Date, as may be amended from time to time in accordance with the terms thereof . "Significant Subsidiary" means, as of any date of determination, any Subsidiary of the Company that constitutes, or any group of Subsidiaries of the Company that, in the aggregate, would constitute, a "significant subsidiary" (as defined in Rule 1 - 02 (w) of Regulation S - X under the 1934 Act) of the Company .
40 4934 - 3 510 - 8025 \ 7 "Stated Value" shall mean $ 1 , 000 per share, subject to adjustment for share splits, share dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after theIssuance Date with respect to the Preferred Stock . "Stockholders' Equity Requirement" means $ 5 , 000 , 000 of stockholders' equity of the Company, determined in accordance with U . S . GAAP, as of the last day of each fiscal quarter or such other stockholders' equity required for the Company to remain eligible for continued listing on the Nasdaq Capital Market . "Subscription Date" means June 30 , 2026 . "Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group . "Subsidiaries" means, with respect to any Person, (A) any corporation, company, association or other business entity (other than a partnership or limited liability company) of which more than fifty percent ( 50 % ) of the total voting power of the common equity entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders' or shareholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person ; and (B) any partnership or limited liability company where (i) more than fifty percent ( 50 % ) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, ofsuch partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form ofmembership, general, special or limited partnership or limited liability company interests or otherwise ; and (ii) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company . "Successor Entity" means the Person formed by, resulting from or survtvmg any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been entered into . "Trading Day" means, as applicable, (x) with respect to all price or trading volume determinations relating to the shares of Common Stock, any day on which the shares of Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the shares of Common Stock, then on the principal securities exchange or securities market on which the shares of Common Stock are then traded, provided that "Trading Day" shall not include any day on which the shares of Common Stock are scheduled to trade onsuch exchange or market for less than 4 . 5 hours or any day that the shares of Common Stock are 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 City time) unless such day is otherwise designated as a Trading Day in writing by the applicable Holder or (y) with respect to all determinations
41 4934 - 3 510 - 8025 \ 7 other than price determinations relating to the shares of Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities . "Transaction Documents" means the Securities Purchase Agreement, this Certificate of Designations and each of the other agreements and instruments entered into or delivered by the Company or any of the Holders in connection with the transactions contemplated by the Securities Purchase Agreement, all as may be amended from time to time in accordance with the terms thereof "U . S . GAAP" means United States generally accepted accounting principles, consistently applied . "VWAP" means, for anysecurity as of any date, the dollar volume - weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which suchsecurity is then traded), during the period beginning at 9 : 30 : 00 a . m . , New York City time, and ending at 4 : 00 : 00 p . m . , New York time, as reported by Bloomberg through its "VAP" function (set to 09 : 30 : 00 start time and 16 : 00 : 00 end time) or, if the foregoing does not apply, the dollar volume - weighted average price of such security in the over - the - counter market on the electronic bulletin board for such security during the period beginning at 9 : 30 : 00 a . m . , New York time, and ending at 4 : 00 : 00 p . m . , New York time, as reported by Bloomberg, or, if no dollar volume - weighted average price is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by OTC Markets Group Inc . (formerly Pink Sheets LLC) . If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VW AP of such security on such date shall be the fair market value as mutually determined by the Company and the Required Holders . If the Company and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25 . All such determinations shall be appropriately adjusted for any share dividend, share split, share combination, recapitalization or other similar transaction during such period . 34 . Disclosure . Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate ofDesignations, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non - public information relating to the Company and its Subsidiaries, taken as a whole, the Company shall within two ( 2 ) Business Days of such receipt or prior to (or simultaneous with) such delivery, as applicable, publicly disclose such material, non - public information on a Current Report on Form 8 - K or otherwise . In the event that the Company believes that a notice contains material, non - public information relating to the Company or any of its Subsidiaries , the Company so shall indicate to such Holder explicitly in writing in such notice (or immediately upon receipt of notice from such Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from such Holder), such Holder shall be allowed to presume that information contained in the notice does not constitute material, non - public information relating to the Company or any of its Subsidiaries . If the Company or any of its Subsidiaries provides material non - public information to a Holder that is not simultaneously filed
42 4934 , 3 510 - 8025 \ 7 in a Current Report on Form 8 - K and such Holder has not agreed to receive such material non - public information, the Company hereby covenants and agrees that such Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non - public information . Nothing contained in this Section 34 shall limit any obligations of the Company, or any rights of any Holder, under Section 4 . 4 of the Securities Purchase Agreement . 35 . Absence of Trading and Disclosure Restrictions . The Company acknowledges and agrees that no Holder is a fiduciary or agen t of the Company and that, subject to such Holder's compliance with the provisions of Section 4 . 6 of the Securities Purchase Agreement, each Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securitie s while in possession of such information, in each case, in the absenc e of a written non - disclosure agreement signed by an officer of such Holder tha t explicitly provide s for such confidentiality and trading restrictions . In the absence of such an executed, written non - disclosure agreement, the Company acknowledges that, subject to such Holder's complianc e with the provision s of Section 4 . 6 of the Securities Purchase Agreement, each Holder may freely trade in any securitie s issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party . * * *
IN WITNESS WHEREOF, the Company has caused this Certificate ofDesignations of Series D Convertible Preferred Stock of Big Digital Energy, Inc. to be executed this 30th day of June, 2026. Name:Kaliste Saloom Title: Authorized Officer Signature Page to Certificate of Designations of the Series D Convertible Preferred Stock of Big Digital Energy, Inc.
EXHIBIT I BIG DIGITAL ENERGY, INC. CONVERSION NOTICE Reference is made to the Certificate of Designations of Series D Convertible Preferred Stock of Big Digital Energy, Inc . (the "Certificate of Designations") . ln accordance with and pursuant to the Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $ 0 . 001 par value per share (the "Preferred Stock''), of Big Digital Energy, Inc . , a Delaware corporation (the "Company"), indicated below into shares of Common Stock, $ 0 . 001 value per share (the "Common Stock"), of the Company, as of the date specified below . Date of Conversion: Aggregate number of Preferred Stock to be converted Aggregate Stated Value of such Preferred Stock to be converted: Aggregate accrued and unpaid Dividends with respect to such Preferred Stock, and such Aggregate Dividends to be converted: AGGREGATE CONVERSION AMOUNT TOBE CONVERTED: Please confirm the following information: Conversion Price: Number of shares of Common Stock to be issued: Please issue the Common Stock into which the applicable Preferred Stock are being converted to Holder, or for its benefit, as follows: [] Check here if requesting delivery in book - entry form to the following name and to the following address: Issue to: I - 1 4 9 08 - 8 9 14 - 4 2 4 8 v.14 4 9 34 - 35 10 - 802 5 \ 7 [ ] Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: DTC Participant: DTCNumber: Account Number:
Date: 4934 - 3510 - 80 2 5 \ 7 Name of Registered Holder By: _ Name: Title: Tax ID: Facsimile: E - mail Address: - --- - 4908 - 8914 - 4248 v.14 I - 2
4934 - 3510 - 80 2 5 \ 7 EXHIBIT II EMAIL ACKNOWLEDGMENT The Company acknowledges receipt of this Conversion Notice and hereby directs [ • ](the "Transfer Agent") to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent instruction letter dated , 2026 , from the Company and acknowledged and agreed to by the Transfer Agent .
Exhibit 4.1
WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
BIG DIGITAL ENERGY, INC.
Warrant To Purchase Common Stock
| Warrant No.: BGDE/YA II PN, LTD. | Number of Shares: | 926,748 |
| Warrant Exercise Price: | $10.81 | |
| Expiration Date: | June 30, 20311 |
Date of Issuance: June 30, 2026
BIG DIGITAL ENERGY, INC., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, YA II PN, LTD. (the “Holder”), the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) up to [ ] fully paid and nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as subsequently adjusted; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise, (however, such restriction may be waived by Holder (but only as to itself and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than 1 Business Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
| 1 | 5 years following Issuance Date. |
Section 1.
(a) This Warrant is issued pursuant to the Securities Purchase Agreement (“Securities Purchase Agreement”) of even date hereof between the Company and the Holder or issued in exchange or substitution thereafter or replacement thereof. Each Capitalized term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.
(b) Definitions. The following words and terms as used in this Warrant shall have the following meanings:
(i) “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, director or third party service providers in the normal course of business, for services provided to the Company.
(ii) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.
(iii) “Closing Bid Price” means the closing bid price of Common Stock as quoted on the Principal Market (as reported by Bloomberg, LP (“Bloomberg”) through its “Volume at Price” function).
(iv) “Common Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
(v) “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time.
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(vi) “Event of Default” means an event of default under the Securities Purchase Agreement or a Triggering Event as defined in the Certificate of Designations for the Preferred Shares issued in connection therewith.
(vii) “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan, (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreement as disclosed in Schedule 3.1(g)therein, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreement, (c) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of the Convertible Debenture or exercise of the Warrants and (d) Shares issued to employees, officers, directors, or service providers consistent with past practices in the normal course of business.
(viii) “Expiration Date” means the date set forth on the first page of this Warrant.
(ix) “Issuance Date” means the date hereof.
(x) “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or convertible securities.
(xi) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
(xii) “Preferred Shares” means the Series D Convertible Preferred Stock, par value $0.001 per share, issued pursuant to the Securities Purchase Agreement or as dividends thereron.
(xiii) “Principal Market” means as of any date of determination, the Eligible Market on which the shares of Common Stock is then listed or quoted.
(xiv) “Securities Act” means the Securities Act of 1933, as amended.
(xv) “Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
(xvi) “Warrant Exercise Price” shall be $[ ]2 or as subsequently adjusted as provided in Section 8 hereof.
| 2 | NTD: Exercise price shall be equal to 120% of the closing price on the day prior to closing. |
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(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s successors and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words “Section”, “Schedule”, and “Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, pro rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business Day, (i) commencing with the first day after the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date, by delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds and the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as practicable following such date (“Cash Basis”) or (ii) commencing 60 days (for Warrant Shares up to 19.99% of outstanding as of closing) and 180 days (for the balance of Warrant Shares)after the issuance of this Warrant, and prior to 11:59 P.M. Eastern Time on the Expiration Date, if at the time of exercise, the Warrant Shares are not subject to an effective registration statement or if an Event of Default has occurred, by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (the “Cashless Exercise”):
Net Number = (A x B) – (A x C)
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which this Warrant is then being exercised.
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B = the Closing Bid Price of the Common Stock on the date of exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or before the second Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and the receipt of the representations of the holder specified in Section 6 hereof, if requested by the Company (the “Exercise Delivery Documents”), and if the Warrant Shares are subject to an effective and current Registration Statement and the Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Warrant Shares are not subject to an effective and current Registration Statement and the Common Stock is not DTC eligible or the Company is otherwise unable to deliver the Warrant Shares electronically without any restrictive legend pursuant to applicable securities laws upon the written opinion of outside counsel, then the Company shall, on or before the second Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate or book entry statement, registered in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. The Warrant Shares shall be issued with a legend unless they are subject to an effective and current Registration Statement or they are being transferred pursuant to an exemption from such registration requirements, the availability of which is confirmed in an opinion of counsel acceptable to the Company’s transfer agent. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to above, the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised. In the case of a dispute as to the determination of the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of Warrant Shares that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within 1 Business Day of receipt of the holder’s Exercise Notice.
(b) If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation of the Warrant Shares within 1 day of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall immediately submit via electronic mail (i) the disputed determination of the Warrant Exercise Price or the Closing Bid Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than 48 hours from the time it receives the disputed determinations or calculations. Such investment banking firm’s or accountant’s determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.
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(c) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, upon the request of the Holder, as soon as practicable and in no event later than 5 Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised.
(d) No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares issued upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.
(e) If the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the holder within 3 Business Days of receipt of the Exercise Delivery Documents, a certificate or book entry statement for the number of Warrant Shares to which the holder is entitled or to credit the holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the holder is entitled upon the holder’s exercise of this Warrant, unless such failure results from a failure of the Company’s Transfer Agent to issue such shares as a result of an act of terrorism, war, natural disaster, act of God or other force majeure event, the Company shall, in addition to any other remedies under this Warrant or otherwise available to such holder, pay as additional damages in cash to such holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount equal to 0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the holder on a timely basis and to which the holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2.
(f) If within 5 Business Days after the Company’s receipt of the Exercise Delivery Documents, and the written request of the Holder that a new Warrant be issued, the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which such holder is entitled pursuant to Section 2 hereof, then, the Holder shall be entitled to exercise or transfer its rights under such new Warrant and the Company shall be obligated to honor such exercises or transfers as if the Holder had submitted the new Warrant without violating this Section 2.
(g) Compliance with Rules of Principal Market. Notwithstanding anything to the contrary herein, the Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant to the extent (but only to the extent) that after giving effect to such exercise, the number of Warrant Shares issued under this Warrant, the Other Warrants and the number of shares of Common Stock issued upon conversion of the Preferred Shares in the aggregate would exceed 1,129,185 (representing 19.99% of the aggregate number of Common Shares issued and outstanding immediately prior to the date of execution of the Securities Purchase Agreement (subject to adjustment for any stock splits, combinations or the like)), calculated in accordance with the rules of the Principal Market, which number shall be reduced, on a share-for-share basis, by the number of Warrant Shares issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by the Agreement under the applicable rules of the Principal Market (such maximum number of shares, the “Exchange Cap”) provided that, the Exchange Cap will not apply if the Company’s stockholders have approved the issuance of Common Shares pursuant to this Warrant, the Other Warrants and the Preferred Shares in excess of the Exchange Cap in accordance with the rules of the Principal Market (the “Shareholder Approval”). In connection with each Exercise Notice, any portion of an exercise that would exceed the Exchange Cap shall automatically be withdrawn with no further action required by the Company and such Exercise Notice shall be deemed automatically modified to reduce the aggregate Warrant Shares exercised by an amount equal to such withdrawn portion in respect of each Exercise Notice.
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Section 3. Covenants as to Common Stock. The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price. If at any time the Company does not have a sufficient number of shares of Common Stock authorized and available, then the Company shall call and hold a special meeting of its stockholders within 60 days of that time for the sole purpose of increasing the number of authorized shares of Common Stock.
(d) Unless the Warrant Shares are already registered for resale pursuant to an effective registration statement, if at any time after the date hereof the Company shall file a registration statement, the Company shall include the Warrant Shares issuable to the holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.
(e) The Company will not, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. The Company will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
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(f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets.
Section 4. Taxes. The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”). Upon exercise of this Warrant the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder’s own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws.
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Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
Section 8. Adjustment of Warrant Exercise Price. The Warrant Exercise Price of this Warrant shall be adjusted from time to time as follows:
(a) Reserved.
(b) Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.
(c) Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case (without duplication of any adjustment pursuant to Section 8(b)):
(i) any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and
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(ii) either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i).
(d) Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrants; provided, that no such adjustment pursuant to this Section 8(d) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8.
(e) Voluntary Adjustments By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
(f) Notices.
(i) Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.
(ii) The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.
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(iii) The Company will also give written notice to the holder of this Warrant at least 10 days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.
Section 9. Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.
(a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, cash or other assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.” Prior to the consummation of any Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders of Warrants representing a majority of the Warrant Shares issuable upon exercise of the Warrants then outstanding) to insure that each of the holders of the Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and receivable upon the exercise of such holder’s Warrants (without regard to any limitations on exercise), such shares of stock, securities, cash or other assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Warrant Shares which would have been issuable and receivable upon the exercise of such holder’s Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii) 1 Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission is not returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses for such communications shall be:
| If to Holder: |
YA II PN, LTD. 1012 Springfield Avenue Mountainside, NJ 07092 Attention: Troy Rillo Telephone: (201) 985-8300 Email: trillo@yorkvilleglobal.com |
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| With Copy to: |
Haynes and Boone, LLP 30 Rockefeller Plaza 22nd Floor New York, NY 10112 Attention: Greg Kramer Telephone: (212) 835-4819 Email: greg.kramer@haynesboone.com |
| If to the Company, to: |
Big Digital Energy, Inc. 950 Railroad Avenue Midland, PA 15059 Attention: Kaliste Saloom Telephone: (412) 515-0896 Email: kaliste.saloom@bigdigital.energy |
| With a copy to: |
Dorsey & Whitney LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 Attention: Cam Hoang Telephone: (612) 492-6109 Email: hoang.cam@dorsey.com |
or at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
Section 12. Date. The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date.
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Section 13. Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the holders of Warrants representing at least 2/3rds of the Warrant Shares issuable upon exercise of the Warrants then outstanding; provided that, except for Section 8(d), no such action may increase the Warrant Exercise Price or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the holder of such Warrant.
Section 14. Descriptive Headings; Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of New York shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the Superior Court of the state courts sitting in the Borough of Manhattan, New York, New York and the Federal District Court for the Southern District of New York sitting in the Borough of Manhattan, New York, New York, for the adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Section 15. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, in any other agreement between the Company and the Holder, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
Section 16. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set forth above.
| BIG DIGITAL ENERGY, INC. | ||
| By: | /s/ Kaliste Saloom | |
| Name: | Kaliste Saloom | |
| Title: | General Counsel | |
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
BIG DIGITAL ENERGY, INC.
The undersigned holder hereby exercises the right to purchase ______________ of the shares of Common Stock (“Warrant Shares”) of Big Digital Energy, Inc. (the “Company”), evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1. ____ Cash Exercise
(a) Payment of Warrant Exercise Price. The holder shall pay the Aggregate Exercise Price of $______________ to the Company in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms of the Warrant.
2. ____ Cashless Exercise
(a) Payment of Warrant Exercise Price. In lieu of making payment of the Aggregate Exercise Price, the holder elects to receive upon such exercise the Net Number of shares of Common Stock determined in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
| By: | ||
| Name: | ||
| Title: |
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________, a warrant to purchase ____________ shares of the capital stock of Big Digital Energy, Inc. represented by warrant certificate no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ______________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises.
| Dated: _______________________ | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of June 30, 2026, between Big Digital Energy, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”). The Company and the Purchasers are referred to collectively as the “Parties.”
WHEREAS, subject to the terms and conditions set forth in this Agreement, and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof or Regulation D thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:
“Action” has the meaning set forth in Section 3.1(j).
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement” has the meaning set forth in the preamble.
“BHCA” has the meaning set forth in Section 3.1(jj).
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in New York City are generally open for use by customers on such day.
“Certificate of Designations” means the Certificate of Designations with respect to the Preferred Stock to be filed with the Secretary of State of the State of Delaware, in the form attached hereto as Exhibit A.
“Closing” means the closing of the purchase and sale of the Shares and Warrants pursuant to Section 2.1.
“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares and Warrants, in each case, have been satisfied or waived.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company” has the meaning set forth in the preamble.
“Company Counsel” means Dorsey & Whitney LLP, with offices located at 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402.
“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Shares.
“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.
“Disqualification Event” has the meaning set forth in Section 3.1(nn).
“Effective Date” means, with respect to any Underlying Shares, as applicable, the earliest of the date that (a) the initial Registration Statement registering for resale such Underlying Shares has been declared effective by the Commission, (b) such Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, (c) following the one year anniversary of the Closing Date provided that a holder of the Underlying Shares is not an Affiliate of the Company, or (d) such Underlying Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.
“Environmental Laws” has the meaning set forth in Section 3.1(m).
“Evaluation Date” has the meaning set forth in Section 3.1(s).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“Federal Reserve” has the meaning set forth in Section 3.1(jj).
“GAAP” has the meaning set forth in Section 3.1(h).
“Hazardous Materials” has the meaning set forth in Section 3.1(m).
“Indebtedness” has the meaning set forth in Section 3.1(aa).
“Intellectual Property Rights” has the meaning set forth in Section 3.1(p).
“IT Systems and Data” has the meaning set forth in Section 3.1(gg).
“Issuer Covered Person” has the meaning set forth in Section 3.1(nn).
“Legend Removal Date” has the meaning set forth in Section 4.1(c).
“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or similar restriction.
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“Material Adverse Effect” has the meaning set forth in Section 3.1(b).
“Material Permits” has the meaning set forth in Section 3.1(n).
“Money Laundering Laws” has the meaning set forth in Section 3.1(kk).
“OFAC” has the meaning set forth in Section 3.1(hh).
“Parties” has the meaning set forth in the preamble.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement Agent” means Northland Securities, Inc.
“Preferred Stock” means the preferred stock of the Company, par value $0.001 per share, designated as “Series D Convertible Preferred Stock,” which shall have the rights, preferences, restrictions and other matters relating to a series of preferred stock as set forth in the Certificate of Designations.
“Proceeding” means an action, suit, investigation or proceeding (including an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign).
“Purchaser” has the meaning set forth in the preamble.
“Purchaser Party” has the meaning set forth in Section 4.8.
“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, among the Company and the Purchasers, in the form attached hereto as Exhibit B.
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Underlying Shares.
“Required Approvals” has the meaning set forth in Section 3.1(e).
“Restricted Persons” has the meaning set forth in Section 4.13(b).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“SEC Reports” has the meaning set forth in Section 3.1(h).
“Securities” means the Shares, the Warrants and the Underlying Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.
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“Shares” means 16,700 shares of Preferred Stock issuable at Closing to the Purchasers pursuant to this Agreement and, if the context requires, such additional shares of Preferred Stock issued to the Purchasers as PIK Shares (as defined in the Certificate of Designations) pursuant to Section 3(a) of the Certificate of Designations.
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds. For clarity, the Subscription Amount for each Share is 90% of the Stated Value. The aggregate Subscription Amount for all of the Shares is $15,030,000.
“Stated Value” means $1,000 per Share.
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the Warrants, the Certificate of Designations, the Registration Rights Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer Agent” means Computershare Trust Company, N.A., the current transfer agent of the Company, and any successor transfer agent of the Company.
“Underlying Shares” means, collectively, the Warrant Shares and the Conversion Shares.
“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall (a) be exercisable immediately, (b) have an exercise price equal to 120% of the closing price of the Common Stock on the Trading Market on the Trading Day prior to the Closing Date (subject to adjustment therein) and (c) have a term of exercise equal to five years from the initial issuance date, in the form of Exhibit C attached hereto.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1. Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the Parties, the Company shall sell, and the Purchasers, severally and not jointly, shall purchase, the Shares and Warrants as set forth on the signature page hereto executed by such Purchaser. Each Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Shares and Warrants, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur remotely by electronic exchange of documents or at such physical location as the Parties mutually agree.
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2.2. Deliveries.
(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this Agreement, duly executed by the Company;
(ii) a stamped filed copy of the Certificate of Designations, as filed with the Secretary of State of the State of Delaware;
(iii) the Registration Rights Agreement, duly executed by the Company;
(iv) certificates evidencing the Shares purchased by such Purchaser, registered in the name of such Purchaser;
(v) a Warrant, registered in the name of such Purchaser, to purchase up to 926,748 shares of Common Stock issuable upon conversion of the Shares purchased by such Purchaser, using as the conversion price $10.81; and
(vi) a legal opinion of Company Counsel, substantially in the form attached hereto as Exhibit D.
(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this Agreement, duly executed by such Purchaser;
(ii) the Registration Rights Agreement, duly executed by such Purchaser; and
(iii) such Purchaser’s Subscription Amount, paid by wire transfer to the account specified in writing by the Company.
2.3. Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein, unless such representation or warranty is as of a specific date therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) as of such date;
(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein, unless such representation or warranty is as of a specific date therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of such date;
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(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement; and
(v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company.1 Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or as reasonably apparent in the SEC Reports, the Company hereby makes the following representations and warranties to each Purchaser:
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). Except as set forth on Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (to the extent such good standing concept exists in such jurisdiction), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing (to the extent such good standing concept exists in such jurisdiction) as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
| 1 | Under final review by BGDE. |
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(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals, including the Shareholder Approval. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filings with the Commission pursuant to the Registration Rights Agreement, (iii) the notice or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv) filings in connection with seeking the Shareholder Approval and (v) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Shares or Warrants, as applicable, will be validly issued, fully paid and nonassessable and free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock the maximum number of Underlying Shares issuable pursuant to the terms of the Shares and Warrants.
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(g) Capitalization.
(i) The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.
(ii) No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except for the Securities and as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchasers). Except as set forth on Schedule 3.1(g), there are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary (for purposes of clarity, excluding customary proportionate adjustments of the exercise, conversion, exchange or reset price in connection with a subdivision of the outstanding shares of Common Stock into a larger number of shares or a combination of the outstanding shares of Common Stock into a smaller number of shares). Except as set forth on Schedule 3.1(g), there are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. Except as set forth on Schedule 3.1(g), the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(iii) To the Company’s knowledge, all of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Other than the Shareholder Approval, no further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. Except as set forth on Schedule 3.1(g), there are no shareholders agreements, voting agreements or other similar agreements with respect to the voting of the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.
(iv) To the Company’s knowledge, each stock option granted by the Company under the Company’s stock option plan was granted (A) in accordance with the terms of the Company’s stock option plan and (B) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. To the Company’s knowledge, no stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
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(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has not in the prior four years been an issuer described in Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The Company is not currently contemplating to amend or restate any of the financial statements included in the SEC Reports, nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of such financial statements, in each case, in order for any of such financial statements to be in conformity with GAAP and in compliance with the published requirements of the Securities Act and Exchange Act, as applicable. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any such financial statements or that there is any need for the Company to amend or restate any of the financial statements.
(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as set forth on Schedule 3.1(i) or in the SEC Reports, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.
(j) Litigation. Except as set forth in the SEC Reports or on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule 3.1(j), (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
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(k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which would reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries comply with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, in each case, in any material respect.
(m) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
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(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them, and good and marketable title in all personal property owned by them, and valid leasehold rights to lease or otherwise use all real property and all personal property leased by them, that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries, (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties and (iii) Liens set forth on Schedule 3.1(g). Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all material respects.
(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have would have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable (other than patent and trademark applications) and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights, except where failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary for companies of similar size as the Company in the businesses in which the Company and the Subsidiaries are engaged, other than directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost which would reasonably be expected to have a Material Adverse Effect.
(r) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports or on Schedule 3.1(r), none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
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(s) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth on Schedule 3.1(s), the Company and the Subsidiaries are in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof and as of the Closing Date, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
(t) Certain Fees. Except for fees payable by the Company to the Placement Agent, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(t) that may be due in connection with the transactions contemplated by the Transaction Documents.
(u) Investment Company. The Company is not, and immediately after receipt of payment for the Securities will not be, an “investment company” or a company that is “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(v) Registration Rights. Except as set forth on Schedule 3.1(v) and pursuant to the Registration Rights Agreement, no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to terminate, or which to its knowledge is likely to have the effect of terminating, the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. Except as set forth in the SEC Reports or on Schedule 3.1(w), the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth in the SEC Reports or on Schedule 3.1(w), the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
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(x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or would become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such Securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(aa) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does 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). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Company has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company have any knowledge or reason to believe that any of its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. Schedule 3.1(aa) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (A) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (B) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (C) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. Except as set forth in Schedule 3.1(aa), neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
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(bb) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.
(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.
(dd) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(dd). To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s next Annual Report on Form 10-K.
(ee) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ff) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Securities.
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(gg) Cybersecurity. (i)(A) To the Company’s knowledge, there is no current or ongoing material security breach or other compromise of or relating to any of the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively, “IT Systems and Data”) and (B) the Company and the Subsidiaries have not been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices.
(hh) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(ii) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
(jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(kk) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
(ll) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby.
(mm) No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(nn) No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
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(oo) Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.
(pp) Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to become a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware.
(qq) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(rr) Acknowledgement Regarding Purchasers’ Trading Activity. The Company understands and acknowledges that, following the public disclosure of the transactions contemplated by the Transaction Documents, except as explicitly set forth otherwise in Section 4.13(b), one or more Purchasers may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period that the Securities are outstanding and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing stockholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted.
3.2. Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):
(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring such Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement, if applicable, or otherwise in compliance with applicable federal and state securities laws). For the avoidance of doubt, nothing herein shall be deemed to limit the ability of any Purchaser to resell all or a part of the Securities in compliance with applicable federal and state securities laws.
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(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any Shares, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(d) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
(e) General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or general advertisement.
The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1. Removal of Legends.
(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this Agreement and the Registration Rights Agreement.
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(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE OR CONVERTIBLE INTO HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.
(c) Certificates evidencing any Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such Underlying Shares is effective under the Securities Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144, without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). If eligible for removal pursuant to the previous sentence, the Company shall cause Company Counsel to issue a legal opinion to the Transfer Agent or the Purchaser promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested by a Purchaser, respectively. If all or any portion of a Warrant is exercised or if any Shares are converted at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares are sold under Rule 144, or if the Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission), then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date with respect to any Underlying Shares, or at such time as such legend is no longer required under this Section 4.1(c), it will, as soon as possible and in any event no later than two Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares issued with a restrictive legend along with any letter of representations reasonably requested by counsel (such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such Underlying Shares that is free from all restrictive and other legends.
(d) Each Purchaser, severally and not jointly with the other Purchasers, acknowledges and agrees that (i) such Purchaser may only sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom; (ii) if Securities are sold pursuant to a registration statement, such Securities will be sold in compliance with the plan of distribution set forth therein; and (iii) the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
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4.2. Furnishing of Information; Public Information. Until the time that no Purchaser owns Shares or Warrants, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, even if the Company is not then subject to the reporting requirements of the Exchange Act.
4.3. Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4. Securities Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby, including the Transaction Documents required to be filed therewith as exhibits thereto, with the Commission no later than two Trading Days after the execution of this Agreement. From and after the filing of such Form 8-K, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.5. Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6. Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing to the receipt of such information and agreed in writing with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates or agents, including the Placement Agent, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, Affiliates or agents, including the Placement Agent, not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously with the delivery of such notice file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
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4.7. Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
4.8. Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by the Company, any shareholder or creditor of the Company or other third party who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence or willful misconduct). For the avoidance of doubt, this indemnity may cover direct claims brought against any Purchaser by the Company. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall (except with respect to any direct claim brought by the Company) have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (A) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (B) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.9. Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Underlying Shares pursuant to any conversion of the Shares (using the Floor Price as the conversion price) or exercise of the Warrants.
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4.10. Listing of Common Stock. The Company hereby agrees to use reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Underlying Shares on such Trading Market and promptly secure the listing of all of the Underlying Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Underlying Shares, and will take such other action as is necessary to cause all of the Underlying Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.11. Shareholder Approval. In the proxy statement for the next annual meeting of the Company’s shareholders, which the Company shall hold no later than November 14, 2026, the Company shall include a proposal to obtain the Shareholder Approval, which shall be accompanied by a unanimous recommendation of the Board of Directors that such proposal be approved. The Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal and shall use its commercially reasonable efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at such annual meeting, the Company shall call a meeting every 90 days thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the Shares are no longer outstanding.
4.12. Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of the Securities or otherwise.
4.13. Certain Transactions and Confidentiality.
(a) Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the Form 8-K as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the Form 8-K as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.
(b) Notwithstanding any provision of this Agreement to the contrary, each Purchaser, severally and not jointly with the other Purchasers, covenants that such Purchaser, together with Persons acting on such Purchaser’s behalf, or any Affiliate of the foregoing (collectively, the “Restricted Persons”), shall not, directly or indirectly, engage in or execute any Short Sale of the Common Stock, either for its own principal account or for the principal account of another Restricted Person, during the period commencing with the execution of this Agreement and ending on the date that no Shares or Warrants remain outstanding.
(c) The Company expressly acknowledges and agrees that, except for the covenants set forth above in this Section 4.13, (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time and (iii) this Agreement shall impose no duty on any Purchaser of confidentiality or to not trade in the securities of the Company. Further, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenants set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
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4.14. Exercise and Conversion Procedures. The form of Notice of Exercise included in the Warrants and the form of Conversion Notice (as defined in the Certificate of Designations) included in the Certificate of Designations set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Shares. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Shares. The Company shall honor exercises of the Warrants and conversion of the Shares and shall deliver the Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.15. Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.
ARTICLE V.
MISCELLANEOUS
5.1. Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other Parties, if the Closing has not been consummated on or before the fifth Trading Day following the date hereof; provided, however, that no such termination will affect the right of any Party to sue for any breach by any other Party (or Parties).
5.2. Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3. Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the Parties acknowledge have been merged into such documents, exhibits and schedules.
5.4. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered via email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the Party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
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5.5. Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a majority of the Shares then outstanding or, in the case of a waiver, by the Party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
5.6. Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8. No Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the Parties and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.
5.9. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each Party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a Party or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the New York City. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the New York City, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any Party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing Party in such Action or Proceeding shall be reimbursed by the non-prevailing Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
5.10. Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
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5.11. Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to each other Party, it being understood that the Parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such “.pdf” signature page were an original thereof.
5.12. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13. Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such Warrant Shares and the restoration of such Purchaser’s right to acquire such Warrant Shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14. Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15. Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The Parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.
5.16. Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
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5.17. Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.18. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.19. Construction. The Parties agree that each of them or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal 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 the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. As used here, the words “including” or “includes” shall be deemed followed by “without limitation,” and the word “or” shall be deemed to mean “and/or.”
5.20. WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Parties have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| BIG DIGITAL ENERGY, INC. | Address for Notice: | ||
| By: | /s/ Kaliste Saloom | Big Digital Energy, Inc. | |
| Name: | Kaliste Saloom | 950 Railroad Avenue | |
| Title: | General Counsel | Midland, PA 15059 | |
| Attn: Kaliste Saloom | |||
| With a copy to | Email:Kaliste.Saloom@bigdigital.energy | ||
| (which shall not constitute notice): | |||
| Dorsey & Whitney LLP |
| 50 South Sixth Street, Suite 1500 |
| Minneapolis, Minnesota 55402 |
| Attn: Cam Hoang |
| Email: hoang.cam@dorsey.com |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGES TO
BIG DIGITAL ENERGY, INC. SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Six Thirty AI, LLC
Signature of Authorized Signatory of Purchaser: /s/ Phil Stanley
Name of Authorized Signatory: Phil Stanley
Title of Authorized Signatory: Manager
Email Address of Authorized Signatory: phil@sixthirty.ai
Address for Notice to Purchaser:
Six Thirty AI, LLC
5473 Blair Road,
Suite 100 PMB 553663,
Dallas, TX 75231
Attn: Anna Kirby
Email: Anna@sixthirty.ai
With a copy to (which shall not constitute notice):
Wick Phillips Gould & Martin, LLP
3131 McKinney Avenue, Suite 500
Dallas, Texas 75204
Attention: Steven Rubin
E-mail: steven.rubin@wickphillips.com
Address for Delivery of Securities to Purchaser (if not same as address for notice): N/A
Subscription Amount: $15,000,000.00
Number of Shares: 16,700 shares of Preferred Stock
Number of Warrants: One Warrant to purchase up to 952,109 shares of Common Stock
EIN: 39-2934766
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EXHIBIT A
CERTIFICATE OF DESIGNATIONS OF
SERIES D CONVERTIBLE PREFERRED STOCK
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CERTIFICATE OF DESIGNATIONS OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
BIG DIGITAL ENERGY, INC.
I, Kaliste Saloom, hereby certify that I am the General Counsel of Big Digital Energy, Inc. (the “Company”), a corporation organized and existing under the Delaware General Corporation Law (the “DGCL”), and further do hereby certify on behalf of the Company and not in my personal capacity:
That pursuant to the authority expressly conferred upon the Board of Directors of the Company (the “Board”) by the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), and Section 151(g) of the DGCL, the Special Transactions Committee of the Board, with authority delegated by the Board, on June 29, 2026, passed the following resolutions, creating a series of preferred stock having a par value of $0.001 per share, designated as “Series D Convertible Preferred Stock”.
RESOLVED, that, in accordance with the provisions of the Certificate of Incorporation, the Special Transactions Committee of the Board does hereby authorize and provide for the establishment, allotment and issuance of a series of preferred stock, par value $0.001 per share, of the Company designated as “Series D Convertible Preferred Stock” and that the designation and number of shares thereof and the other relative rights, powers and preferences of the shares of such series and the qualifications, limitations and restrictions thereof in accordance with this certificate of designations (this “Certificate of Designations”), as follows:
TERMS OF SERIES D CONVERTIBLE PREFERRED STOCK
1. Designation and Number of Shares. There shall hereby be created and established a series of preferred stock of the Company designated as “Series D Convertible Preferred Stock” (the “Preferred Stock”). The authorized number of Preferred Stock shall be 100,000 shares. Each Preferred Share shall have a par value of $0.001 and shall be certificated and represented in physical or electronic stock-certificate form. Capitalized terms not defined herein shall have the meanings as set forth in Section 33 below.
2. Ranking. For so long as any Preferred Stock are issued, except (x) as permitted pursuant to Section 15(e) or (y) to the extent that the Required Holders (as defined below) expressly consent to the creation of Parity Shares or Senior Preferred Stock (as defined below) in accordance with Section 18, all shares in the capital of the Company shall be junior in rank to the Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (such junior shares are referred to herein collectively as “Junior Shares”). The rights of all shares in the capital of the Company shall be subject to the rights, powers, preferences and privileges of the Preferred Stock. Without limiting any other provision of this Certificate of Designations, without the prior express consent of holders of at least a majority of the issued Preferred Stock and Yorkville (as defined below) (collectively, the “Required Holders”), voting separately as a single class, the Company shall not hereafter authorize or issue any additional or other shares in the capital of the Company that is (i) of senior rank to the Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”), (ii) of pari passu rank to the Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Parity Shares”) or (iii) any Junior Shares having a maturity date or which is mandatorily redeemable or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 90 days after the date that no Preferred Stock remain issued, except, in the case of the foregoing clause (i) and (ii), to the extent permitted pursuant to Section 15(e). In the event of the merger or consolidation of the Company with or into another corporation, so long as any Preferred Stock remain issued, the Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall be consummated if it would result in the Preferred Stock being treated in any manner inconsistently with the foregoing, unless the Company has exercised its right of Company Optional Redemption in full prior to or in connection with such merger or consolidation and actually pays the applicable Company Optional Redemption Price prior to or simultaneously with such merger or consolidation.
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3. Dividends.
(a) Dividends. Each holder of a Preferred Share (each, a “Holder” and collectively, the “Holders”), shall be entitled to receive dividends (“Dividends”) on the Stated Value of its Preferred Stock at the applicable Dividend Rate (as defined below). Dividends on the Preferred Stock shall commence accruing on the date of issuance of a Preferred Share and shall be computed on the basis of a 360-day year and twelve 30-day months. Dividends shall be payable quarterly in arrears on the last Trading Day of each quarter (each, a “Dividend Date”). On each Dividend Date, the Company shall, at its election, (i) pay such Dividend through the issuance of additional Preferred Stock (“PIK Shares”) to each holder equal to the quotient of (x) the aggregate amount of Dividends accrued on such Holder’s Preferred Stock and (y) the Stated Value or (ii) pay such Dividend in cash; provided, however, that the Company shall not pay any Dividend in cash to the extent prohibited by applicable law or agreements governing the Company’s debts or other liabilities. If the Company elects to pay a Dividend through the issuance of PIK Shares, the Company shall promptly after each Dividend Date deliver to each Holder stock certificate receipts evidencing the issuance of the PIK Shares on such Dividend Date, if any such PIK Shares are so issued on such Dividend Date. Dividends on the Preferred Stock as provided in this Section 3(a) shall accrue and be payable whether or not declared, set aside for payment or otherwise authorized by the Board and whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends, such that if Dividends are not paid as provided in this Section 3(a), the unpaid Dividends shall accumulate until paid.
4. Conversion. At any time beginning two months after the Initial Issuance Date, each Preferred Share shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 4.
(a) Holder’s Conversion Right. Subject to the provisions of Section 4(d), at any time or times on or after the date that is two (2) months after the Initial Issuance Date, each Holder shall be entitled to convert any Preferred Stock held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 4(c) at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Stock, except any such taxes that are due because the converting Holder requests the shares of Common Stock to be registered in a name other than the Holder’s name.
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(b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to Section 4(a) shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the “Conversion Rate”):
(i) “Conversion Amount” means, with respect to each Preferred Share, as of the applicable date of determination, the sum of (A) the Stated Value thereof plus (B) any Additional Amount thereon as of such date of determination.
(ii) “Conversion Price” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, 95% of the lowest daily VWAP of the Common Stock during the five (5) consecutive Trading Day period immediately preceding but not including the Conversion Date, provided that the Conversion Price shall not be lower than the Floor Price and subject to adjustment as provided herein.
(iii) Derivative Liability Savings Adjustment. Notwithstanding anything to the contrary in this Certificate of Designations, solely with respect to fiscal quarter ending June 30, 2026, if the Company’s independent registered public accounting firm confirms in writing that, absent an increase in the Floor Price pursuant to this Section 4(b)(iii), the issuance of the Preferred Stock or the existence, terms or operation of the conversion rights hereunder would be required under U.S. GAAP to result in a Derivative Liability in excess of $2,000,000, or would cause the Company to breach the Stockholders’ Equity Requirement, then the Floor Price shall, effective as of the date of such written confirmation and without further action by the Company or any Holder, be increased solely to the lowest price that such independent registered public accounting firm confirms in writing would (A) limit such Derivative Liability to not more than $2,000,000 and (B) cause the Company to satisfy shareholder’s equity maintenance requirement for continued listing on the Nasdaq Capital Market . Any such written confirmation shall include reasonably detailed supporting calculations, shall be delivered to each Holder promptly and in any event within one (1) Business Day after receipt by the Company, and shall be conclusive absent manifest error. No adjustment under this Section 4(b)(iii) shall be made based on the Company’s internal determination or without such written confirmation, and any increase in the Floor Price pursuant to this Section 4(b)(iii) shall be no greater than necessary to achieve the foregoing limits. If, after any increase in the Floor Price pursuant to this Section 4(b)(iii), the Company’s independent registered public accounting firm confirms in writing that a lower Floor Price would not result in a Derivative Liability in excess of $2,000,000 or cause the Company’s stockholders’ equity to be less than the Stockholders’ Equity Requirement as of any fiscal quarter end, then the Floor Price shall automatically decrease to such lower price, but in no event below the Floor Price in effect immediately prior to the applicable increase under this Section 4(b)(iii). Notwithstanding anything to the contrary contained herein, and for the avoidance of doubt, this Section 4(b) shall only be effective with respect to the fiscal quarter ended June 30, 2026, and shall not have any force and effect, and shall not be operative, with respect to any other fiscal period of the Company.
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(c) Any Mechanics of Conversion. The conversion of each Preferred Share shall be conducted in the following manner:
(i) Optional Conversion. To convert a Preferred Share into shares of Common Stock on any date (a “Conversion Date”), a Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York City time, on such date, a copy of an executed notice of conversion of the share(s) of Preferred Stock subject to such conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. As promptly as practicable, and in any event on or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by electronic mail an acknowledgment of confirmation of receipt of such Conversion Notice, substantially in the form attached hereto as Exhibit II, to such Holder and the Company’s transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following each date on which the Company has received a Conversion Notice (the “Share Delivery Deadline”), the Company shall: (1) provided that the Transfer Agent is participating in DTC’s Fast Automated Securities Transfer Program (“FAST”), credit such aggregate number of shares of Common Stock to which such Holder shall be entitled pursuant to such conversion to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating in FAST, upon the request of such Holder, issue and deliver (whether via electronic email or reputable overnight courier) to the address as specified in such Conversion Notice, a Book-Entry Statement, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. If less than all of the Preferred Stock then held by a Holder are submitted for conversion pursuant to any Conversion Notice, then the Company shall, as soon as practicable and in no event later than two (2) Trading Days after receipt of the applicable Conversion Notice and at its own expense, issue and deliver to such Holder (or its designee) a new stock certificate (in accordance with Section 20(c)) representing the number of Preferred Stock not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Stock shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
(ii) Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, if the Transfer Agent is not participating in FAST, to issue and deliver to such Holder (or its designee) a Book-Entry for the number of shares of Common Stock to which such Holder is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit such Holder’s or its designee’s balance account with DTC for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Conversion Amount (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to such Holder, such Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be, all, or any portion, of such Preferred Stock that has not been converted pursuant to such Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 4(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver to such Holder (or its designee) a Book-Entry and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, the Transfer Agent shall fail to credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to clause (II) below, and if on or after such Share Delivery Deadline such Holder purchases (in an open market transaction, shares loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that such Holder is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to such Holder, the Company shall, within three (3) Business Days after receipt of such Holder’s request and in such Holder’s discretion, either: (I) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including brokerage commissions, shares loan costs and other out-of- pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of such Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such Book-Entry (and to issue such shares of Common Stock) or credit to the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to such Holder a Book-Entry representing such shares of Common Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder (as the case may be) and pay cash to such Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause (II). Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver a Book Entry representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of Preferred Stock as required pursuant to the terms hereof.
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(iii) Registration; Book-Entry. The Company (or the Transfer Agent, as custodian for the Preferred Stock) shall maintain a register (the “Register”) for the recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Stock (the “Registered Preferred Stock”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and each Holder of the Preferred Stock shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including, without limitation, the right to receive payments and Dividends hereunder) notwithstanding notice to the contrary. A Registered Preferred Share may be assigned, transferred or sold only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell one or more Registered Preferred Stock by such Holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Preferred Stock in the same aggregate Stated Value as the Stated Value of the surrendered Registered Preferred Stock to the designated assignee or transferee pursuant to Section 20, provided that, subject to Section 19, if the Company has granted its consent to an assignment or other transfer (or such consent is not required in accordance with Section 19) and the Company does not so record an assignment, transfer or sale (as the case may be) of such Registered Preferred Stock within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be). Each Holder and the Company shall maintain records showing the Stated Value, Dividends converted and/or paid (as the case may be) and Late Charges converted and/or paid (as the case may be), and the dates of such conversions and/or payments (as the case may be), or shall use such other method, reasonably satisfactory to such Holder and the Company, and if the Company does not update the Register to record such Stated Value, Dividends converted and/or paid (as the case may be) and Late Charges converted and/or paid (as the case may be), and the dates of such conversions and/or payments (as the case may be), within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence. In the event of any dispute or discrepancy, such records of the Company establishing the number of Preferred Stock to which the record holder is entitled shall be controlling and determinative in the absence of manifest error. A Holder and any transferee or assignee, by acceptance of a Book-Entry, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any Preferred Stock, the number of Preferred Stock represented by such Book-Entry may be less than the number of Preferred Stock stated in the most recent Book-Entry statement delivered to the Holder. Each Book-Entry representing Preferred Stock shall bear the following legend:
ANY TRANSFEREE OR ASSIGNEE OF THIS INSTRUMENT SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT, INCLUDING SECTION 4(c)(iii) THEREOF.
THE NUMBER OF SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES D PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(iii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES D PREFERRED STOCK REPRESENTED BY THIS INSTRUMENT.
(iv) Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one Holder for the same Conversion Date and the Company can convert some, but not all, of such Preferred Stock submitted for conversion, the Company shall convert from each Holder electing to have Preferred Stock converted on such date a Holder Pro Rata Amount of such Holder’s Preferred Stock submitted for conversion on such date based on the number of Preferred Stock submitted for conversion on such date by such Holder relative to the aggregate number of Preferred Stock submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to a Holder in connection with a conversion of Preferred Stock, the Company shall issue to such Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 25.
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(d) Limitation on Beneficial Ownership. The Company shall not effect the conversion of any of the Preferred Stock held by a Holder, and such Holder shall not have the right to convert any of the Preferred Stock held by such Holder pursuant to the terms and conditions of this Certificate of Designations, and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, such Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and the other Attribution Parties shall include the number of shares of Common Stock held by such Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted Preferred Stock beneficially owned by such Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes, convertible Preferred Stock or warrants, including the Preferred Stock) beneficially owned by such Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 4(d). For purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of determining the number of outstanding shares of Common Stock a Holder may acquire upon the conversion of such Preferred Stock without exceeding the Maximum Percentage, such Holder may rely on the number of shares of Common Stock outstanding as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from a Holder at a time when the actual number of shares of Common Stock outstanding is less than the Reported Outstanding Share Number, the Company shall notify such Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such Holder’s beneficial ownership, as determined pursuant to this Section 4(d), to exceed the Maximum Percentage, such Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of any Holder, the Company shall within two (2) Business Days confirm in writing or by electronic mail to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including such Preferred Stock, by such Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to a Holder upon conversion of such Preferred Stock results in such Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which such Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and such Holder shall not have the power to vote or to transfer the Excess Shares. For purposes of clarity, the shares of Common Stock issuable to a Holder pursuant to the terms of this Certificate of Designations in excess of the Maximum Percentage shall not be deemed to be beneficially owned by such Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert such Preferred Stock pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 4(d) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived or eliminated (except by an amendment to this Certificate of Designations) and shall apply to a successor holder of such Preferred Stock. Notwithstanding the foregoing, this Section 4(d) shall not apply to any Holder that, together with such Holder’s other Attribution Parties, beneficially owns shares of Common Stock in excess of the Maximum Percentage as of the first date on which such Holder acquires Preferred Stock.
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(e) Conversion Limitation. During any calendar month, so long as no Triggering Event has occurred and is continuing, no Holder shall convert Preferred Stock to the extent that the aggregate dollar value of the shares of Common Stock issuable upon all conversions by Holders during such calendar month would exceed the greater of (a) ten percent (10%) of aggregate dollar trading volume of the Common Stock during such calendar month or (b) $2.0 million. For the avoidance of doubt, after the occurrence and during the continuance of a Triggering Event the limitations set forth in this Section 4(e) shall have no force and effect.
(f) Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares or otherwise pursuant to the terms of this Certificate of Designations if the issuance of such shares of Common Stock together with the number of shares issued under that certain Warrant would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Preferred Shares without breaching the Company’s obligations under the listing rules of the Principal Market (the number of shares which may be issued without violating such rules, including rules related to the aggregate offerings under NASDAQ Listing Rule 5635(d) and NYSE Listed Company Manual Section 312.03(c), as applicable, the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable listing rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders. Until such approval or such written opinion is obtained, no Holder shall be issued in the aggregate, upon conversion of any Preferred Shares, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the quotient of (1) the aggregate number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2) the aggregate number of Preferred Shares issued to the Holders on the Initial Issuance Date (with respect to each Holder, the “Exchange Cap Allocation”). In the event that any Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, the transferee shall be allocated a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such portion of such Preferred Shares so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion in full of a Holder’s Preferred Shares, the difference (if any) between such Holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Holder upon such Holder’s conversion in full of such Preferred Shares shall be allocated to the respective Exchange Cap Allocations of the remaining Holders of Preferred Shares on a pro rata basis in proportion to the shares of Common Stock underlying the Preferred Shares then held by each such Holder of Preferred Shares.
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5. Triggering Events.
(a) Triggering Event. Each of the following events, in each case to the extent such event (disregarding any cure period) occurs following the Initial Issuance Date, shall constitute a “Triggering Event”:
(i) the suspension from trading or the failure of the shares of Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of ten (10) consecutive Trading Days;
(ii) the Company’s (A) failure to cure a Conversion Failure (as defined herein) by delivery of the required number of shares of Common Stock within three (3) Trading Days after the applicable Conversion Date or (B) written notice to any Holder of Preferred Stock, including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Preferred Stock into shares of Common Stock that is requested in accordance with the provisions of this Certificate of Designations (for the avoidance of doubt, other than the Company’s valid refusal to effectuate a conversion in accordance with Section 4(d) or Section 4(f) hereof);
(iii) except to the extent the Company is in compliance with Section 10(b) below, at any time following the tenth (10th) consecutive day that a Holder’s Authorized Share Allocation (as defined in Section 10(a) below) is less than 100% of the number of shares of Common Stock that such Holder would be entitled to receive upon a conversion in full, of all of the Preferred Stock then held by such Holder (assuming conversion at the Floor Price then in effect without regard to any limitations on conversion set forth in this Certificate of Designations);
(iv) the Company’s failure to pay to any Holder any Dividend on any Dividend Date (whether or not declared by the Board), solely to the extent such failure remains uncured for a period of at least five (5) Trading Days after the Company’s receipt of written notice thereof;
(v) the Company’s failure to pay any other amount due in cash when and as due under this Certificate of Designations (including, without limitation, the Company’s failure to pay any Late Charges or other amounts due in cash hereunder), the Securities Purchase Agreement or any other Transaction Document or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby (in each case, whether or not permitted pursuant to the DGCL), solely to the extent such failure remains uncured for a period of at least five (5) Trading Days after the Company’s receipt of written notice thereof;
(vi) the Company fails to deliver the shares of Common Stock issuable upon a conversion of Preferred Stock without a restrictive legend either on any Book-Entry representing such shares of Common Stock or by credit of such shares of Common Stock to such Holder’s or its designee’s balance account with DTC as and when required by this Certificate of Designations, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading Days after the Company’s receipt of written notice thereof;
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(vii) the Company or any of its Significant Subsidiaries, pursuant to or within the meaning of any Bankruptcy Law, either:
| (1) | commences a voluntary case or proceeding; |
| (2) | consents to the entry of an order for relief against it in an involuntary case or proceeding; |
| (3) | consents to the appointment of a custodian of it or for substantially all of its property; |
| (4) | makes a general assignment for the benefit of its creditors; |
| (5) | takes any comparable action under any foreign Bankruptcy Law; or |
| (6) | is not paying its undisputed debts as they become due, and such failure continues unremedied for a period of thirty (30) consecutive days; |
(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that either:
| (1) | is for relief against the Company or any of its Significant Subsidiaries in an involuntary case or proceeding; |
| (2) | appoints a custodian of the Company or any of its Significant Subsidiaries, or for any substantial part of the property of the Company or any of its Significant Subsidiaries; |
| (3) | orders the winding up or liquidation of the Company or any Significant Subsidiary; or |
| (4) | grants any similar relief under any foreign Bankruptcy Law, and, in each case under this subsection (viii), such order or decree remains unstayed and in effect for at least sixty (60) days; |
(ix) one or more final and non-appealable judgment being rendered against the Company or any of its Significant Subsidiaries for the payment of at least $10,000,000 in the aggregate (excluding any amounts covered by insurance or bond), where such judgment is not discharged, stayed, vacated or otherwise satisfied within sixty (60) days after (A) the date on which the right to appeal the same has expired, if no such appeal has commenced or (B) the date on which all rights to appeal have been extinguished (for the avoidance of doubt, excluding any judgments or awards in favor of Affiliates of Celsius Mining LLC occurring prior to the Initial Issuance Date);
(x) default by the Company or any of its Subsidiaries with respect to any one or more mortgages, agreements or other instruments under which there is outstanding, or by which there is secured or evidenced, any indebtedness for money borrowed of at least $2,500,000 (or its foreign currency equivalent) in the aggregate of the Company or any of its Subsidiaries, whether such indebtedness exists as of the Initial Issuance Date or is thereafter created, where such default constitutes a failure to pay principal or interest on such indebtedness or results in such indebtedness becoming or being declared due and payable prior to its stated maturity (for the avoidance of doubt, excluding any amounts owed to Affiliates of Celsius Mining LLC on account of judgments or awards occurring prior to the Initial Issuance Date or any amount shown as unpaid or past due on Schedule 3.1(aa) to the Securities Purchase Agreement);
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(xi) other than as specifically set forth in another clause of this Section 5(a), the Company or any Subsidiary breaches any representation or warranty made by or on behalf of the Company or such Subsidiary in any Transaction Document in any material respect (other than the representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any material covenant or other material term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of thirty (30) consecutive days after the Company’s receipt of written notice thereof;
(xii) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company as to whether any Triggering Event has occurred;
(xiii) any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 15(e) of this Certificate of Designations, only if such breach remains uncured for a period of five (5) consecutive Trading Days; or
(xiv) any breach or failure in any material respect by the Company to comply with the covenant titled “Equity Classification; Stockholders’ Equity” in Section 15, or any representation or warranty made by the Company therein proving to have been false or inaccurate in any material respect when made or deemed made (it being understood and agreed that failure to comply with the Stockholders’ Equity Requirement as of any applicable measurement date shall constitute such a material breach, failure, falsehood or inaccuracy).
(b) Notice of a Triggering Event. Within two (2) Business Days after becoming aware of the occurrence of a Triggering Event, the Company shall deliver written notice thereof via electronic mail to each Holder.
6. Rights Upon Fundamental Transactions.
(a) Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) (x) the Successor Entity or its Parent Entity (in which case, all subsequent references to “Successor Entity” in this paragraph shall be deemed to refer to such Parent Entity) assumes in writing all of the obligations of the Company under this Certificate of Designations and the other Transaction Documents in accordance with the provisions of this Section 6(a) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction (such approval not to be unreasonably withheld, conditioned or delayed), including agreements to deliver to each Holder of Preferred Stock in exchange for such Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Certificate of Designations, including, without limitation, having a stated value and dividend rate equal to the stated value and dividend rate of the Preferred Stock held by the Holders and having similar ranking to the Preferred Stock, and satisfactory to the Required Holders and (y) the Successor Entity is a publicly traded corporation whose common equity is quoted on or listed for trading on an Eligible Market or (ii) the Company exercises its right of Company Optional Redemption in full effective upon the consummation of such Fundamental Transaction. Except in the case of the foregoing clause (ii), upon the occurrence of any Fundamental Transaction, (A) the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designations and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Certificate of Designations and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein and therein, and (B) the Successor Entity shall deliver to each Holder confirmation that there shall be issued upon conversion of the Preferred Stock at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 7 and 15, which shall continue to be receivable thereafter)) issuable upon the conversion of the Preferred Stock prior to such Fundamental Transaction, such shares of the publicly traded common equity (or their equivalent) of the Successor Entity which each Holder would have been entitled to receive upon the happening of such Fundamental Transaction had all the Preferred Stock held by each Holder been converted immediately prior to such Fundamental Transaction at the Conversion Price in effect at such time (without regard to any limitations on the conversion of the Preferred Stock contained in this Certificate of Designations), as adjusted in accordance with the provisions of this Certificate of Designations. Notwithstanding the foregoing, such Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 6(a) to permit the Fundamental Transaction without the assumption of the Preferred Stock. The provisions of this Section 6 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of the Preferred Stock.
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7. Rights Upon Issuance of Purchase Rights and Other Corporate Events.
(a) Purchase Rights. In addition to any adjustments pursuant to Section 8 and Section 15 below, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase shares, warrants, securities or other property pro rata to all or substantially all of the record holders of shares of Common Stock (the “Purchase Rights”), then each Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Stock (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock and assuming for such purpose that all the Preferred Stock were converted at the Conversion Price as of the applicable record date) held by such Holder immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights, provided, however, to the extent that such Holder’s right to participate in any such Purchase Right would result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Purchase Right to such extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the benefit of such Holder until such time or times, if ever, as its right thereto would not result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times such Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable)) to the same extent as if there had been no such limitation.
(b) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), except to the extent the Company exercises its right of Company Optional Redemption effective upon the consummation of such Fundamental Transaction, the Company shall make appropriate provision to ensure that each Holder will thereafter have the right, at such Holder’s option, to receive upon a conversion of all the Preferred Stock held by such Holder (i) such securities or other assets to which such Holder would have been entitled with respect to the shares of Common Stock receivable upon such conversion had such shares of Common Stock been held by such Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock set forth in this Certificate of Designations) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as such Holder would have been entitled to receive had the Preferred Stock held by such Holder initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate in effect at such time. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 7 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion of the Preferred Stock set forth in this Certificate of Designations.
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8. Rights Upon Issuance of Other Securities.
(a) Voluntary Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time any Preferred Stock remain issued, with the prior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board.
(b) Calculations. All calculations under this Section 8 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock issued at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock. The Company will make all calculations in good faith, and, absent manifest error, its calculations will be final and binding on all Holders. The Company will provide a schedule of such calculations to any Holder upon written request.
9. Non-circumvention. The Company hereby covenants and agrees, to the extent that it is within the power and control of the Company, that the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Certificate of Designations, and will at all times in good faith carry out all the provisions of this Certificate of Designations and take all action as may be required to protect the rights of the Holders hereunder. Without limiting the generality of the foregoing or any other provision of this Certificate of Designations or the other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the conversion of any Preferred Stock above the Conversion Price then in effect, (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the conversion of Preferred Stock and (c) shall, so long as any Preferred Stock are issued, take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Stock, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Preferred Stock then issued (without regard to any limitations on conversion contained herein). Notwithstanding anything herein to the contrary, if each Holder is not permitted to convert such Holder’s Preferred Stock in full for any reason (other than pursuant to restrictions set forth in Section 4(d) hereof), the Company shall use its reasonable best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to effect such conversion into shares of Common Stock.
10. Authorized Shares.
(a) Reservation. So long as any Preferred Stock remain issued, the Company shall at all times reserve out of its authorized and unissued Common Stock a number of shares of Common Stock equal to the sum of (i) 100% of the aggregate number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Preferred Stock then issued at the Floor Price then in effect (without regard to any limitations on conversions) and (ii) 100% of the aggregate number of shares of Common Stock that would be necessary to effect the conversion of that number of PIK Shares equal to eighteen (18) months of Dividends on the Preferred Stock then issued at the Floor Price then in effect (without regard to any limitations on conversions set forth herein) (the “Required Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the Preferred Stock held by each Holder on each Issuance Date or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a Holder shall sell or otherwise transfer any of such Holder’s Preferred Stock, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Preferred Stock shall be allocated to the remaining Holders of Preferred Stock, pro rata based on the number of the Preferred Stock then held by the Holders.
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(b) Insufficient Authorized Shares. If, notwithstanding Section 10(a) and not in limitation thereof, at any time while any of the Preferred Stock remain issued the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Preferred Stock at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Preferred Stock then issued (or deemed issued pursuant to Section 10(a) above). Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized Common Stock. Nothing contained in Section 10(a) or this Section 10(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
11. Company Optional Redemption.
(a) At any time, or from time to time, after the Issuance Date for the applicable Preferred Shares, the Company shall have the right to redeem all or any portion of such Preferred Shares (the “Company Optional Redemption”) at a redemption price equal to the Conversion Amount of the Preferred Shares to be redeemed multiplied by 105% (such price, subject to adjustment as provided herein, the “Company Optional Redemption Price”). Notwithstanding the foregoing, the Company will not exercise its rights to Company Optional Redemption, or otherwise send a Notice of Company Optional Redemption, unless the Company has sufficient funds legally available to fully pay the Company Optional Redemption Price in respect of all Preferred Shares called for Company Optional Redemption. The Company Optional Redemption Price shall be paid in cash. Notwithstanding the foregoing, if on the date of the Notice of Company Optional Redemption or if at any time during the Company Optional Redemption Period, the Equity Conditions are not, or cease to be, satisfied, then the Company Optional Redemption Price shall be the greater of (x) such portion of the Conversion Amount multiplied by 105% and (y) the product of (A) such portion of the Conversion Amount multiplied by (B) the quotient determined by dividing (I) the highest VWAP for the Common Stock during the Company Optional Redemption Period by (II) the Conversion Price in effect on the Trading Day on which such highest VWAP occurs; provided, such increased Company Optional Redemption Price shall apply only with respect to that portion of the Conversion Amount being redeemed that is convertible into a number of shares of Common Stock that would be required to be registered for resale under the RRA but are not so registered.
(b) If the Company elects to effect a Company Optional Redemption, the Company shall send to the Holders a written notice (i) notifying the Holders of the election of the Company to redeem all or the applicable part of the Preferred Shares and the date set for redemption (the “Company Optional Redemption Date”), (ii) stating the Conversion Amount subject to the Company Optional Redemption (the “Company Optional Redemption Amount”), (iii) stating the instructions a Holder must follow to receive payment, and (iv) stating the Company Optional Redemption Price therefor (such notice, a “Notice of Company Optional Redemption”). The Company Optional Redemption Date selected by the Company shall be no less than 12 Trading Days nor more than 60 Trading Days after the date on which the Company provides the Notice of Company Optional Redemption to the Holders (such period, “Company Optional Redemption Notice Period”). In the case of a partial redemption, then (x) the Preferred Shares to be redeemed will be selected pro rata among the Holders based on the number of the Preferred Shares held by each Holder on the Company Optional Redemption Date and (y) all Conversion Amounts converted by the Holder after the date of the Notice of Company Optional Redemption shall reduce the Company Optional Redemption Amount required to be redeemed on the Company Optional Redemption Date.
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(c) For the avoidance of doubt, the Holder may convert Preferred Shares, at any time and from time to time during or after a Company Optional Redemption Notice Period until 5:00 p.m. New York City time on the second (2nd) Business Day immediately before the applicable Company Optional Redemption Date, except to the extent the Company fails to pay the Company Optional Redemption Price for such Preferred Shares in accordance with this Section 11. With respect to any portion of the Conversion Amount of the Preferred Shares which have not been converted by a Holder prior to the applicable Company Optional Redemption Date and have been specified to be redeemed by the Company pursuant to the Company Optional Redemption and which have been redeemed in accordance with the provisions of this Section 11, (i) Dividends, if any, shall cease to accrue on such Preferred Shares, (ii) such Preferred Shares shall no longer be deemed outstanding and (iii) all rights with respect to such Preferred Shares shall cease and terminate.
(d) Any such Notice of Company Optional Redemption given in accordance with the provisions of this Section 11 may, at the Company’s discretion, be given prior to the completion of a transaction (including a Fundamental Transaction or other transaction) and be subject to the satisfaction (or waiver by the Company) of one or more conditions precedent, including, but not limited to, completion of a related transaction. If such Company Optional Redemption is so subject to satisfaction of one or more conditions precedent, such Notice of Company Optional Redemption shall describe each such condition, and if applicable, shall state that, in the Company’s discretion, the applicable Company Optional Redemption Date may be delayed until such time (including more than 60 days after the date the Notice of Company Optional Redemption was delivered) as any or all such conditions shall be satisfied (or waived by the Company), or such Company Optional Redemption may not occur and such Notice of Company Optional Redemption may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Company) by such Company Optional Redemption Date, or by such Company Optional Redemption Date as so delayed. In addition, the Company may provide in such Notice of Company Optional Redemption that payment of the Company Optional Redemption Price and performance of the Company’s obligations with respect to such Company Optional Redemption may be performed by another Person. If any such condition precedent has not been satisfied (or waived by the Company), the Company shall provide written notice to the Holders no later than the close of business on the third (3rd) Business Day prior to the applicable Company Optional Redemption Date. To the extent any such condition precedent is satisfied (or waived by the Company) prior to the Company Optional Redemption Date, the Company shall promptly provide written notice to the Holders of the completion of the conditions precedent. Upon the Company providing such written notice to the Holders, the Notice of Company Optional Redemption shall be rescinded or delayed, and the Company Optional Redemption of the Preferred Shares shall be rescinded or delayed, in each case, as provided in such Notice of Company Optional Redemption.
12. Reserved.
13. Reserved.
14. Voting Rights. Holders of the Preferred Stock shall be entitled to written notice of all shareholders meetings or written consents, as well as copies of proxy materials and other information sent to shareholders. Notwithstanding the foregoing, except as required by applicable law or as expressly set forth herein, the holders of the Preferred Stock shall not be entitled to vote the Preferred Stock on any matter presented to the shareholders of the Company for their action or consideration, whether at a meeting or by written consent.
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15. Covenants. For so long as any Preferred Stock are outstanding, without the prior written consent of the Required Holders:
(a) Incurrence of Indebtedness. The Company shall not, nor shall the Company permit any of its Subsidiaries to, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness for borrowed money, except for Permitted Indebtedness.
(b) Existence of Liens. The Company shall not, nor shall the Company permit any of its Subsidiaries to create, assume or suffer to exist any Lien to secure Indebtedness on any property or assets now owned or hereafter acquired by the Company or any of its Subsidiaries except for Permitted Liens.
(c) Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital shares (other than as required by this Certificate of Designations).
(d) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary; provided, however, that the Company shall not be required to preserve any such corporate existence of any of its Subsidiaries if, in the judgment of the Company, the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and all material assets of any such Subsidiaries have been assigned to the Company or another Subsidiary, in each case where such restructuring does not have a material impact on the Company’s ability to comply with the provisions hereof.
(e) Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the Required Holders, (i) issue any Preferred Stock (other than as contemplated by the Securities Purchase Agreement and this Certificate of Designations), (ii) issue any other securities that would cause a breach or default under this Certificate of Designations or (iii) other than where the use of proceeds is used to (x) redeem the Preferred Stock in full or (y) refinance the Company or its Subsidiary’s Indebtedness existing as of the Subscription Date, create, or authorize the creation of, any additional class or series of capital shares of the Company (or any equity security convertible into or exercisable for any such class or series of capital shares of the Company) or issue or sell, or obligate itself to issue or sell, any equity securities of the Company (or any equity security convertible into or exercisable for any such class or series of capital shares of the Company) that ranks on par or superior (except in the case of clause (y), in which case such securities may only rank par or junior) to the Preferred Stock as to dividends, distributions and payments upon the liquidation, dissolution or winding up of the Company or as to redemption or repurchase rights.
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(f) Stay, Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted or in force) that may affect the covenants or the performance of this Certificate of Designations; and (B) expressly waives all benefits or advantages of any such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holders by this Certificate of Designations, but will suffer and permit the execution of every such power as though no such law has been enacted.
(g) Taxes. The Company and its Subsidiaries shall pay when due (taking into account all available extensions) all taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except where the failure to pay would not, individually or in the aggregate, have a material adverse effect on the Company or any of its Subsidiaries). The Company and its Subsidiaries shall file on or before the due date therefor (taking into account all available extensions) all personal property tax returns (except where the failure to file would not, individually or in the aggregate, have a material adverse effect on the Company or any of its Subsidiaries). Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain adequate reserves therefor in accordance with U.S. GAAP.
(h) Variable Rate Transaction. Neither the Company nor its Subsidiaries will be party to, enter into, effect or consummate any Variable Rate Transaction or enter into any agreement to effect or consummate any Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock whereby the Company or any Subsidiary may sell securities at a future determined price (other than pursuant to a customary “weighted average” anti-dilution provision or standard and customary “preemptive” or “participation” rights). Notwithstanding the foregoing, (i) shares of Common Stock issued and sold pursuant to the ATM Facility; (ii) the issuance of Excluded Securities; and (iii) the making of payments to customers, vendors or suppliers in the ordinary course of business consistent with past practice consisting of, or the consideration for which consists of, securities subject to a variable price shall not be deemed a Variable Rate Transaction for purposes of this Section 15(h).
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(i) Organizational Documents. The Company shall not amend, alter, modify, or repeal this Certificate of Designations, by the adoption or amendment of any Certificate of Designation or similar document, in each case, in any manner that materially adversely affects the rights of any of the Holders of the Preferred Stock. The Company shall not amend, alter, modify, or repeal its Certificate of Incorporation, bylaws or any other corporate governance document, in any manner that materially adversely affects the rights of any of the Holders of the Preferred Stock.
(j) Agreement. The Company shall not enter into any agreement which would substantially impair its obligations under this Certificate of Designations or any other Transaction Document.
(k) Independent Investigation. At the request of any Holder holding not less than $5.0 million in Stated Value of Preferred Stock either (x) at any time when a Triggering Event has occurred and is continuing, (y) upon the occurrence of an event that with the passage of time or giving of notice would constitute a Triggering Event or (z) at any time such Holder reasonably believes a Triggering Event may have occurred or be continuing, the Company will permit an independent, reputable investment bank selected by the Company and approved by such Holder (such approval not to be unreasonably withheld) to investigate, at the Company’s expense (provided, however, that if such investigation is undertaken pursuant to the preceding clause (z) and, following such investigation, no Triggering Event is found to have occurred, such investigation shall be at the Holder’s expense (and the Holder shall promptly reimburse the Company, if applicable)), as to whether any breach of the Certificate of Designations has occurred (the “Independent Investigator”); provided that, absent the occurrence and continuance of a Triggering Event, no more than two (2) such investigations shall be permitted in any fiscal year. If the Independent Investigator determines that such breach of the Certificate of Designations has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written notice to each Holder of such breach. In connection with such investigation, the Independent Investigator may, upon reasonable notice and at such reasonable times during normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants’ work papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request; provided that, prior to being permitted to engage in any such visitation, inspection or access rights provided for under this Section 15(k), such Independent Investigator shall have executed a standard confidentiality agreement in favor of the Company on customary terms reasonably satisfactory to the Company. The Company shall furnish the Independent Investigator with such financial and operating data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested. Notwithstanding the foregoing, this Section 15(k) shall not require the Company to breach any confidentiality obligations owed to third parties or to waive the Company’s attorney-client privilege.
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(l) Equity Classification; Stockholders’ Equity. The Company represents, warrants and covenants to each Holder that (i) the Preferred Stock shall be classified and treated as equity, and not as a liability, in the Company’s financial statements in accordance with U.S. GAAP, except solely to the extent of any Derivative Liability permitted by clause (ii), (ii) neither the issuance of the Preferred Stock nor the existence, terms or operation of the conversion rights hereunder shall result in a Derivative Liability in excess of $2,000,000 or in any Derivative Liability that would cause the Company’s stockholders’ equity to be less than the Stockholders’ Equity Requirement as of any fiscal quarter end, and (iii) the Company shall have stockholders’ equity of at least the Stockholders’ Equity Requirement as of the last day of each fiscal quarter.
(m) Affiliated Debt. The Company shall not make any payments of principal or other payments, except for regularly scheduled payments of interest at the non-default rate of interest, on the Endeavor Debt and/or any other Indebtedness then held by an Affiliate of the Company.
16. Liquidation, Dissolution, Winding-Up. In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its shareholders (the “Liquidation Funds”), before any amount shall be paid to the holders of any Junior Shares, but pari passu with any Parity Shares then issued, an amount per Preferred Share equal to the greater of (x) Stated Value and (y) the amount per share such Holder would receive if such Holder converted such Preferred Share into shares of Common Stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of Parity Shares, if any, then each Holder and each holder of Parity Shares shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Shares as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Preferred Stock and all holders of Parity Shares. To the extent necessary, the Company shall cause such actions to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed to the Holders in accordance with this Section 16. All the preferential amounts to be paid to the Holders under this Section 16 shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of the Company to the holders of Junior Shares in connection with a Liquidation Event as to which this Section 16 applies.
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17. Distribution of Assets. In addition to any adjustments pursuant to Section 7(a) and Section 8, if the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”), then each Holder, as holders of Preferred Stock, will be entitled to such Distributions as if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred Stock (without taking into account any limitations or restrictions on the convertibility of the Preferred Stock and assuming for such purpose that the Preferred Share was converted at the current Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for such Distributions (provided, however, that to the extent that such Holder’s right to participate in any such Distribution would result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Distribution to the extent of any such excess over the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of such Holder until such time or times as its right thereto would not result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times, if any, such Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
18. Vote to Change the Terms of or Issue Preferred Stock. For so long as any Preferred Stock are issued and outstanding, in addition to any other rights provided by law, except where the vote or written consent of the holders of a greater number of shares is required by law or by another provision of the Certificate of Incorporation, without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders, voting together as a single class, the Company shall not: (a) amend, alter, modify or repeal any provision of, or add any provision to, its Certificate of Incorporation, or file any certificate of designations or certificate of amendment of any series of stock, including this Certificate of Designations, if such action would materially adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit of the Preferred Stock hereunder, regardless of whether any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise; (b) increase or decrease (other than by conversion) the authorized number of Preferred Stock; (c) without limiting any provision of Section 2, create or authorize (by reclassification or otherwise) any new class or series of Senior Preferred Stock or Parity Shares; (d) purchase, repurchase or redeem any Junior Shares (other than pursuant to the terms of the Company’s equity incentive plans and options and other equity awards granted under such plans (that have in good faith been approved by the Board)); (e) without limiting any provision of Section 2, pay dividends or make any other distribution on any shares of any Junior Shares; (f) issue any Preferred Stock other than as contemplated hereby or pursuant to the Securities Purchase Agreement; (g) become subject to any agreement that would restrict the Company’s ability to perform its obligations under this Certificate of Designations; or (h) without limiting any provision of Section 9, whether or not prohibited by the terms of the Preferred Stock, circumvent a right of the Preferred Stock hereunder.
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19. Transfer of Preferred Stock. A Holder may not transfer all or any portion of its Preferred Stock without the express prior written consent of the Company (through its Board), except for any transfer to an Affiliate of such Holder, to the Company, to YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”) or any of its Affiliates, or to any other Person in connection with, or upon the exercise of, any rights or remedies of Yorkville under the Pledge and Security Agreement. Notwithstanding the foregoing, a Holder may pledge all or any portion of its Preferred Stock to Yorkville pursuant to the Pledge and Security Agreement without the prior written consent of the Company. Any transfer of Preferred Stock shall be in compliance with all applicable securities laws and Sections 4.1 and 5.7 of the Securities Purchase Agreement. Any purported transfer of Preferred Stock in violation of this Certificate of Designations shall be null and void, and no such transfer shall be recorded on the Company’s books and the purported transferee in any such transfer shall not be treated (and the Holder proposing to make any such transfer shall continue to be treated) as the owner of such Preferred Stock for all purposes of this Certificate of Designations. Each Holder shall pay all costs and expenses incurred by the Company in connection with any transfer of Preferred Stock by such Holder.
20. Reissuance of Certificates.
(a) Transfer. If any Preferred Stock represented by a stock certificate are to be transferred, the applicable Holder shall provide written notice of such transfer to the Company and surrender to the Company the stock certificate representing such Preferred Stock, together with a duly executed instrument of transfer, whereupon the Company shall forthwith issue and deliver, upon the order of such Holder, a new stock certificate registered in such name or names as such Holder may request, representing the number of Preferred Stock being transferred by such Holder and, if less than all of the Preferred Stock represented by the surrendered stock certificate are being transferred, a new stock certificate (in accordance with Section 20(c)) to such Holder representing the number of Preferred Stock not being transferred.
(b) Certificated Exchangeable for Different Denominations. Each stock certificate may be exchanged by the applicable Holder, upon surrender of such stock certificate to the Company together with written notice to the Company, for two or more new stock certificates (in accordance with Section 20(c)) representing, in the aggregate, the number of Preferred Stock represented by the original stock certificate, and each such new stock certificate shall represent such portion of such number of Preferred Stock represented by the original stock certificate as is designated in writing by such Holder at the time of such surrender.
(c) Issuance of New Certificates. Whenever the Company is required to issue a new stock certificate pursuant to the terms of this Certificate of Designations, such new stock certificate (i) shall represent, as indicated on the face of such stock certificate, the number of Preferred Stock then represented thereby, which, when added to the number of Preferred Stock represented by the other new stock certificate or stock certificates issued in connection with such issuance, does not exceed the number of Preferred Stock represented by the original stock certificate immediately prior to such issuance, and (ii) shall have an issuance date, as indicated on the face of such new stock certificate, which is the same as the issuance date of such original stock certificate.
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21. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations shall be cumulative and in addition to all other remedies available under this Certificate of Designations and any of the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit any Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Certificate of Designations. No failure on the part of a Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by such Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy of a Holder at law or equity or under this Certificate of Designations or any of the documents shall not be deemed to be an election of such Holder’s rights or remedies under such documents or at law or equity. The Company covenants to each Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, each Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to a Holder that is reasonably requested in writing by such Holder to enable such Holder to confirm the Company’s compliance with the terms and conditions of this Certificate of Designations; provided that, to the extent the Company indicates to such Holder that the requested information or documentation may contain material non-public information, such information or documentation will not be provided to such Holder without such Holder’s express prior written consent.
22. Payment of Collection, Enforcement and Other Costs. If (a) any Preferred Stock are placed in the hands of an attorney for collection or enforcement or are collected or enforced through any legal proceeding or a Holder otherwise takes action to collect amounts due under this Certificate of Designations with respect to the Preferred Stock or to enforce the provisions of this Certificate of Designations or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Certificate of Designations, then the Company shall pay the costs reasonably incurred by such Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Certificate of Designations with respect to any Preferred Stock shall be affected, or limited, by the fact that the purchase price paid for each Preferred Share was less than the original Stated Value thereof.
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23. Construction; Headings. This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Holders and shall not be construed against any such Person as the drafter hereof. The headings of this Certificate of Designations are for convenience of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Certificate of Designations instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Certificate of Designations. Terms used in this Certificate of Designations and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Initial Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the Required Holders.
24. Failure or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any provision of Section 4(d).
25. Dispute Resolution.
(a) Submission to Dispute Resolution for Certain Matters.
(x) In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the applicable Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by such Holder at any time after such Holder learned of the circumstances giving rise to such dispute. If such Holder and the Company are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate, at any time after the tenth (10th) Business Day following such initial notice by the Company or such Holder (as the case may be) of such dispute to the Company or such Holder (as the case may be), then such Holder and the Company may select an independent, reputable investment bank mutually agreeable in good faith to them to resolve such dispute.
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(xi) Such Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which such investment bank was selected (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either such Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and such Holder or otherwise requested by such investment bank, neither the Company nor such Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(xii) The Company and such Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and such Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous. The Company expressly acknowledges and agrees that( i) this Section 25 constitutes an agreement to arbitrate between the Company and each Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that any Holder is authorized to apply for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 25, (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (A) the consideration per share at which an issuance or deemed issuance of shares of Common Stock occurred, (B) whether any issuance or sale or deemed issuance or sale of shares of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, and (C) whether an agreement, instrument, security or the like constitutes an Option or Convertible Security, (iii) the terms of this Certificate of Designations and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Certificate of Designations and any other applicable Transaction Documents, (iv) either the Company or the applicable Holder (and only such Holder with respect to disputes solely relating to such Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 25 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 25 and (v) nothing in this Section 25 shall limit such Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 25).
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26. Notices; Currency; Payments.
(a) Notices. The Company shall provide each Holder of Preferred Stock with prompt written notice of all material actions taken pursuant to the terms of this Certificate of Designations, including in reasonable detail a description of such action and the reason therefor; provided that the Company shall not be required to provide any such notice in connection with (x) a Conversion Notice except as set forth in Section 4 or (y) transfers of any stock certificate. Without limiting the generality of the foregoing and unless disclosed by the Company in a press release or in a filing on Form 8-K, the Company shall give written notice to each Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase shares, warrants, securities or other property to holders of all or substantially all shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or simultaneously with such notice being provided to such Holder by issuance of press release or the filing of Form 8-K with the SEC. Whenever notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice must be in writing and shall be given in accordance with Section 5.4 of the Securities Purchase Agreement.
(b) Currency. All dollar amounts referred to in this Certificate of Designations are in United States Dollars (“U.S. Dollars”), and all dollar amounts owing under this Certificate of Designations shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Certificate of Designations, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
(c) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately available funds pursuant to wire transfer instructions that Holder shall provide to the Company in writing from time to time. Whenever any amount expressed to be due by the terms of this Certificate of Designations is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount due under the Transaction Documents in cash which is not paid when due (except to the extent such amount is simultaneously accruing Dividends) shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of ten percent (10%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).
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27. Waiver of Notice. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Certificate of Designations and the Securities Purchase Agreement.
28. Governing Law. This Certificate of Designations shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Certificate of Designations shall be governed by, the DGCL, without giving effect to any choice of law or conflict of law provision or rule (whether of the DGCL or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 25 above, the Company and each Holder (by acceptance of its Preferred Stock) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude any Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of such Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 25 above. THE COMPANY AND EACH HOLDER (BY ACCEPTANCE OF ITS PREFERRED STOCK) HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS OR ANY TRANSACTION CONTEMPLATED HEREBY.
29. Judgment Currency.
(a) If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 29 referred to as the “Judgment Currency”) an amount due in U.S. dollars under this Certificate of Designations, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(x) the date of actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
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(xi) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 29(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If in the case of any proceeding in the court of any jurisdiction referred to in Section 29(a)(ii) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Certificate of Designations.
30. Severability. If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this Certificate of Designations as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
31. Maximum Payments. Without limiting Section 5.2 of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the applicable Holder and thus refunded to the Company.
32. Amendment. Except for Section 4(d), which may not be amended or waived hereunder, this Certificate of Designations or any provision hereof may be amended by obtaining the affirmative vote at a meeting duly called for such purpose, or written consent without a meeting in accordance with the DGCL, of the Required Holders, voting separately as a single class, and with such other shareholder approval, if any, as may then be required pursuant to the DGCL and the Certificate of Incorporation.
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33. Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings:
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Additional Amount” means, as of the applicable date of determination, with respect to each Preferred Share, all unpaid Dividends that have accrued on such Preferred Share and any other unpaid amounts then due and payable hereunder with respect to such Preferred Share.
“Additional Issuance Date” means, for any date after the Initial Issuance Date where Preferred Stock are issued pursuant to the Securities Purchase Agreement, the issuance date for such Preferred Stock.
“Affiliate” or “Affiliated” means, with respect to any specified Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such specified Person, with “control” having the meaning ascribed to such term in Rule 405 under the Securities Act of 1933, as amended. “Affiliated Party” means, with respect to any natural person, (i) any company, partnership, trust or other entity for which such natural person (or such natural person’s estate) has dispositive or voting power with respect to the equity securities of the Company held by such company, partnership, trust or other entity; (ii) any trust the beneficiaries of which consist solely of such natural person, any Family Member of such natural person or any person described in clause (i); (iii) the trustees, legal representatives, beneficiaries or beneficial owners (in each case, solely in such capacity and not in their individual or other capacities) of any such company, partnership, trust or other entity referred to in clause (i) or (ii); (iv) the estate of such natural person (it being understood, for the avoidance of doubt, that this clause (iv) will not include any person to whom any securities are transferred from any such estate); and (v) the Family Members of such natural person.
“Approved Share Plan” means any employee benefit plan which has been approved by the Board prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock may be issued to any employee, officer, consultant, director or other service provider of the Company or any of its Subsidiaries for services provided to the Company or any of its Subsidiaries in their capacity as such.
“ATM Facility” means the Company’s “at the market” facility with H.C. Wainwright & Co., LLC for the issuances of Common Stock at prevailing market prices from time to time.
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“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Initial Issuance Date, directly or indirectly managed or advised by a Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of such Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with such Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with such Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively such Holder and all other Attribution Parties to the Maximum Percentage.
“Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal or state or non-U.S. law for the relief of debtors.
“Bloomberg” means Bloomberg, L.P.
“Book-Entry” means each entry on the Register evidencing one or more Preferred Stock that has been converted into shares of Common Stock.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
“Capital Lease Obligation” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under U.S. GAAP; the amount of such obligations shall be the capitalized amount thereof determined in accordance with U.S. GAAP, and the final maturity of such obligations shall be the date of the last payment of such amounts due under such lease (or other arrangement) prior to the first date on which such lease (or other arrangement) may be terminated by the lessee without payment of a premium or a penalty; and, for the purposes of this Certificate of Designations, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with U.S. GAAP.
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“Closing Bid Price” and “Closing Sale Price” mean, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be), then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York City time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any share splits, share dividends, share combinations, recapitalizations or other similar transactions during such period.
“Common Stock” means (i) the Company’s common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
“Convertible Securities” means any shares or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common Stock.
“Current Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns more than fifty percent (50%) of the outstanding voting power of the capital shares or equity or similar interests of such Person entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or shareholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such Person; or (ii) controls the business, operations or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries”. For purposes of this definition, “control” means the power to direct the management and the policies of such Person, whether through the ownership of voting capital, by contract or otherwise.
“Derivative Liability” means any derivative, embedded derivative or other liability required under U.S. GAAP to be recorded on the Company’s balance sheet as a result of the issuance of the Preferred Stock or the existence, terms or operation of the conversion rights under this Certificate of Designations.
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“Dividend Rate” means five percent (5%) or eighteen percent (18%) per annum upon the occurrence and continuation of a Triggering Event.
“Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, or, in each case, any successor thereto.
“Equity Conditions” means, with respect to a given date or period of determination, on each day during the period beginning thirty (30) Trading Days prior to such applicable date of determination and ending on and including such applicable date of determination (the “Equity Conditions Measuring Period”) (i) all shares of Common Stock issuable upon conversion of the Preferred Shares that would be required to be registered for resale under the RRA shall be eligible to be resold by the Holders without restriction or any legend under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Preferred Shares); (ii) the Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Preferred Shares) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on such Eligible Market nor shall delisting or suspension by such Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of such Eligible Market; (iii) the Company shall have delivered all shares of Common Stock issuable upon conversion of the Preferred Shares on a timely basis as set forth in Section 4 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (v) none of the Holders shall be in possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees, officers, representatives, agents or the like; and (vi) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been substantially in compliance with, and shall not have breached in any material respect any representation or warranty (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document in any material respect, including, without limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured as of or after the date that is ten (10) Trading Days prior to the applicable date of determination.
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“Excluded Securities” means (i) Common Stock or options to purchase Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued or issuable to directors, consultants, officers, employees or other service providers of the Company or any of its Subsidiaries for services rendered to the Company or any of its Subsidiaries in their capacity as such pursuant to an Approved Share Plan, provided that the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that materially adversely affects any of the Holders; (ii) Convertible Securities and/or shares of Common Stock issued or issuable upon the conversion or exercise of Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued or issuable pursuant to an Approved Share Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion, exercise or issuance price of any such Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) is not lowered (other than in accordance with the terms thereof in effect as of the Subscription Date), none of such Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder (other than in accordance with the terms thereof in effect as of the Subscription Date) and none of the terms or conditions of any such Convertible Securities (other than options to purchase shares of Common Stock or other awards convertible, exercisable for or exchangeable for shares of Common Stock issued pursuant to an Approved Share Plan that are covered by clause (i) above) are otherwise materially changed in any manner that materially adversely affects any of the Holders; (iii) the shares of Common Stock issuable upon conversion of the Preferred Stock or otherwise pursuant to the terms of this Certificate of Designations; provided, that the terms of this Certificate of Designations are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms hereof in effect as of the Subscription Date); and (iv) securities issued as consideration for the acquisition of another entity by the Company by merger, purchase of substantially all of the assets or other reorganization or bona fide joint venture agreement, provided that such issuance is approved by the majority of the disinterested directors of the Company.
“Family Member” means, with respect to any individual, any other individual having a relationship by blood (to the second degree of consanguinity), marriage (including former spouses), domestic partnership (including former domestic partners) or adoption to such individual.
“Floor Price” means $1.80 (as adjusted for share splits, share dividends, share combinations, recapitalizations or other similar transactions occurring after the Subscription Date).
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“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, unless, for purposes of any Section hereunder other than Section 11(c), the holders of shares of Common Stock of the Company immediately prior to such consolidation or merger continue to hold at least 50% of the aggregate ordinary voting power represented by the shares of Common Stock of the Company (or the surviving or acquiring entity), or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole, to one or more Subject Entities, other than solely to one or more of the Company’s wholly owned Subsidiaries, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the issued shares of Common Stock, (y) 50% of the issued shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not issued, or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the issued shares of Common Stock, or (iv) consummate a shares or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, in any transaction or series of related transactions, acquire, either (x) at least 50% of the issued shares of Common Stock, (y) at least 50% of the issued shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such shares purchase agreement or other business combination were not issued, or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the issued shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, unless the holders of the shares of Common Stock of the Company immediately prior to such reorganization, recapitalization or reclassification continue to hold at least 50% of the aggregate ordinary voting power represented by the shares of Common Stock of the Company (or the surviving entity), (B) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate, other than the Company or its wholly owned Subsidiaries, or their respective employee benefit plans, to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in issued Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued shares of Common Stock not held by all such Subject Entities as of the date of this Certificate of Designations calculated as if any shares of Common Stock held by all such Subject Entities were not issued, or (z) a percentage of the aggregate ordinary voting power represented by issued shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner intended to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
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“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
“Holder Pro Rata Amount” means, with respect to any Holder, a fraction (i) the numerator of which is the number of Preferred Stock issued to such Holder pursuant to the Securities Purchase Agreement on the Initial Issuance Date and (ii) the denominator of which is the number of Preferred Stock issued to all Holders pursuant to the Securities Purchase Agreement on the Initial Issuance Date.
“Indebtedness” of any Person means, without duplication (A) all obligations of such Person for borrowed money, (B) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent such obligations would appear as a liability on a balance sheet of such Person prepared in accordance with U.S. GAAP, (C) all guarantees by such Person of Indebtedness of others, (D) all Capital Lease Obligations of such Person, (E) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, letters of guaranty, bank guarantees, bankers’ acceptances and similar instruments and, (F) to the extent not otherwise included in this definition, net obligations of such Person under hedging obligations entered into by such Person in the ordinary course of business and entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Company (the amount of any such obligations to be equal at any time to the net payments under such agreement or arrangement giving rise to such obligation that would be payable by such person at the termination of such agreement or arrangement); provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business, (iv) Indebtedness of any parent entity (for which none of the Company or any Subsidiary is liable) appearing on the balance sheet of the Company solely by reason of push down accounting under U.S. GAAP, (v) obligations in connection with government auctions, subsidies, benefits or similar programs or processes, and (vi) obligations under any license, permit or other approval (or guarantees in respect of such obligations) incurred prior to the Subscription Date or in the ordinary course of business. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner), to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. For all purposes hereof, the Indebtedness of the Company and any of its Subsidiaries shall exclude (i) intercompany liabilities between and among them arising solely from their cash management, tax and accounting operations in the ordinary course of business and (ii) intercompany loans, advances or Indebtedness between and among them having a term not exceeding 364 days (inclusive of any rollover, conversion or extension terms) and made in the ordinary course of business.
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“Initial Issuance Date” means the date Preferred Stock are first issued pursuant to the Securities Purchase Agreement.
“Issuance Date” means the Initial Issuance Date or Additional Issuance Date, as applicable.
“Liens” means, with respect to any asset, (a) any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Liquidation Event” means, whether in a single transaction or series of transactions, the voluntary or involuntary liquidation, dissolution or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially all of the assets of the business of the Company and its Subsidiaries, taken as a whole.
“Non-assessable” means, with respect to the issuance of shares, that a shareholder shall not, solely by virtue of its status as a shareholder, be liable for additional assessments or calls on shares of the Company or its creditors (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose Common Stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
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“Permitted Indebtedness” means:
(a) any Indebtedness arising in the ordinary course of business in connection with trade payables;
(b) any Indebtedness arising in the ordinary course of business in connection with project financing or to finance Capital Lease Obligations in an aggregate amount outstanding not to exceed $500,000;
(c) any Indebtedness under that certain Revolving Line of Credit Promissory Note payable to Endeavor Blockchain, LLC (for the avoidance of doubt, including any interest thereon) or any refinancing of such Indebtedness (the “Endeavor Debt”);
(d) any Indebtedness set forth in Schedule 3.1(aa) to the Securities Purchase Agreement (for the avoidance of doubt, including any interest thereon) as in effect on the Initial Issuance Date;
(e) any intercompany Indebtedness of the Company or of any of its Subsidiaries owing to the Company or any of its Subsidiaries;
(f) any Indebtedness consented to by the Required Holders; and
(g) any Indebtedness where the proceeds are to be used to pay the Company Optional Redemption Price upon the Company’s exercise of its Company Optional Redemption right.
“Permitted Liens” means any Lien securing Permitted Indebtedness, except to the extent such Permitted Indebtedness is specified as being unsecured.
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
“Principal Market” means, as of any date of determination, the Eligible Market on which the shares of Common Stock are then listed or quoted.
“RRA” means the Registration Rights Agreement, dated June 30, 2026, between the Company and the Holders.
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
“Securities Purchase Agreement” means that certain securities purchase agreement by and among the Company and the initial holders of Preferred Stock, dated as of the Subscription Date, as may be amended from time to time in accordance with the terms thereof.
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“Significant Subsidiary” means, as of any date of determination, any Subsidiary of the Company that constitutes, or any group of Subsidiaries of the Company that, in the aggregate, would constitute, a “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the 1934 Act) of the Company.
“Stated Value” shall mean $1,000 per share, subject to adjustment for share splits, share dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the Issuance Date with respect to the Preferred Stock.
“Stockholders’ Equity Requirement” means $5,000,000 of stockholders’ equity of the Company, determined in accordance with U.S. GAAP, as of the last day of each fiscal quarter or such other stockholders’ equity required for the Company to remain eligible for continued listing on the Nasdaq Capital Market.
“Subscription Date” means June 30, 2026.
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
“Subsidiaries” means, with respect to any Person, (A) any corporation, company, association or other business entity (other than a partnership or limited liability company) of which more than fifty percent (50%) of the total voting power of the common equity entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders’ or shareholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (B) any partnership or limited liability company where (i) more than fifty percent (50%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (ii) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Successor Entity” means the Person formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been entered into.
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the shares of Common Stock, any day on which the shares of Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the shares of Common Stock, then on the principal securities exchange or securities market on which the shares of Common Stock are then traded, provided that “Trading Day” shall not include any day on which the shares of Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the shares of Common Stock are 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 City time) unless such day is otherwise designated as a Trading Day in writing by the applicable Holder or (y) with respect to all determinations other than price determinations relating to the shares of Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
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“Transaction Documents” means the Securities Purchase Agreement, this Certificate of Designations and each of the other agreements and instruments entered into or delivered by the Company or any of the Holders in connection with the transactions contemplated by the Securities Purchase Agreement, all as may be amended from time to time in accordance with the terms thereof.
“U.S. GAAP” means United States generally accepted accounting principles, consistently applied.
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30:00 a.m., New York City time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30:00 start time and 16:00:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:00 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination, recapitalization or other similar transaction during such period.
34. Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate of Designations, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company and its Subsidiaries, taken as a whole, the Company shall within two (2) Business Days of such receipt or prior to (or simultaneous with) such delivery, as applicable, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder explicitly in writing in such notice (or immediately upon receipt of notice from such Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from such Holder), such Holder shall be allowed to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. If the Company or any of its Subsidiaries provides material non-public information to a Holder that is not simultaneously filed in a Current Report on Form 8-K and such Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that such Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material non-public information. Nothing contained in this Section 34 shall limit any obligations of the Company, or any rights of any Holder, under Section 4.4 of the Securities Purchase Agreement.
35. Absence of Trading and Disclosure Restrictions. The Company acknowledges and agrees that no Holder is a fiduciary or agent of the Company and that, subject to such Holder’s compliance with the provisions of Section 4.6 of the Securities Purchase Agreement, each Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information, in each case, in the absence of a written non-disclosure agreement signed by an officer of such Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that, subject to such Holder’s compliance with the provisions of Section 4.6 of the Securities Purchase Agreement, each Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations of Series D Convertible Preferred Stock of Big Digital Energy, Inc. to be executed this 30th day of June, 2026.
| Name: | |
| Title: |
Signature
Page to Certificate of Designations
of the Series D Convertible Preferred Stock of
Big Digital Energy, Inc.
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EXHIBIT I
BIG DIGITAL ENERGY, INC.
CONVERSION NOTICE
Reference is made to the Certificate of Designations of Series D Convertible Preferred Stock of Big Digital Energy, Inc. (the “Certificate of Designations”). In accordance with and pursuant to the Certificate of Designations, the undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock, $0.001 par value per share (the “Preferred Stock”), of Big Digital Energy, Inc., a Delaware corporation (the “Company”), indicated below into shares of Common Stock, $0.001 value per share (the “Common Stock”), of the Company, as of the date specified below.
| Date of Conversion: |
| Aggregate
number of Preferred Stock to be converted |
| Aggregate
Stated Value of such Preferred Stock to be converted: |
| Aggregate
accrued and unpaid Dividends with respect to such Preferred Stock, and such Aggregate Dividends to be converted: |
| AGGREGATE
CONVERSION AMOUNT TO BE CONVERTED: |
| Please confirm the following information: |
| Conversion Price: |
| Number
of shares of Common Stock to be issued: |
Please issue the Common Stock into which the applicable Preferred Stock are being converted to Holder, or for its benefit, as follows:
| ☐ | Check here if requesting delivery in book-entry form to the following name and to the following address: | |||
| Issue to: | ||||
| ☐ | Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: |
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Date: ______________, ______
___________________________
_________________________
| Name of Registered Holder | |||
| By: | |||
| Name: | |||
| Title: | |||
| Tax ID: | |||
| Facsimile: | |||
| E-mail Address: | |||
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EXHIBIT II
EMAIL ACKNOWLEDGMENT
The Company acknowledges receipt of this Conversion Notice and hereby directs [●] (the “Transfer Agent”) to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent instruction letter dated _____, 2026, from the Company and acknowledged and agreed to by the Transfer Agent.
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of June 30, 2026, between Big Digital Energy, Inc., a Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers,” and together with the Company, the “Parties”). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase Agreement”).
The Parties hereby agrees as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” has the meaning set forth in Section 6(c).
“Agreement” has the meaning set forth in the preamble. “Company” has the meaning set forth in the preamble.
“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 60th calendar day following the Closing Date (or, in the event of a “full review” by the Commission, the 90th calendar day following the Closing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2(b) or Section 3(c), the 30th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 60th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Dates as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, subject to the Commission agreeing to the five Trading Day or shorter period; provided further, however, that if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness Period” has the meaning set forth in Section 2(a).
“Event” has the meaning set forth in Section 2(d).
“Event Date” has the meaning set forth in Section 2(d).
“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 21st calendar day following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified Party” has the meaning set forth in Section 5(c).
“Indemnifying Party” has the meaning set forth in Section 5(c).
“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
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“Losses” has the meaning set forth in Section 5(a).
“Parties” has the meaning set forth in the preamble.
“Plan of Distribution” has the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in a Registration Statement (including a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Purchase Agreement” has the meaning set forth in the preamble.
“Purchasers” has the meaning set forth in the preamble.
“Registrable Securities” means, as of any date of determination, (a) all Conversion Shares then issued or issuable upon conversion of the Series D Preferred Stock (assuming on such date the Series D Preferred Stock is convertible in full at the Floor Price (as defined in the Certificate of Designations) without regard to any limitations on conversion); (b) all Warrant Shares then issued or issuable upon exercise of the Warrants (assuming on such date the Warrants are exercisable in full without regard to any limitations on exercise); (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (i) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (ii) such Registrable Securities have been previously sold in accordance with Rule 144 or (iii) such securities are eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders.
“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Selling Stockholder Questionnaire” has the meaning set forth in Section 3(a).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff; and (ii) the Securities Act.
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2. Shelf Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by at least a majority in interest of the Holders) the “Plan of Distribution” section in substantially the form attached hereto as Annex A and the “Selling Stockholder” section in substantially the form attached hereto as Annex B; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent; provided further, however, that if the Commission requests that any Holder be identified as a statutory underwriter in any Registration Statement, such Holder will have the option, in its sole and absolute discretion, either to withdraw from the Registration Statement (which shall be exercised via such Holder’s prompt written request thereof to the Company), in which case the Company’s obligation to register such Holder’s Registrable Securities shall be deemed satisfied, or to be included as such in the Registration Statement. Subject to the terms of this Agreement, the Company shall cause a Registration Statement filed under this Agreement (including under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use commercially reasonably efforts to keep such Registration Statement continuously effective under the Securities Act until the date that no Holder holds any Registrable Securities covered by such Registration Statement(the “Effectiveness Period”). The Company shall request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall notify the Holders by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the staff of the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415 or other SEC Guidance, be registered for resale as a secondary offering on a single registration statement, the Company shall promptly inform each of the Holders thereof and file amendments to the Initial Registration Statement as required by the staff of the Commission, covering the maximum number of Registrable Securities permitted to be registered by the staff of the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e), with respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment, the Company shall use diligent efforts to advocate with the staff of the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including Compliance and Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the staff of the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the staff of the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities to register a lesser number, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
(i) First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; and
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(ii) Second, the Company shall reduce Registrable Securities on a pro rata basis based on the total number of unregistered Registrable Securities held by such Holders; provided, however, that all Warrant Shares shall be removed before any Conversion Shares are removed.
In the event of a cutback hereunder, the Company shall give the Holder at least five Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use commercially reasonable efforts to file with the Commission, as promptly as allowed by the staff of the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (it being understood and agreed that if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i));
(ii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the staff of the Commission in respect of such Registration Statement within ten Trading Days after the receipt of comments by or notice from staff of the Commission that such amendment is required in order for such Registration Statement to be declared effective;
(iii) a Registration Statement registering for resale Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement; or
(iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to the Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than 15 consecutive calendar days or more than an aggregate of 22 Trading Days (which need not be consecutive Trading Days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iii), the date on which such Event occurs, for purposes of clause (ii), the date on which such ten-Trading Day period is exceeded, and for the purposes of this clause (iv), the date on which such 15-calendar day or 22-Trading Day period, as applicable, is exceeded being referred to as “Event Date”)
then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event has not been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the (1) product of (A) 1.50% multiplied by (B) the quotient of (I) the number of such Holder’s Registrable Securities that are not then covered by an effective Registration Statement available for use by such Holder, divided by (II) the total number of such Holder’s Registrable Securities, multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement; provided, however, that if none of such Holder’s Registrable Securities are then covered by an effective Registration Statement available for use by such Holder, the quotient of (I) divided by (II) in clause (1)(B) herein shall be deemed equal to 1.0; provided further, however, that in no event shall the aggregate liquidated damages payable by the Company to a Holder under this Agreement exceed 9.0% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. For the avoidance of doubt, no liquidated damages shall be payable hereunder solely due to the inability of the Company to register for resale certain Registrable Securities as provided in Section 2(b).
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(e) If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.
3. Registration Procedures.
(a) Not less than five Trading Days prior to the filing of each Registration Statement and not less than one Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which Holders of a majority of the Registrable Securities reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three Trading Days after the Holders have been so furnished copies of a Registration Statement or one Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached hereto as Annex C (a “Selling Stockholder Questionnaire”) on a date that is not less than two Trading Days prior to the Filing Date or by the end of the fourth Trading Day following the date on which such Holder receives draft materials in accordance with this Section 3(a).
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date (subject to SEC Guidance), an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.
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(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e) Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
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(j) Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(k) Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l) The Company shall use commercially reasonable efforts to maintain eligibility (or, if applicable, acquire eligibility) for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.
(m) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall (i) all registration and filing fees (including fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any underwriter, broker or similar commissions or fees of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. The Company will reimburse the costs and expense of one counsel to the Holders in connection with attorneys’ fees incurred in connection with this Agreement after the Closing Date up to a maximum of $15,000.
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5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(e).
(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
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(c) Conduct of Indemnification Proceedings.
(i) If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
(ii) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
(iii) Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 5(c)) shall be paid to the Indemnified Party, within 30 Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
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(d) Contribution.
(i) If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the Parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a Party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such Party in connection with any Proceeding to the extent such Party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 5(d) was available to such Party in accordance with its terms.
(ii) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
(iii) The indemnity and contribution agreements contained in this Section 5 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement or a Registration Statement on Form S-8 relating to any stock option or similar plan.
(c) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii)-(vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
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(d) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of a majority or more of the then outstanding Registrable Securities, provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the Parties.
(e) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the Parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement (in which case, for the avoidance of doubt, such assignee shall agree in writing to be bound by the provisions of this Agreement that apply to the “Holders”).
(g) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth in Schedule 3.1(v) to the Purchase Agreement, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.
(h) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by electronic mail (including “.pdf” or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. docusign.com) or other transmission method, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if it were an original thereof.
(i) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
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(k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Interpretation. The headings in this Agreement are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. As used herein, the words “including” or “includes” shall be deemed followed by “without limitation,” and the word “or” shall be deemed to mean “and/or.”
(m) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
(n) Material Non-Public Information. If, notwithstanding the prohibition on providing the Holders with material, non-public information, any notice or other communication delivered to the Holders hereunder contains any material, non-public information (within the meaning of the Exchange Act) regarding the Company, the Company shall cause such material, non-public information to be publicly disseminated no later than two Trading Days after the delivery thereof to the Holders.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Parties have executed this Registration Rights Agreement as of the date first written above.
| BIG DIGITAL ENERGY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
[SIGNATURE PAGES OF HOLDERS FOLLOW]
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[SIGNATURE PAGE OF HOLDERS TO
REGISTRATION RIGHTS AGREEMENT OF BIG DIGITAL ENERGY, INC.]
Name of Holder:_____________________________________________________________
Signature of Authorized Signatory of Holder: ______________________________________
Name of Authorized Signatory:_________________________________________________
Title of Authorized Signatory:___________________________________________________
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Annex A
Plan of Distribution
Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell, separately or together, any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. To the extent the Selling Stockholders gift, pledge or otherwise transfer the securities offered hereby, such transferees may offer and sell the securities from time to time under this prospectus, provided that, if required under the Securities Act, and the rules and regulations promulgated thereunder, this prospectus has been amended under Rule 424(b)(3) or other applicable provision of the Securities Act, to include the name of such transferee in the list of selling securityholders under this prospectus. A Selling Stockholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | through one or more underwritten offerings on a firm commitment or best efforts basis; |
| ● | settlement of short sales ; |
| ● | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | through the distribution of securities by any Selling Stockholder to its partners, members or securityholders; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus. The Selling Stockholders have the sole and absolute discretion not to accept any purchase offer or make any sale of securities if they deem the purchase price to be unsatisfactory at any particular time.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
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In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders may from time to time pledge or grant a security interest in some or all of their securities to their broker-dealers under the margin provisions of customer agreements or to other parties to secure other obligations. If a Selling Stockholder defaults on a margin loan or other secured obligation, the broker-dealer or secured party may, from time to time, offer and sell the securities pledged or secured thereby pursuant to this prospectus. The Selling Stockholders and any other persons participating in the sale or distribution of the securities will be subject to applicable provisions of the Securities Act and the Exchange Act, and the rules and regulations thereunder, including Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the securities by, the Selling Stockholders or any other person, which limitations may affect the marketability of the securities.
The Selling Stockholders also may transfer the shares of our securities in other circumstances, in which case the transferees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus.
A Selling Stockholder that is an entity may elect to make a pro rata in-kind distribution of securities to its members, partners or shareholders pursuant to the registration statement of which this prospectus is part by delivering a prospectus. To the extent that such members, partners or shareholders are not affiliates of ours, such members, partners or shareholders would thereby receive freely tradeable securities pursuant to the distribution through a registration statement.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of the date on which (i) the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144 or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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Annex B
SELLING STOCKHOLDERS
The common stock being offered by the selling stockholders are those issuable to the selling stockholders, upon exercise of the warrants and conversion of the preferred stock. For additional information regarding the issuances of those warrants and preferred stock, see “Private Placement of Warrants and Preferred Stock” above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time.
The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership of the shares of warrants and preferred stock, as of _________________, 2026, assuming exercise of the warrants and conversion of the preferred stock held by the selling stockholders on that date, without regard to any limitations on exercises or conversions.
The third column lists the shares of common stock being offered by this prospectus by the selling stockholders.
In accordance with the terms of a registration rights agreement with the selling stockholders, this prospectus generally covers the resale of the sum of (i) the maximum number of shares of common stock issuable upon conversion of the preferred stock, determined as if the outstanding shares of preferred stock were converted in full at the Floor Price (as defined in the certificate of designation for the preferred stock) and (ii) the maximum number of shares of common stock issuable upon exercise of the warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration rights agreement, without regard to any limitations on the exercise of the warrants or conversion of the preferred stock. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the warrants, a selling stockholder may not exercise the warrants to the extent such exercise would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% or 9.99%, as applicable, of our then outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of such warrants which have not been exercised. Under the certificate of designations for the preferred stock, a selling stockholder may not convert the preferred stock to the extent such conversion would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 19.99% of our then outstanding common stock following such conversion, excluding for purposes of such determination shares of common stock issuable upon conversion of such shares of preferred stock which have not been converted. The number of shares in the second and fourth columns do not reflect these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Stockholder | Shares of Common Stock Owned Prior to Offering | Maximum Shares of Common Stock to be Sold Pursuant to this Prospectus | Shares of Common Stock Owned After this Offering | |||||||||
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Annex C
BIG DIGITAL ENERGY, INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock (the “Registrable Securities”) of Big Digital Energy, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name:
(a) Full Legal Name of Selling Stockholder:
(b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
(c) Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):
2. Address for Notices to Selling Stockholder:
| Telephone: | ||
| Email: | ||
| Contact Person: |
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3. Broker-Dealer Status:
(a) Are you a broker-dealer?
Yes ☐ No ☐
(b) If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?
Yes ☐ No ☐
Note: If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
(c) Are you an affiliate of a broker-dealer?
Yes ☐ No ☐
(d) If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
Yes ☐ No ☐
Note: If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
(a) Type and Amount of other securities beneficially owned by the Selling Stockholder:
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.
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By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Dated: | Beneficial Owner: | |
| By: | ||
| Name: | ||
| Title: | ||
PLEASE EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
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EXHIBIT C
WARRANT
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WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
BIG DIGITAL ENERGY, INC.
Warrant To Purchase Common Stock
| Warrant No.: BGDE/YA II PN, LTD. | Number of Shares: | 926,748 |
| Warrant Exercise Price: | $10.81 | |
| Expiration Date: | June 30, 20311 | |
| Date of Issuance: June 30, 2026 |
BIG DIGITAL ENERGY, INC., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, YA II PN, LTD. (the “Holder”), the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) up to [ ] fully paid and nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as subsequently adjusted; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise, (however, such restriction may be waived by Holder (but only as to itself and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of any holder, the Company shall promptly, but in no event later than 1 Business Day following the receipt of such notice, confirm in writing to any such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
| 1 | 5 years following Issuance Date. |
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Section 1.
(a) This Warrant is issued pursuant to the Securities Purchase Agreement (“Securities Purchase Agreement”) of even date hereof between the Company and the Holder or issued in exchange or substitution thereafter or replacement thereof. Each Capitalized term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.
(b) Definitions. The following words and terms as used in this Warrant shall have the following meanings:
(i) “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, director or third party service providers in the normal course of business, for services provided to the Company.
(ii) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.
(iii) “Closing Bid Price” means the closing bid price of Common Stock as quoted on the Principal Market (as reported by Bloomberg, LP (“Bloomberg”) through its “Volume at Price” function).
(iv) “Common Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
(v) “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time.
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(vi) “Event of Default” means an event of default under the Securities Purchase Agreement or a Triggering Event as defined in the Certificate of Designations for the Preferred Shares issued in connection therewith.
(vii) “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan, (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreement as disclosed in Schedule 3.1(g)therein, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreement, (c) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of the Convertible Debenture or exercise of the Warrants and (d) Shares issued to employees, officers, directors, or service providers consistent with past practices in the normal course of business.
(viii) “Expiration Date” means the date set forth on the first page of this Warrant.
(ix) “Issuance Date” means the date hereof.
(x) “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or convertible securities.
(xi) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
(xii) “Preferred Shares” means the Series D Convertible Preferred Stock, par value $0.001 per share, issued pursuant to the Securities Purchase Agreement or as dividends thereron.
(xiii) “Principal Market” means as of any date of determination, the Eligible Market on which the shares of Common Stock is then listed or quoted.
(xiv) “Securities Act” means the Securities Act of 1933, as amended.
(xv) “Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
(xvi) “Warrant Exercise Price” shall be $[ ]2 or as subsequently adjusted as provided in Section 8 hereof.
| 2 | NTD: Exercise price shall be equal to 120% of the closing price on the day prior to closing. |
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(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s successors and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words “Section”, “Schedule”, and “Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, pro rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business Day, (i) commencing with the first day after the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date, by delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds and the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as practicable following such date (“Cash Basis”) or (ii) commencing 60 days (for Warrant Shares up to 19.99% of outstanding as of closing) and 180 days (for the balance of Warrant Shares)after the issuance of this Warrant, and prior to 11:59 P.M. Eastern Time on the Expiration Date, if at the time of exercise, the Warrant Shares are not subject to an effective registration statement or if an Event of Default has occurred, by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (the “Cashless Exercise”):
Net Number = (A x B) – (A x C)
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which this Warrant is then being exercised.
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B = the Closing Bid Price of the Common Stock on the date of exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or before the second Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and the receipt of the representations of the holder specified in Section 6 hereof, if requested by the Company (the “Exercise Delivery Documents”), and if the Warrant Shares are subject to an effective and current Registration Statement and the Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Warrant Shares are not subject to an effective and current Registration Statement and the Common Stock is not DTC eligible or the Company is otherwise unable to deliver the Warrant Shares electronically without any restrictive legend pursuant to applicable securities laws upon the written opinion of outside counsel, then the Company shall, on or before the second Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate or book entry statement, registered in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. The Warrant Shares shall be issued with a legend unless they are subject to an effective and current Registration Statement or they are being transferred pursuant to an exemption from such registration requirements, the availability of which is confirmed in an opinion of counsel acceptable to the Company’s transfer agent. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to above, the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised. In the case of a dispute as to the determination of the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of Warrant Shares that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within 1 Business Day of receipt of the holder’s Exercise Notice.
(b) If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation of the Warrant Shares within 1 day of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall immediately submit via electronic mail (i) the disputed determination of the Warrant Exercise Price or the Closing Bid Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than 48 hours from the time it receives the disputed determinations or calculations. Such investment banking firm’s or accountant’s determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.
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(c) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, upon the request of the Holder, as soon as practicable and in no event later than 5 Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised.
(d) No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares issued upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.
(e) If the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the holder within 3 Business Days of receipt of the Exercise Delivery Documents, a certificate or book entry statement for the number of Warrant Shares to which the holder is entitled or to credit the holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the holder is entitled upon the holder’s exercise of this Warrant, unless such failure results from a failure of the Company’s Transfer Agent to issue such shares as a result of an act of terrorism, war, natural disaster, act of God or other force majeure event, the Company shall, in addition to any other remedies under this Warrant or otherwise available to such holder, pay as additional damages in cash to such holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount equal to 0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the holder on a timely basis and to which the holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the last possible date which the Company could have issued such Common Stock to the holder without violating this Section 2.
(f) If within 5 Business Days after the Company’s receipt of the Exercise Delivery Documents, and the written request of the Holder that a new Warrant be issued, the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which such holder is entitled pursuant to Section 2 hereof, then, the Holder shall be entitled to exercise or transfer its rights under such new Warrant and the Company shall be obligated to honor such exercises or transfers as if the Holder had submitted the new Warrant without violating this Section 2.
(g) Compliance with Rules of Principal Market. Notwithstanding anything to the contrary herein, the Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant to the extent (but only to the extent) that after giving effect to such exercise, the number of Warrant Shares issued under this Warrant, the Other Warrants and the number of shares of Common Stock issued upon conversion of the Preferred Shares in the aggregate would exceed [ ] (representing 19.99% of the aggregate number of Common Shares issued and outstanding immediately prior to the date of execution of the Securities Purchase Agreement (subject to adjustment for any stock splits, combinations or the like)), calculated in accordance with the rules of the Principal Market, which number shall be reduced, on a share-for-share basis, by the number of Warrant Shares issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by the Agreement under the applicable rules of the Principal Market (such maximum number of shares, the “Exchange Cap”) provided that, the Exchange Cap will not apply if the Company’s stockholders have approved the issuance of Common Shares pursuant to this Warrant, the Other Warrants and the Preferred Shares in excess of the Exchange Cap in accordance with the rules of the Principal Market (the “Shareholder Approval”). In connection with each Exercise Notice, any portion of an exercise that would exceed the Exchange Cap shall automatically be withdrawn with no further action required by the Company and such Exercise Notice shall be deemed automatically modified to reduce the aggregate Warrant Shares exercised by an amount equal to such withdrawn portion in respect of each Exercise Notice.
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Section 3. Covenants as to Common Stock. The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price. If at any time the Company does not have a sufficient number of shares of Common Stock authorized and available, then the Company shall call and hold a special meeting of its stockholders within 60 days of that time for the sole purpose of increasing the number of authorized shares of Common Stock.
(d) Unless the Warrant Shares are already registered for resale pursuant to an effective registration statement, if at any time after the date hereof the Company shall file a registration statement, the Company shall include the Warrant Shares issuable to the holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.
(e) The Company will not, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. The Company will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
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(f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets.
Section 4. Taxes. The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”). Upon exercise of this Warrant the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder’s own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws.
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Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
Section 8. Adjustment of Warrant Exercise Price. The Warrant Exercise Price of this Warrant shall be adjusted from time to time as follows:
(a) Reserved.
(b) Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.
(c) Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case (without duplication of any adjustment pursuant to Section 8(b)):
(i) any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and
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(ii) either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i).
(d) Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrants; provided, that no such adjustment pursuant to this Section 8(d) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8.
(e) Voluntary Adjustments By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
(f) Notices.
(i) Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.
(ii) The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.
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(iii) The Company will also give written notice to the holder of this Warrant at least 10 days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.
Section 9. Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.
(a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, cash or other assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.” Prior to the consummation of any Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders of Warrants representing a majority of the Warrant Shares issuable upon exercise of the Warrants then outstanding) to insure that each of the holders of the Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and receivable upon the exercise of such holder’s Warrants (without regard to any limitations on exercise), such shares of stock, securities, cash or other assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Warrant Shares which would have been issuable and receivable upon the exercise of such holder’s Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii) 1 Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission is not returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses for such communications shall be:
| If to Holder: | YA II PN, LTD. |
| 1012 Springfield Avenue | |
| Mountainside, NJ 07092 | |
| Attention: Troy Rillo | |
| Telephone: (201) 985-8300 | |
| Email: trillo@yorkvilleglobal.com |
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| With Copy to: | Haynes and Boone, LLP |
| 30 Rockefeller Plaza 22nd Floor | |
| New York, NY 10112 | |
| Attention: Greg Kramer | |
| Telephone: (212) 835-4819 | |
| Email: greg.kramer@haynesboone.com |
| If to the Company, to: | Big Digital Energy, Inc. |
| 950 Railroad Avenue | |
| Midland, PA 15059 | |
| Attention: Kaliste Saloom | |
| Telephone: (412) 515-0896 | |
| Email: kaliste.saloom@bigdigital.energy | |
| With a copy to: | Dorsey & Whitney LLP |
| 50 South Sixth Street, Suite 1500 | |
| Minneapolis, MN 55402 | |
| Attention: Cam Hoang | |
| Telephone: (612) 492-6109 | |
| Email: hoang.cam@dorsey.com |
or at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
Section 12. Date. The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date.
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Section 13. Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the holders of Warrants representing at least 2/3rds of the Warrant Shares issuable upon exercise of the Warrants then outstanding; provided that, except for Section 8(d), no such action may increase the Warrant Exercise Price or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the holder of such Warrant.
Section 14. Descriptive Headings; Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The corporate laws of the State of New York shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the Superior Court of the state courts sitting in the Borough of Manhattan, New York, New York and the Federal District Court for the Southern District of New York sitting in the Borough of Manhattan, New York, New York, for the adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Section 15. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, in any other agreement between the Company and the Holder, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
Section 16. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set forth above.
| BIG DIGITAL ENERGY, INC. | ||
| By: | /s/ Kaliste Saloom | |
| Name: | Kaliste Saloom | |
| Title: | General Counsel | |
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EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
BIG DIGITAL ENERGY, INC.
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Big Digital Energy, Inc. (the “Company”), evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1. ____ Cash Exercise
(a) Payment of Warrant Exercise Price. The holder shall pay the Aggregate Exercise Price of $___________to the Company in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the holder ___________Warrant Shares in accordance with the terms of the Warrant.
2. ____ Cashless Exercise
(a) Payment of Warrant Exercise Price. In lieu of making payment of the Aggregate Exercise Price, the holder elects to receive upon such exercise the Net Number of shares of Common Stock determined in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the holder ____________Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
| By: | ||
| Name: | ||
| Title: |
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EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to _________________, Federal Identification No. ___________, a warrant to purchase shares of the capital stock of Big Digital Energy, Inc. represented by warrant certificate no.______, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ________________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises.
| Dated: _______________________ | ||
| By: | ||
| Name: | ||
| Title: | ||
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EXHIBIT D
LEGAL OPINION
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June 30, 2026
Six Thirty AI, LLC
5473 Blair Road, Suite 100
PMB 553663
Dallas, TX 75231
| Re: | Big Digital Energy, Inc. |
Ladies and Gentlemen:
We have acted as counsel to Big Digital Energy, Inc., a Delaware corporation (the “Company”), in connection with the issue and sale on the date hereof (the “Transaction”), of an aggregate of 16,700 shares (the “Preferred Shares”) of the Company’s convertible preferred stock, par value $0.001 per share, designated as “Series D Convertible Preferred Stock” (the “Series D Preferred Stock”) convertible into shares of common stock of the Company, par value $0.001 per share (the “Common Stock”), to be issued by the Company to the Purchasers at an issuance price of $1,000 per Preferred Share and common stock purchase warrants (the “Warrants”) to purchase 926,748 shares of Common Stock (the “Warrant Shares”), pursuant to that certain Securities Purchase Agreement, by and among the Company and the Purchasers, dated as of the date hereof (the “Purchase Agreement”). Each Preferred Share is entitled to dividends payable in the form of additional Preferred Shares (the “PIK Shares”). Each Preferred Share and PIK Share is convertible into up to 555 shares of Common Stock, assuming a Floor Price equal to 20% of the closing price of the Common Stock immediately prior to the closing date of $1.80 (as subject to adjustment as defined in the Certificate of Designations (as defined below)) (each, an “Underlying Share”).
This opinion letter is being provided to you at the request of the Company pursuant to Section 2.2(a)(vi) of the Purchase Agreement. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.
In our capacity as such counsel, we have examined, among other things, originals, or copies identified to our satisfaction as being true copies, of the following:
(a) the Purchase Agreement;
(b) the Certificate of Designations with respect to the Series D Preferred Stock of the Company, as filed with the Delaware Secretary of State on June 29, 2026 (the “Certificate of Designations”);
(c) the Registration Rights Agreement, dated as of the date hereof, by and among the Company and the Purchasers (the “Registration Rights Agreement”);
(d) the Warrants;
(e) the Letter Agreement regarding Pledge, Transfer and Assignment of Series D Preferred Stock and Warrants (the “Letter Agreement,” and collectively with the Purchase Agreement, the Certificate of Designations, the Registration Rights Agreement and the Warrants, the “Transaction Documents”); and
(f) such other records, certificates, documents and instruments, certified or otherwise identified to our satisfaction, as we have considered necessary or appropriate for purposes of this opinion letter.
In our capacity as such counsel, we have also reviewed such questions of law as we have considered necessary or appropriate for purposes of this opinion letter.
In rendering our opinions set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. In rendering our opinions set forth below, we have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments and that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties (other than the Company with respect to the Transaction Documents). In addition, in rendering our opinions set forth below, we have assumed that all agreements and instruments relevant hereto are the valid, binding and enforceable obligations of all parties thereto (other than the Company with respect to the Transaction Documents). As to questions of fact material to our opinions, we have relied upon the representations and warranties of the Company, and the Purchasers contained in the Transaction Documents and on certificates or comparable documents of officers and other representatives of the Company and of public officials.
200 Crescent Court |Suite 1600 | Dallas, Texas | T 214.981.9900 | F 214.981.9901 | dorsey.com
109
Six Thirty AI, LLC
June 30, 2026
Our opinions expressed below as to certain factual matters are qualified as being limited “to our knowledge” or by other words to the same or similar effect. Such words, as used herein, mean the information known to Cam Hoang and Joshua Pleitz, the attorneys at Dorsey & Whitney LLP who have represented the Company in connection with the issuance of the Preferred Shares and the Warrants and the other transactions contemplated by the Transaction Documents, in connection with their representation of the Company. No other inference as to our knowledge with respect to such matters should be drawn from the fact of our representation of the Company.
Our opinions expressed in this letter are subject to the limitation that offers or sales of securities in the United States by or for the Company prior to or following the completion of the Transaction may be integrated with the Transaction or with conversions of the Preferred Shares or with exercises of the Warrants in the United States and render unavailable the exemption from registration relied upon by the Company in connection therewith. We therefore offer no opinion as to the effect any such offers or sales (except for conversions of the Preferred Shares and the PIK Shares issued in the Transaction by the original purchasers in the Transaction in the manner described in paragraph 6 below, and exercises of the Warrants by the original purchasers in the Transaction in the manner described in paragraph 4 below) may have upon the availability of any exemptions relied upon by the Company in connection with the Transaction or with conversions of the Preferred Shares in the United States.
Based on the foregoing, we are of the opinion that:
1. The Company is validly existing as a corporation and in good standing under the laws of the State of Delaware, with corporate power to execute, deliver and perform each of the Transaction Documents.
2. The Preferred Shares and the PIK Shares have been duly authorized, and, upon issuance, delivery and payment therefor as described in the Purchase Agreement, will be validly issued, fully paid and nonassessable and free of preemptive or similar rights.
3. The Warrants have been duly authorized, and, upon issuance, delivery and payment therefor as described in the Purchase Agreement, will constitute the valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms.
4. The Warrant Shares issuable upon exercise of the Warrants have been duly and validly authorized and when issued and paid for upon the exercise of the Warrants in accordance with the terms therein, will be validly issued, fully paid and nonassessable and free of preemptive or similar rights.
5. Each of the Transaction Documents has been duly authorized by all requisite corporate action and executed by the Company and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
6. The Underlying Shares issuable upon conversion of the Preferred Shares and the PIK Shares have been duly and validly authorized, and, upon conversion in accordance with the Purchase Agreement and the Certificate of Designations, will be validly issued, fully paid and nonassessable and free of preemptive or similar rights.
110
Six Thirty AI, LLC
June 30, 2026
7. No consent, approval, authorization or order of, and no notice to or filing with,any governmental agency or body or any court in the United States or any person pursuant to any agreement or instrument included as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026 (collectively, the “Material Agreements”) is required to be obtained or made by the Company for the issuance of the Preferred Shares, the PIK Shares, the Underlying Shares, the Warrants and the Warrant Shares, except (i) the filing with the Securities and Exchange Commission (the “Commission”) of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by applicable state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filing of any applications to the NASDAQ Capital Market for the trading thereon in the time and manner required thereby, and (v) those that have been made or obtained prior to the date hereof.
8. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Preferred Shares and the Warrants and the consummation by the Company of the transactions contemplated thereby will not (a) violate the Company’s certificate of incorporation or bylaws, (b) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any Material Agreement, (c) result in the violation of the provisions of Applicable Law (as defined below), or (d) result in any lien on any property of the Company pursuant to the express terms of any Material Agreement.
9. The Company is not, and after giving effect to the issuance of (a) the Preferred Shares, the PIK Shares and the Underlying Shares and (b) the Warrants and the Warrant Shares will not be, required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
10. The issuance of (a) the Preferred Shares, the PIK Shares, the Underlying Shares and (b) the Warrants and the Warrant Shares to the original purchasers in the manner contemplated by the Purchase Agreement does not require registration under the Securities Act.
The opinions set forth above are subject to the following qualifications and exceptions:
(A) Our opinion set forth in paragraph 1 above relating to the valid existence and good standing of the Company under the laws of the State of Delaware, relies solely upon a Certificate of Good Standing certified by the Secretary of State of the State of Delaware on June 29, 2026.
(B) Our opinions are qualified by and subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the relief of debtors or the rights and remedies of creditors generally, including without limitation the effect of statutory or other law regarding fraudulent conveyances, preferential transfers and equitable subordination.
(C) Our opinions are qualified by and subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and judicial decisions holding that certain provisions are unenforceable when their enforcement would violate the implied covenant of good faith and fair dealing, or would be commercially unreasonable or involve undue delay.
(D) We express no opinion as to the enforceability of any provision contained in any Transaction Document relating to any indemnification, contribution, non-reliance, exculpation, release, limitation or exclusion of remedies, waiver or other provisions having similar effect that may be contrary to public policy or violate federal or state securities laws, rules or regulations, or to the extent any such provision purports to, or has the effect of, waiving or altering any statute of limitations.
(E) In rendering our opinion in paragraph 7 above, we express no opinion with respect to any consent, approval, authorization or order of, or notice to or filing with, any governmental agency or body or any court required generally in connection with the business or operations of the Company.
111
Six Thirty AI, LLC
June 30, 2026
(F) In rendering our opinion in paragraph 10 above, we have assumed that the Company will, within prescribed time periods, prepare and file any forms or notices required under the Securities Act in connection with the issuance of the Preferred Shares and the Underlying Shares and the Warrants and the Warrant Shares.
(G) Our opinion set forth in paragraph 10 relates only to the registration requirements of the Securities Act and we have not considered any other law in rendering such opinion. In particular, we express no opinion on compliance with state or federal requirements for the registration of broker-dealers. We further express no opinion concerning the availability of any exemption from registration under state securities or “blue sky” laws of any state of the United States.
(H) Our opinions are based on the assumption that the exercise price of the Warrants will at all times be equal to or greater than the par value of the Common Stock and assume that no adjustment will be made to such exercise price that would cause such exercise price to be less than the par value of the Common Stock.
(I) We express no opinion as to the enforceability of (i) provisions that relate to choice of law, forum selection or submission to jurisdiction (including, without limitation, any express or implied waiver of any objection to venue in any court or of any objection that a court is an inconvenient forum) to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a state court of the State of New York, (ii) waivers by the Company of any statutory or constitutional rights or remedies, (iii) terms which excuse any person or entity from liability for, or require the Company to indemnify such person or entity against, such person’s or entity’s negligence or willful misconduct or (iv) obligations to pay any prepayment premium, default interest rate, early termination fee or other form of liquidated damages, if the payment of such premium, interest rate, fee or damages may be construed as unreasonable in relation to actual damages or disproportionate to actual damages suffered as a result of such prepayment, default or termination.
(J) We draw your attention to the fact that, under certain circumstances, the enforceability of terms to the effect that provisions may not be waived or modified except in writing may be limited.
(K) Our opinions do not extend to any licenses, permits or other authorizations or approvals necessary for the conduct of the business of the Company; further, we express no opinion, in such paragraphs or otherwise, as to zoning, subdivision, environmental, planning, land use or similar laws; building, fire, access, safety or similar codes; or statutes, ordinances, administrative decisions, rules and regulations of counties, cities, towns, municipalities, special political subdivisions and the like (whether created or enacted through federal, state or regional action).
Our opinions expressed above are limited to New York law, Delaware law and the federal laws of the United States of America (collectively, “Applicable Laws”) normally applicable to financing transactions of the type contemplated by the Transaction Documents and we express no opinion with respect to the applicability of any other laws.
This opinion letter is furnished to you solely for your benefit and may only be relied upon by you. It may not be used or relied upon by you for any other purpose or by any other person, nor may copies be delivered to any other person, without, in each instance, our prior written consent; provided, however, that such permitted reliance shall not imply or establish an attorney-client relationship between such relying party and Dorsey & Whitney LLP with respect to the matters covered by this opinion letter, and such relying party, by relying on our opinion, disclaims any such attorney-client relationship with respect to the matters covered by this opinion letter. We understand that the Warrants will be transferred to YA II PN, Ltd., a Cayman Islands exempted company (“YA”), and that YA has been granted a security interest in the Preferred Shares and the Underlying Shares issuable upon conversion thereof. Accordingly, Yorkville Advisors LLC and YA may also rely on this opinion letter as if a recipient hereof. This opinion letter is expressly limited to the matters set forth above, and we render no opinion, whether by implication or otherwise, as to any other matters. We assume no obligation to update or supplement this opinion letter to reflect any facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein, or any future changes in laws.
| Very truly yours, |
CCH/JDP/DM
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Exhibit 10.2
LETTER AGREEMENT
REGARDING PLEDGE, TRANSFER AND ASSIGNMENT OF
SERIES D PREFERRED STOCK AND WARRANTS
This Letter Agreement (this “Agreement”) is entered into as of June 30, 2026, by and among:
(1) Big Digital Energy, Inc., a Nevada corporation (the “Company”);
(2) Six Thirty AI, LLC, a Texas limited liability company (the “Purchaser”); and
(3) YA II PN, LTD., a Cayman Islands exempt limited company, in its capacity as administrative agent and collateral agent for the Lenders (as defined below) under the Loan Documents (as defined below) (the “Agent” and, together with the Company and the Purchaser, the “Parties”).
RECITALS
WHEREAS, the Company and the Purchaser are parties to that certain Securities Purchase Agreement, dated as of or about the date hereof (as amended, restated, supplemented, or otherwise modified from time to time, the “SPA”), pursuant to which the Purchaser agreed to purchase, and the Company agreed to issue and sell, 16,700 shares of the Company’s Series D Convertible Preferred Stock (the “Preferred Shares”) and a warrant to purchase shares of Common Stock equal to 50% of the Preferred Shares purchased by the Purchaser (the “Warrants”);
WHEREAS, the SPA, the Warrants, the Certificate of Designations for the Series D Convertible Preferred Stock, the Registration Rights Agreement, and all other documents and agreements contemplated thereby are collectively referred to herein as the “Transaction Documents”;
WHEREAS, the Purchaser and certain affiliates of the Purchaser (collectively with the Purchaser, the “Borrowers”) have entered into that certain Loan and Guaranty Agreement, dated as of or about the date hereof (as amended, restated, supplemented, or otherwise modified from time to time, the “Loan Agreement”), with the Agent and the lenders party thereto from time to time (the “Lenders”);
WHEREAS, in connection with the Loan Agreement, the Purchaser has entered into that certain Pledge and Security Agreement, dated as of or about the date hereof (as amended, restated, supplemented, or otherwise modified from time to time, the “Pledge Agreement” and, together with the Loan Agreement and all other documents and agreements executed in connection therewith, the “Loan Documents”), pursuant to which the Purchaser has granted to the Agent, for the ratable benefit of the Lenders, a security interest in and pledge of, among other collateral, the Preferred Shares and the Warrants;
[Signature Page to Letter Agreement]
WHEREAS, pursuant to the Loan Agreement, the Warrants are to be transferred and assigned to the Lenders ratably on the closing date as a commitment fee (the “Warrant Assignment”);
WHEREAS, pursuant to the Loan Agreement, each Lender has the right to exchange all or any portion of the outstanding Obligations (as defined in the Loan Agreement) for shares of the Company’s Preferred Stock (the “Exchange Right”), and the Loan Documents further permit settlement using pledged Preferred Shares or Common Stock issuable upon conversion thereof, subject to transfer and resale restrictions; and
WHEREAS, the Purchaser and the Agent have requested that the Company acknowledge the foregoing arrangements and provide its consent thereto, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Defined Terms.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the SPA, the Loan Agreement, or the Pledge Agreement, as applicable. In addition to the terms defined in the Recitals:
| (a) | “Common Stock” means the common stock of the Company, par value $0.001 per share. |
| (b) | “Pledged Securities” means, collectively, the Preferred Shares pledged or assigned pursuant to the Loan Documents, together with any Common Stock issuable upon conversion thereof. |
| (c) | “Permitted Transferee” means the Agent, any Lender, or any designee, successor, assign, agent, or nominee of the Agent or any Lender. |
Section 2. Acknowledgment of Pledge.
The Company hereby acknowledges that it has been informed that the Purchaser will pledge the Preferred Shares and grant a security interest therein to the Agent, for the ratable benefit of the Lenders, pursuant to the Pledge Agreement, and that certificates representing the Preferred Shares will be delivered to the Agent together with blank stock powers in connection therewith.
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Section 3. Consent to Pledge.
The Company hereby consents to the pledge of the Preferred Shares by the Purchaser to the Agent, for the ratable benefit of the Lenders, pursuant to the Pledge Agreement, and acknowledges that no further consent, approval, legal opinion, or notice from or to the Company shall be required in connection with such pledge.
Section 4. Advance Consent to Transfer of Preferred Shares.
The Company hereby consents in advance to any transfer of the Preferred Shares (or any portion thereof) to the Agent, any Lender, or any other Permitted Transferee, in each case:
| (a) | pursuant to the exercise of the Exchange Right under the Loan Agreement; |
| (b) | pursuant to any foreclosure, realization, enforcement, or other exercise of rights or remedies by the Agent or any Lender under the Loan Documents (including any transfer of the Pledged Securities into the name of the Agent or its transferee upon or following an Event of Default); or |
| (c) | pursuant to any other transfer or disposition of the Preferred Shares permitted under the Loan Documents, |
in each case without further consent, approval, legal opinion, or notice from or to the Company being required, subject to Section 7 hereof. The Company further understands that all of the Purchaser’s rights and remedies under the Transaction Documents have been collaterally assigned to the Agent under the Pledge Agreement. Accordingly, any Permitted Transferee of Pledged Securities shall have all of the rights or a “Purchaser” or “Holder”, as applicable, under the Transaction Documents as if an original party thereto.
In addition, upon any transfer of Preferred Shares to Agent or any Lender, the Company shall as promptly as practicable, and in any event within 2 Trading Days, file a prospectus supplement to any effective registration statement covering the resale of the Common Stock underlying such Preferred Shares identifying the Agent or such Lender, as applicable, as a selling stockholder therein.
Section 5. Acknowledgment of Warrant Assignment.
The Company hereby acknowledges and understands that the Warrants issuable to the Purchaser under the SPA will be assigned and transferred by the Purchaser to the Lenders (ratably) as a commitment fee under the Loan Agreement. The Company acknowledges that such assignment is contemplated by the Loan Agreement and the SPA and does not require any additional consent or approval of the Company beyond the consent set forth in Section 6 below.
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Section 6. Consent to Transfer of Warrants; Exercise of Rights.
| (a) | The Company hereby consents to the transfer and assignment of the Warrants by the Purchaser to the Agent and/or the Lenders pursuant to the Loan Agreement, and to any subsequent transfer of the Warrants to any Permitted Transferee. |
| (b) | Each of the Company and the Purchaser acknowledges, agrees and understands that, following any such transfer or assignment, the Agent, the Lenders, and any Permitted Transferee shall be entitled to exercise any and all rights and remedies of the Purchaser under the SPA and the Transaction Documents as they relate to the Warrants, including the right to exercise the Warrants in accordance with their terms, and to receive all shares of Common Stock and other consideration issuable upon such exercise. |
Section 8. Transfer Agent Instructions; Cooperation.
| (a) | Upon the request of the Agent or any Permitted Transferee, and subject to compliance with applicable securities laws and the terms of the Transaction Documents, the Company shall (i) instruct its transfer agent to effectuate any transfer of the Preferred Shares or Common Stock issuable upon conversion thereof as contemplated by this Agreement, (ii) deliver or cause to be delivered any stock certificates, book-entry statements, or other documentation reasonably required to effectuate such transfer, and (iii) take all other actions reasonably necessary to record any such transfer on the Company’s books and records. |
| (b) | The Company shall deliver to the Agent or any Permitted Transferee, at the Purchaser’s expense, such reasonable documentation as may be requested by the Agent or any Permitted Transferee in connection with the pledge, security interest, or transfer contemplated hereby, consistent with the Company’s obligations under Section 4(h) of the SPA (or any substantially similar provision thereof). |
| (c) | The Company represents that, as of the date hereof, it has not issued any stop-transfer instructions to its transfer agent with respect to the Preferred Shares or the Warrants that would prohibit or impede the pledge, transfer, or assignment contemplated by this Agreement (other than customary restrictive legends as required under applicable securities laws and the Transaction Documents). |
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| (d) | The Company will, or will cause the Transfer Agent (as applicable) to, mark its records, by book-entry or otherwise, to indicate the pledge of, and Agent’s security interest in, the Pledged Securities. To the best of the Company’s knowledge, and except for Lender's security interest, and as of the date hereof (a) the Pledged Securities are identified on the Company’s books and records, by book-entry or otherwise, as being owned by Purchaser; (b) the Company has identified on its books and records the Pledged Securities as being pledged to the Agent; and (c) the Company has not created, nor has the Company received notice of any liens, claims or encumbrances with respect to the Pledged Securities, except to Agent. The Company agrees, and agrees to the cause the Transfer Agent (as applicable) to, not to effect any transfer of the Purchaser’s interest in any of the Pledged Securities without Agent’s prior written consent. Should the Company receive further written notice from Agent, the Company will hold the Pledged Securities and all dividends, distributions, and other proceeds relating to the Pledged Securities (whether in cash, securities or other property) subject to Agent’s written instructions. In addition, the Company will not enter into any amendment, modification or waiver of Transaction Documents without the prior written consent of the Agent. The Company will comply with all written instructions originated by Agent concerning the Pledged Securities without further consent by the Purchaser and Purchaser agrees that it will not give any contrary instructions. At the Agent’s request if Agent deems it reasonably necessary to perfect its security interest in the Pledge Securities, the Company will cause the Transfer Agent to enter a control agreement in customary form with the Agent. |
| (e) | Purchaser agrees that whenever it may exercise any right or remedy under the Transaction Documents or may otherwise give instructions to the Company under any Transaction Document, it will only do so in consultation with, and upon the consent of, the Agent. |
Section 9. Representations.
Each Party hereby represents and warrants to the other Parties that (a) it has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, (b) this Agreement has been duly authorized, executed, and delivered by such Party, and (c) this Agreement constitutes a legal, valid, and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors’ rights generally and by general equitable principles.
The Company further represents to Agent that the Pledged Securities are, or will be on issuance, duly authorized are validly issued, fully paid and non-assessable and (ii) (A) are not subject to preemptive or similar rights, (B) are not subject to any transfer restrictions other than as set forth in the Transaction Documents. The Company hereby further agrees that Agent may rely on the representations and warranties of the COmpany in the Securities Purchase Agreement as if Agent was the recipient thereof.
Section 10. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts-of-law principles thereof that would require the application of the laws of any other jurisdiction.
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Section 11. Counterparts; Electronic Signatures.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by facsimile, electronic mail (including .pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, the Uniform Electronic Transactions Act, or other applicable law), or other electronic transmission shall be equally effective as delivery of a manually executed counterpart.
Section 12. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect thereto. This Agreement may not be amended, modified, or supplemented except by a written instrument executed by each of the Parties.
Section 13. Third-Party Beneficiaries.
Each Lender is an intended third-party beneficiary of Sections 2, 3, 4, 5, 6, and 7 of this Agreement and shall be entitled to enforce the provisions thereof as if it were a party hereto. Except as expressly set forth in the immediately preceding sentence, nothing in this Agreement, express or implied, is intended to confer upon any person other than the Parties any rights or remedies hereunder.
Section 14. Notices.
All notices, requests, demands, and other communications required or permitted hereunder shall be given in the manner and to the addresses set forth in the SPA (with respect to the Company and the Purchaser) and the Loan Agreement (with respect to the Agent), or to such other address as any Party may designate by written notice to the other Parties.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
| COMPANY: | |||
| BIG DIGITAL ENERGY, INC. | |||
| By: | /s/ Kaliste Saloom | ||
| Name: | Kaliste Saloom | ||
| Title: | General Counsel | ||
| PURCHASER: | |||
| SIX THIRTY AI, LLC | |||
| By: | /s/ Phil Stanley | ||
| Name: | Phil Stanley | ||
| Title: | Manager | ||
| AGENT: | |||
| YA II PN, LTD. | |||
| By: | Yorkville Advisors Global, LP | ||
| Its: | Investment Manager | ||
| By: | Yorkville Advisors Global, LLC | ||
| Its: | General Partner | ||
| By: | /s/ Troy Rillo | ||
| Name: | Troy Rillo | ||
| Title: | Member | ||
[Signature Page to Letter Agreement]
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of June 30, 2026, between Big Digital Energy, Inc., a Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers,” and together with the Company, the “Parties”). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase Agreement”).
The Parties hereby agrees as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” has the meaning set forth in Section 6(c).
“Agreement” has the meaning set forth in the preamble.
“Company” has the meaning set forth in the preamble.
“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 60th calendar day following the Closing Date (or, in the event of a “full review” by the Commission, the 90th calendar day following the Closing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2(b) or Section 3(c), the 30th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 60th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Dates as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, subject to the Commission agreeing to the five Trading Day or shorter period; provided further, however, that if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness Period” has the meaning set forth in Section 2(a).
“Event” has the meaning set forth in Section 2(d).
“Event Date” has the meaning set forth in Section 2(d).
“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 21st calendar day following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified Party” has the meaning set forth in Section 5(c).
“Indemnifying Party” has the meaning set forth in Section 5(c).
“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses” has the meaning set forth in Section 5(a).
“Parties” has the meaning set forth in the preamble.
“Plan of Distribution” has the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in a Registration Statement (including a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Purchase Agreement” has the meaning set forth in the preamble.
“Purchasers” has the meaning set forth in the preamble.
“Registrable Securities” means, as of any date of determination, (a) all Conversion Shares then issued or issuable upon conversion of the Series D Preferred Stock (assuming on such date the Series D Preferred Stock is convertible in full at the Floor Price (as defined in the Certificate of Designations) without regard to any limitations on conversion); (b) all Warrant Shares then issued or issuable upon exercise of the Warrants (assuming on such date the Warrants are exercisable in full without regard to any limitations on exercise); (c) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (i) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (ii) such Registrable Securities have been previously sold in accordance with Rule 144 or (iii) such securities are eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders.
“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Selling Stockholder Questionnaire” has the meaning set forth in Section 3(a).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff; and (ii) the Securities Act.
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2. Shelf Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by at least a majority in interest of the Holders) the “Plan of Distribution” section in substantially the form attached hereto as Annex A and the “Selling Stockholder” section in substantially the form attached hereto as Annex B; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent; provided further, however, that if the Commission requests that any Holder be identified as a statutory underwriter in any Registration Statement, such Holder will have the option, in its sole and absolute discretion, either to withdraw from the Registration Statement (which shall be exercised via such Holder’s prompt written request thereof to the Company), in which case the Company’s obligation to register such Holder’s Registrable Securities shall be deemed satisfied, or to be included as such in the Registration Statement. Subject to the terms of this Agreement, the Company shall cause a Registration Statement filed under this Agreement (including under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use commercially reasonably efforts to keep such Registration Statement continuously effective under the Securities Act until the date that no Holder holds any Registrable Securities covered by such Registration Statement(the “Effectiveness Period”). The Company shall request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall notify the Holders by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the staff of the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415 or other SEC Guidance, be registered for resale as a secondary offering on a single registration statement, the Company shall promptly inform each of the Holders thereof and file amendments to the Initial Registration Statement as required by the staff of the Commission, covering the maximum number of Registrable Securities permitted to be registered by the staff of the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e), with respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment, the Company shall use diligent efforts to advocate with the staff of the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including Compliance and Disclosure Interpretation 612.09.
(c) Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the staff of the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the staff of the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities to register a lesser number, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
(i) First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; and
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(ii) Second, the Company shall reduce Registrable Securities on a pro rata basis based on the total number of unregistered Registrable Securities held by such Holders; provided, however, that all Warrant Shares shall be removed before any Conversion Shares are removed.
In the event of a cutback hereunder, the Company shall give the Holder at least five Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use commercially reasonable efforts to file with the Commission, as promptly as allowed by the staff of the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (it being understood and agreed that if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i));
(ii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the staff of the Commission in respect of such Registration Statement within ten Trading Days after the receipt of comments by or notice from staff of the Commission that such amendment is required in order for such Registration Statement to be declared effective;
(iii) a Registration Statement registering for resale Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement; or
(iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to the Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than 15 consecutive calendar days or more than an aggregate of 22 Trading Days (which need not be consecutive Trading Days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iii), the date on which such Event occurs, for purposes of clause (ii), the date on which such ten-Trading Day period is exceeded, and for the purposes of this clause (iv), the date on which such 15-calendar day or 22-Trading Day period, as applicable, is exceeded being referred to as “Event Date”)
then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event has not been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the (1) product of (A) 1.50% multiplied by (B) the quotient of (I) the number of such Holder’s Registrable Securities that are not then covered by an effective Registration Statement available for use by such Holder, divided by (II) the total number of such Holder’s Registrable Securities, multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement; provided, however, that if none of such Holder’s Registrable Securities are then covered by an effective Registration Statement available for use by such Holder, the quotient of (I) divided by (II) in clause (1)(B) herein shall be deemed equal to 1.0; provided further, however, that in no event shall the aggregate liquidated damages payable by the Company to a Holder under this Agreement exceed 9.0% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. For the avoidance of doubt, no liquidated damages shall be payable hereunder solely due to the inability of the Company to register for resale certain Registrable Securities as provided in Section 2(b).
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(e) If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.
3. Registration Procedures.
(a) Not less than five Trading Days prior to the filing of each Registration Statement and not less than one Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which Holders of a majority of the Registrable Securities reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three Trading Days after the Holders have been so furnished copies of a Registration Statement or one Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached hereto as Annex C (a “Selling Stockholder Questionnaire”) on a date that is not less than two Trading Days prior to the Filing Date or by the end of the fourth Trading Day following the date on which such Holder receives draft materials in accordance with this Section 3(a).
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date (subject to SEC Guidance), an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.
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(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e) Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
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(j) Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(k) Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l) The Company shall use commercially reasonable efforts to maintain eligibility (or, if applicable, acquire eligibility) for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.
(m) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall (i) all registration and filing fees (including fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any underwriter, broker or similar commissions or fees of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. The Company will reimburse the costs and expense of one counsel to the Holders in connection with attorneys’ fees incurred in connection with this Agreement after the Closing Date up to a maximum of $15,000.
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5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(e).
(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
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(c) Conduct of Indemnification Proceedings.
(i) If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
(ii) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
(iii) Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 5(c)) shall be paid to the Indemnified Party, within 30 Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution.
(i) If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the Parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a Party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such Party in connection with any Proceeding to the extent such Party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 5(d) was available to such Party in accordance with its terms.
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(ii) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
(iii) The indemnity and contribution agreements contained in this Section 5 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement or a Registration Statement on Form S-8 relating to any stock option or similar plan.
(c) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii)-(vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
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(d) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of a majority or more of the then outstanding Registrable Securities, provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the Parties.
(e) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the Parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement (in which case, for the avoidance of doubt, such assignee shall agree in writing to be bound by the provisions of this Agreement that apply to the “Holders”).
(g) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth in Schedule 3.1(v) to the Purchase Agreement, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.
(h) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by electronic mail (including “.pdf” or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. docusign.com) or other transmission method, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if it were an original thereof.
(i) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
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(l) Interpretation. The headings in this Agreement are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. As used herein, the words “including” or “includes” shall be deemed followed by “without limitation,” and the word “or” shall be deemed to mean “and/or.”
(m) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
(n) Material Non-Public Information. If, notwithstanding the prohibition on providing the Holders with material, non-public information, any notice or other communication delivered to the Holders hereunder contains any material, non-public information (within the meaning of the Exchange Act) regarding the Company, the Company shall cause such material, non-public information to be publicly disseminated no later than two Trading Days after the delivery thereof to the Holders.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Parties have executed this Registration Rights Agreement as of the date first written above.
| BIG DIGITAL ENERGY, INC. | ||
| By: | /s/ Kaliste Saloom | |
| Name: | Kaliste Saloom | |
| Title: | General Counsel | |
[SIGNATURE PAGES OF HOLDERS FOLLOW]
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[SIGNATURE PAGE OF HOLDERS TO
REGISTRATION RIGHTS AGREEMENT OF BIG DIGITAL ENERGY, INC.]
| Name of Holder: Six Thirty AI, LLC | ||
| Signature of Authorized Signatory of Holder: | /s/ Phil Stanley | |
| Name of Authorized Signatory: Phil Stanley | ||
| Title of Authorized Signatory: Manager |
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Annex A
Plan of Distribution
Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell, separately or together, any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. To the extent the Selling Stockholders gift, pledge or otherwise transfer the securities offered hereby, such transferees may offer and sell the securities from time to time under this prospectus, provided that, if required under the Securities Act, and the rules and regulations promulgated thereunder, this prospectus has been amended under Rule 424(b)(3) or other applicable provision of the Securities Act, to include the name of such transferee in the list of selling securityholders under this prospectus. A Selling Stockholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | through one or more underwritten offerings on a firm commitment or best efforts basis; |
| ● | settlement of short sales ; |
| ● | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | through the distribution of securities by any Selling Stockholder to its partners, members or securityholders; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus. The Selling Stockholders have the sole and absolute discretion not to accept any purchase offer or make any sale of securities if they deem the purchase price to be unsatisfactory at any particular time.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
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In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders may from time to time pledge or grant a security interest in some or all of their securities to their broker-dealers under the margin provisions of customer agreements or to other parties to secure other obligations. If a Selling Stockholder defaults on a margin loan or other secured obligation, the broker-dealer or secured party may, from time to time, offer and sell the securities pledged or secured thereby pursuant to this prospectus. The Selling Stockholders and any other persons participating in the sale or distribution of the securities will be subject to applicable provisions of the Securities Act and the Exchange Act, and the rules and regulations thereunder, including Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the securities by, the Selling Stockholders or any other person, which limitations may affect the marketability of the securities.
The Selling Stockholders also may transfer the shares of our securities in other circumstances, in which case the transferees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus.
A Selling Stockholder that is an entity may elect to make a pro rata in-kind distribution of securities to its members, partners or shareholders pursuant to the registration statement of which this prospectus is part by delivering a prospectus. To the extent that such members, partners or shareholders are not affiliates of ours, such members, partners or shareholders would thereby receive freely tradeable securities pursuant to the distribution through a registration statement.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of the date on which (i) the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144 or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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Annex B
SELLING STOCKHOLDERS
The common stock being offered by the selling stockholders are those issuable to the selling stockholders, upon exercise of the warrants and conversion of the preferred stock. For additional information regarding the issuances of those warrants and preferred stock, see “Private Placement of Warrants and Preferred Stock” above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time.
The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership of the shares of warrants and preferred stock, as of__________________, 2026, assuming exercise of the warrants and conversion of the preferred stock held by the selling stockholders on that date, without regard to any limitations on exercises or conversions.
The third column lists the shares of common stock being offered by this prospectus by the selling stockholders.
In accordance with the terms of a registration rights agreement with the selling stockholders, this prospectus generally covers the resale of the sum of (i) the maximum number of shares of common stock issuable upon conversion of the preferred stock, determined as if the outstanding shares of preferred stock were converted in full at the Floor Price (as defined in the certificate of designation for the preferred stock) and (ii) the maximum number of shares of common stock issuable upon exercise of the warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration rights agreement, without regard to any limitations on the exercise of the warrants or conversion of the preferred stock. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the warrants, a selling stockholder may not exercise the warrants to the extent such exercise would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% or 9.99%, as applicable, of our then outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of such warrants which have not been exercised. Under the certificate of designations for the preferred stock, a selling stockholder may not convert the preferred stock to the extent such conversion would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 19.99% of our then outstanding common stock following such conversion, excluding for purposes of such determination shares of common stock issuable upon conversion of such shares of preferred stock which have not been converted. The number of shares in the second and fourth columns do not reflect these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Stockholder | Shares of Common Stock Owned Prior to Offering | Maximum Shares of Common Stock to be Sold Pursuant to this Prospectus | Shares of Common Stock Owned After this Offering | |||||||||
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Annex C
BIG DIGITAL ENERGY, INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock (the “Registrable Securities”) of Big Digital Energy, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name:
(a) Full Legal Name of Selling Stockholder:
(b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
(c) Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):
2. Address for Notices to Selling Stockholder:
| Telephone: | ||
| Email: | ||
| Contact Person: |
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3. Broker-Dealer Status:
(a) Are you a broker-dealer?
Yes ☐ No ☐
(b) If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?
Yes ☐ No ☐
Note: If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
(c) Are you an affiliate of a broker-dealer?
Yes ☐ No ☐
(d) If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
Yes ☐ No ☐
Note: If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
(a) Type and Amount of other securities beneficially owned by the Selling Stockholder:
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.
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By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Date: | Beneficial Owner: | |
| By: | ||
| Name: | ||
| Title: | ||
PLEASE EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
20
Exhibit 99.1
FOR IMMEDIATE RELEASE
Big Digital Energy announces partnership with 10NetZero to Acquire Power-Ready Hood County, Texas Site for AI Datacenter Development
50/50 joint venture targets a phased buildout of up to 311 MW on a site with live power and grid headroom
MIDLAND, PA — July 6, 2026 — Big Digital Energy, Inc. (“We,” “Big Digital” or the “Company”) (Nasdaq: “BGDE”), a developer and operator of next-generation digital infrastructure, today announced that it had entered into a 50/50 joint venture with energy-infrastructure company 10NetZero, with a signed a letter of intent to acquire a live powered industrial site in Hood County, Texas, and to develop it into a large-scale datacenter campus serving artificial intelligence (“AI”) tenants. The Company also engaged Northland Capital Markets to act as a financial advisor in relation to the Company’s evaluation of AI/high-performance computing (“HPC”) uses for the Company’s power assets, including site level financing and partnership opportunities.
Josh Kilgore, Chairman of Big Digital commented “Our planned acquisition of the 50% interest in the Hood County site and partnership with 10NetZero is a prime example of our efforts to leverage our powered land expertise and pipeline to identify and acquire attractive AI ready sites. The planned transactions illustrate management’s commitment to accelerating the Company’s transition into an AI datacenter developer and operator in order to maximize value to all Big Digital stakeholders.”
Cody Smith, COO of Big Digital commented “The Hood County site would give us live power and a path to up to hundreds of megawatts, which would let us deliver capacity to AI customers years ahead of a comparable greenfield project. Partnering with 10NetZero would pair that site with deep energy-infrastructure capability, and we intend to move quickly.”
The approximately 50-acre Hood County site contains over 30,000 square feet of existing structures the partnership intends to repurpose for datacenter use as well as an administrative office which will be utilized as the Command Center. The Hood County site already carries 17 MW of operational power and will be expandable up to 111 MW of grid power, subject to validation by the Electric Reliability Council of Texas (“ERCOT”). On-site are two 12-inch and one 20-inch natural-gas pipelines providing the option to add behind-the-meter generation, supporting a buildout to as much as 311 MW of operating capacity. The acquisition would bring the Company’s total operational MWs to 146 MW, and the Company is actively evaluating expansion opportunities within its current powered land portfolio as well as potential acquisitions from the private powered land portfolio of an affiliate of its executive management team.
About Big Digital Energy, Inc.
Big Digital Energy, Inc. (Nasdaq: “BGDE”) is a U.S.-based technology company that designs, builds, and operates next-generation digital infrastructure platforms. The Company provides services spanning artificial intelligence (“AI”), high performance computing (“HPC”), digital assets (including Bitcoin mining), and other intensive compute applications. The Company delivers both self-mining operations and colocation/hosting for enterprise customers, with a vertically integrated infrastructure model built for scalability and efficiency.
A core part of the Company’s strategy is identifying and advancing sites positioned to support high-performance compute with the infrastructure required for long-term deployment.. With 129 megawatts of capacity already online and more under development, the Company is positioning itself as a competitive provider of digital infrastructure solutions to support the immediate and growing demand for AI data centers.
About 10NetZero, Inc.
10NetZero, Inc. is a U.S.-based energy-infrastructure company that designs, builds, and operates behind-the-meter power generation and datacenter facilities for energy-intensive computing. Through its Digital Midstream™ platform, the Company converts stranded, flared, and otherwise wasted natural gas into electricity at the source—delivering power for artificial intelligence (“AI”), high performance computing (“HPC”), and digital asset applications without dependence on traditional pipeline or grid infrastructure. The Company provides full-lifecycle services spanning site evaluation, power systems design, and datacenter operations.
For more information about the Company, visit: https://bigdigital.energy
CAUTIONARY LANGUAGE ON FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding the expected benefits of the joint venture, the deployment of assets, revenue growth, and the Company’s strategic initiatives. Forward-looking statements may be identified by the use of words referencing future events or circumstances such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “target,” “will,” “would,” “subject to,” and similar expressions.
These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Important factors include, without limitation: the Company’s ability to continue as a going concern; the Company’s ability to maintain its Nasdaq listing; the need for and availability of additional financing; the Company’s ability to obtain any required stockholder approvals and to file and maintain the effectiveness of any required registration statements; the timing, negotiation, and execution of any definitive agreements relating to a joint venture with 10NetZero and the proposed acquisition and development of any Texas site, and the satisfaction of any closing conditions; availability and cost of power, grid interconnection and build-out timing; the feasibility, permitting, and development of any behind-the-meter generation; execution risks in developing AI/HPC digital infrastructure; market demand for AI/HPC and accelerated computing; evolving and uncertain regulation of digital assets, artificial intelligence, and high-performance computing; volatility in digital asset prices and reductions in mining incentives; and the other risks described under “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and in other filings made with the SEC from time to time. Any forward-looking statements speak only as of the date of this report, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as required by law.
CONTACT
Investor Relations: IR@bigdigital.energy
Partnerships: Partnerships@bigdigital.energy
Media and Press: mediarelations@bigdigital.energy
Website: www.bigdigital.energy
Exhibit 99.2
Texas Load House A Power-Ready ERCOT Site with a Three-Track Path to 300+ MW Big Digital Energy is planning to acquire a power-ready industrial site in the Dallas–Fort Worth area (ERCOT) and develop it into a large- scale AI datacenter. The site is power-ready today with 17 MW of operational ERCOT power, with 111.6 MW subject to validation by the Electric Reliability Council of Texas ("ERCOT"). On-site gas infrastructure — two 12-inch lines and a 24-inch line — supports behind-the- meter expansion. Capital deploys across three independent, complementary tracks: an AI-leaning on-grid Phase 1, an institutional grid powered-shell, and behind-the-meter gas generation — scaling to 300+ MW of available capacity at full deployment. 17 MW O P E R AT I O N A L E R C O T P O W E R TO D AY 74 MW Y E A R - 1 TA R G E T C A PA C I T Y ( F R O M 1 7 M W TO D AY ) 111.6 MW P O T E N T I A L G R I D H E A D R O O M 300+ MW AVA I L A B L E C A PA C I T Y AT F U L L D E P L O Y M E N T ~$485M C O M B I N E D S TA B I L I Z E D N O I ( M I D C A S E ) ~13.6% B L E N D E D U N L E V E R E D Y I E L D ( M I D C A S E ) P O W E R - R E A D Y E R C O T S I T E · T H R E E - T R A C K D A T A C E N T E R D E V E L O P M E N T · J U N E 2 0 2 6 D A L L A S – F O R T W O R T H A R E A T R A C K · ~ 5 0 A C R E S Confidential — prepared by Big Digital Energy Inc 1
A S S E T & P O W E R A Power-Ready ERCOT Site The site's edge is timing: it carries live ERCOT power today and a path to substantial additional capacity subject to ERCOT validation, while on-site gas lines (two 12-inch and one 24-inch, in service) support behind-the-meter generation in parallel, subject to a confirmed tap/ interconnect. In a market where new interconnections sit in multi-year queues, power-ready beats power-promised — this is among the most capital-efficient routes to large-scale ERCOT-area compute available in 2026. S I T E & R E A L E S TAT E Location Dallas–Fort Worth area, TX (ERCOT) Interconnection 138 kV transmission (ERCOT) Site size ~50 acres Improvements 30,000 sq ft bldg · 10-tonne crane Also on site 2 warehouses · office · 2 water wells P O W E R & E N E R G Y Power today 17 MW operational Year-1 target 74 MW (grid) Energization Near-term Potential headroom 111.6 MW Gas access 2 × 12″ + 1 × 24″ lines on-site · in service Full-deployment target Up to 300+ MW (all tracks) W H Y P O W E R - R E A D Y W I N S Greenfield datacenter sites wait years in ERCOT interconnection queues before energizing a single server. This site has 17 MW live today, with on-site gas to support behind-the-meter expansion in parallel. The April 2026 capacity study removes the single largest source of greenfield uncertainty. Few sites combine an active interconnection, major on-site gas lines, water, expansion land, and an existing operating footprint — and that combination is what makes the three-track structure possible. 17 MW L I V E O P E R AT I O N A L P O W E R 111.6 MW P O T E N T I A L G R I D H E A D R O O M 24″ O N - S I T E G A S L I N E S ( 2 × 1 2 ″ + 2 4 ″ ) · B E H I N D - T H E - M E T E R O P T I O N A L I T Y Confidential — prepared by Big Digital Energy Inc 2
S T R A T E G I C T H E S I S Three Tracks, One Asset The opportunity is structured as three independent but complementary tracks, so capital can be deployed at the scale, timeline, and risk profile that fits each counterparty. The tracks are sequenced to compound: Track 1 will secure the site and anchor early AI colocation cash flow; Track 3 will reach in-service ahead of Track 2. At full deployment the site operates 300+ MW of available infrastructure capacity. TRACK 1 — ON-GRID PHASE 1 AI colocation TRACK 2 — GRID POWERED SHELL TRACK 3 — BEHIND-THE-METER Business model On-grid AI colocation offtake on the operational 17 MW, scaling with the year-one ramp Powered shell + gray space; ERCOT grid power; tenant pays utility Powered shell + gray space; on-site Wärtsilä gas gen; tenant pays fuel at cost Target capacity 17 MW today → 74 MW (year-1 target) 111 MW (potential, subject to ERCOT validation) 200 MW (2 × 100 MW, phased) Construction start None — operating at acquisition On tenant FID (gated) Phase A near-term · Phase B follows Time to first revenue Colo onboarding ~9 mo ~24–30 mo from FID ~18–24 mo (Phase A in-service) Lease / contract term 3-yr colo primary 10–15 yr primary 10–15 yr primary Revenue economics $90–120/MWh (AI colo) $165/kW-mo base rent (illustrative) · capacity rent $165/kW-mo base rent (illustrative) + fuel pass-through Stabilized revenue (mid) ~$14M ~$197M / yr ~$355M / yr (capacity rent) Stabilized GM / NOI (mid) ~$8M ~$173M NOI ~$312M NOI Strategic value Secures the site + early AI colocation cash flow; funds the dev window for Tracks 2 & 3 Highest % return; capital-efficient Largest absolute NOI; earliest at scale; ERCOT-independent 300+ MW AVA I L A B L E C A PA C I T Y AT F U L L D E P L O Y M E N T ~$3.56B TO TA L D E P L O YA B L E I N F R A S T R U C T U R E C A P I TA L ~$485M C O M B I N E D S TA B I L I Z E D N O I ( M I D C A S E ) Defined terms. NOI: net operating income (revenue less operating expense). Yield-on-cost: stabilized NOI ÷ total project cost. Colocation ("colo"): leasing power and data-hall space to a tenant. FID: final investment decision. Capacity rent: a fixed monthly charge per kW for reserved power/space. Behind-the-meter: on-site generation serving load without using grid transmission. Powered shell / gray space: a building with power delivered / fitted-out data-hall space. No tenant or power offtaker is currently under letter of intent (LOI) or contract — the only executed LOI is to purchase the property; any tenant "LOI" shown in the roadmap is a future target. Economics are shown at the project (100%) level; Big Digital Energy's economic share is 50% under the contemplated 50/50 joint venture with 10NetZero, subject to final participation. Confidential — prepared by Big Digital Energy Inc 3
C A P I T A L & R E T U R N S Deployment Roadmap & Economics Track 1 will be funded first and will anchor early AI colocation cash flow, funding the development window. Track 3 will reach in-service early and demonstrate execution; Track 2 will follow as the lowest-risk grid build. The blended return at full deployment is approximately 13.6% unlevered — attractive for available, power-ready infrastructure with embedded generation. C A P I TA L D E P L O Y M E N T R O A D M A P PHASE TRACK 1 — ON-GRID TRACK 2 — POWERED SHELL TRACK 3 — BEHIND-THE-METER Close Acquisition; AI colocation origination on the operational 17 MW Dev capital; ERCOT process; tenant origination Land sourcing; permitting; Wärtsilä engagement Yr 1 Ramp 17→74 MW; AI colo offtake signed & onboarding Continued development Phase A construction begins (100 MW) Yr 2 AI colo offtake operating Target tenant LOI · pre-FID Phase A construction Yr 3 AI colo offtake operating FID; financing close Phase A in-service (100 MW) Yr 4 Transitions into Track 2 Construction (111 MW) Phase B construction (+100 MW) Yr 5+ — In-service; long-term grid lease cash flow Phase B in-service (full 200 MW) H E A D L I N E E C O N O M I C S AT F U L L D E P L O Y M E N T ( M I D C A S E ) TRACK 2 (111 MW) TRACK 3 (200 MW) COMBINED (300+ MW) Total project basis (excl. land) ~$1.12B ~$2.44B ~$3.56B Stabilized capacity-rent revenue ~$197M ~$355M ~$552M Stabilized NOI ~$173M ~$312M ~$485M Blended unlevered yield-on-cost ~15.5% ~12.8% ~13.6% ~$552M S TA B I L I Z E D A N N U A L R E V E N U E ~$485M S TA B I L I Z E D A N N U A L N O I ~$3.56B D E P L O YA B L E I N F R A C A P I TA L ~13.6% B L E N D E D U N L E V E R E D Y I E L D Illustrative mid-case figures based on stated assumptions; not projections or guarantees. Track 1 economics are smaller-scale (AI colo ~$8M GM at $105/MWh mid case) and are reported separately. Yields on this page are unlevered and exclude adjacent land cost, financing structure, taxes, and tenant-specific concessions. Defined terms are footnoted on the "Three Tracks, One Asset" page. No tenant or power offtaker is under LOI or contract; the only executed LOI is to purchase the property. Economics are project-level (100%); Big Digital Energy's economic share is 50% under the contemplated 50/50 joint venture with 10NetZero, subject to final participation. Confidential — prepared by Big Digital Energy Inc 4
P A R T N E R S H I P S & E X E C U T I O N The Team Behind the Buildout Big Digital Energy owns and leads the project, in a joint venture with energy-infrastructure partner 10NetZero and with Vinco engaged to lead engineering, design, and go-to-market. The combination pairs site control and power with behind-the-meter generation capability and a dedicated AI-conversion engineering and tenant-origination team — aligned to a single mandate: bringing firm power to the AI market faster than a greenfield project can. J O I N T V E N T U R E — 1 0 N E T Z E R O BDE and energy-infrastructure partner 10NetZero plan to acquire and develop the site as a joint venture, pairing BDE's datacenter development with 10NetZero's energy-infrastructure and behind-the-meter generation capability — directly relevant to the Track 3 on-site gas buildout. E N G I N E E R I N G & G O - TO - M A R K E T — V I N C O Vinco (San Mateo, CA) leads engineering and design, ROM cost and schedule, and tenant origination / structured leasing with neo-cloud and hyperscale operators. Vinco recently delivered a 15 MW legacy-facility-to-AI conversion with VADD Construction Services and is backed by a growth investment from Bridgepointe Technologies. W H Y N O W ERCOT structural shortage. Texas is short of power-ready compute sites at peak AI demand; new interconnections in queue today are not in service until late this decade. Potential headroom. The April 2026 capacity study points to a path to 111 MW of additional grid capacity, subject to ERCOT validation. Sequencing advantage. Track 1 cash flow will fund the development window; Track 3 will reach in-service early, proving execution; Track 2 will follow as the lowest-risk grid build. Each track de-risks the next. Optionality. Active interconnection + on-site gas lines (2 × 12″ + 24″) + water + expansion land + an operating footprint — a combination few sites offer. POWER- READY L I V E I N T E R C O N N E C T I O N · P O T E N T I A L H E A D R O O M 3 TRACKS S E Q U E N C E D TO C O M P O U N D & D E - R I S K 300+ MW F U L L - D E P L O Y M E N T TA R G E T C A PA C I T Y Confidential — prepared by Big Digital Energy Inc 5
T R A N S A C T I O N S U M M A R Y The Acquisition, the Thesis & Why Now T H E A C Q U I S I T I O N Asset ~50 acres · power-ready (full site) Location Dallas–Fort Worth area, TX Year-1 target 74 MW (from 17 MW) Power at acquisition 17 MW operational Structure BDE / 10NetZero joint venture Status Letter of intent executed (property purchase) R E T U R N S N A P S H O T · F U L L D E P L O Y M E N T Available capacity 300+ MW Total project basis ~$3.56B (excl. land) Stabilized revenue ~$552M / yr Stabilized NOI ~$485M / yr Blended unlevered yield ~13.6% In-service (full) Phased over the build Conservative track yield ~15.5% (Track 2) T H E T H E S I S The scarce, hard-to-replicate element is in place: power-ready ERCOT capacity — 17 MW live and 111.6 MW of potential headroom subject to ERCOT validation — combined with on-site gas lines (two 12-inch + one 24-inch), water, expansion land, and an operating industrial footprint. A single acquisition unlocks up to $3.56B of deployable infrastructure across three sequenced tracks, anchored by the same site and operations, with Track 1 cash-flowing within months of close and Tracks 2 and 3 scaling to 300+ MW of available capacity. W H Y N O W Hyperscalers and AI operators are leasing every quality megawatt they can contract, and ERCOT-area power-ready sites are structurally scarce — new interconnections in queue today are not in service until late this decade. This site converts that scarcity into a capital-efficient, multi-track development with live power on day one and a potential path to hundreds of megawatts, delivered years ahead of a comparable greenfield project. Economics shown are at the project (100%) level; Big Digital Energy's economic share is 50% under the contemplated 50/50 joint venture with 10NetZero, subject to final participation. The only executed LOI is to purchase the property; no tenant or power offtaker is currently under LOI or contract. Forward-Looking Statements This investor presentation contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements regarding the Company's plans and expectations regarding any joint venture with 10NetZero and the proposed development of a data-center site in Texas, and the Company's strategy, operations, and future results. Words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "opportunity," "plan," "project," "roadmap," "target," "will," "would," "subject to," and similar expressions are intended to identify forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Important factors include, without limitation: the Company's ability to continue as a going concern; the Company's ability to maintain its Nasdaq listing; the need for and availability of additional financing; the timing, negotiation, and execution of any definitive agreements relating to a joint venture with 10NetZero and the proposed acquisition and development of any Texas site, and the satisfaction of any closing conditions; availability and cost of power, grid interconnection and build-out timing; the feasibility, permitting, and development of any behind-the-meter generation; execution risks in developing AI/HPC digital infrastructure; market demand for AI/HPC and accelerated computing; evolving and uncertain regulation of digital assets, artificial intelligence, and high-performance computing; volatility in digital asset prices and reductions in mining incentives; and the other risks described under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and in other filings made with the SEC from time to time. Any forward-looking statements speak only as of the date of this investor presentation, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this investor presentation, except as required by law. Confidential — prepared by Big Digital Energy Inc 6